CHAPTER 22 MANAGEMENT CONTROL SYSTEMS, TRANSFER PRICING, AND MULTINATIONAL CONSIDERATIONS 22-1A management control system is a means of gathering and using information to aid and coordinate the planning and control decisions throughout the organization and to guide the behavior of its managers and employees. The goal of the system is to improve the collective decisions within an organization. 2-2To be effective, management control systems should be (a) closely aligned to an organization's strategies and goals, (b) designed to fit the organization's structure and the decision-making responsibility of individual managers, and (c) able to motivate managers and employees to put in effort to attain selected goals desired by top management. 22-3Motivation combines goal congruence and effort. Motivation is the desire to attain a selected goal specified by top management (the goal-congruence aspect) combined with the resulting pursuit of that goal (the effort aspect). 2-4 The chapter cites five benefits of decentralization: 1. Creates greater responsiveness to local needs 2. Leads to gains from faster decision making 3. Increases motivation of subunit managers 4. Aids management development and learning 5. Sharpens the focus of subunit managers The chapter cites four costs of decentralization: 1. Leads to suboptimal decision making 2. Results in duplication of activities 3. Focuses managers’ attention on the subunit rather than the company as a whole 4.

Increases costs of gathering information 22-5 No. Organizations typically compare the benefits and costs of decentralization on a function-by-function basis. For example, companies with highly decentralized operating divisions frequently have centralized income tax strategies. 22-6 No. A transfer price is the price one subunit of an organization charges for a product or service supplied to another subunit of the same organization. The two segments can be cost centers, profit centers, or investment centers.

For example, the allocation of service department costs to production departments that are set up as either cost centers or investment centers is an example of transfer pricing. 22-7The three general methods for determining transfer prices are: 1. Market-based transfer prices 2. Cost-based transfer prices 3. Negotiated transfer prices 22-8Transfer prices should have the following properties. They should 1. promote goal congruence, 2. be useful for evaluating subunit performance, 3. motivate management effort, and 4. preserve a high level of subunit autonomy in decision making. . No, the chapter illustration demonstrates how division operating incomes differ dramatically under the variable costs, full costs, and market price methods. 10. Transferring products or services at market prices generally leads to optimal decisions when (a) the market for the intermediate product market is perfectly competitive, (b) interdependencies of subunits are minimal, and (c) there are no additional costs or benefits to the company as a whole from buying or selling in the external market instead of transacting internally. 2-11One potential limitation of full-cost-based transfer prices is that they can lead to suboptimal decisions for the company as a whole. An example of a conflict between divisional action and overall company profitability resulting from an inappropriate transfer-pricing policy is buying products or services outside the company when it is beneficial to overall company profitability to source them internally. This situation often arises where full-cost-based transfer prices are used. This situation can make the fixed costs of the supplying division appear to be variable costs of the purchasing division.

Another limitation is that the supplying division may not have sufficient incentives to control costs if the full-cost-based transfer price uses actual costs rather than standard costs. The purchasing division sources externally if market prices are lower than full costs. From the viewpoint of the company as a whole, the purchasing division should source from outside only if market prices are less than variable costs of production, not full costs of production. 22-12Reasons why a dual-pricing approach to transfer pricing is not widely used in practice include: 1.

The manager of the supplying division uses a cost-based method to record revenues and does not have sufficient incentives to control costs. 2. This approach does not provide clear signals to division managers about the level of decentralization top management wants. 3. This approach tends to insulate managers from the frictions of the marketplace because costs, not market prices, affect the revenues of the supplying division. 4. It leads to problems in computing the taxable income of subunits located in different tax jurisdictions. 2-13Disagree. Cost and price information are often useful starting points in the negotiation process. Costs, particularly variable costs of the "selling" division, serve as a "floor" below which the selling division would be unwilling to sell. Prices that the "buying" division would pay to purchase products from the outside market serves as a "ceiling" above which the buying division would be unwilling to buy. The price negotiated by the two divisions will, in general, have no specific relationship to either costs or prices.

But the negotiated price will generally fall between the variable costs-based floor and the market price-based ceiling. 22-14Yes. The general transfer-pricing guideline specifies that the minimum transfer price equals the additional outlay costs per unit incurred up to the point of transfer plus the opportunity costs per unit to the supplying division. When the supplying division has idle capacity, its opportunity costs are zero; when the supplying division has no idle capacity, its opportunity costs are positive.

Hence, the minimum transfer price will vary depending on whether the supplying division has idle capacity or not. 22-15Alternative transfer-pricing methods can result in sizable differences in the reported operating income of divisions in different income tax jurisdictions. If these jurisdictions have different tax rates or deductions, the net income of the company as a whole can be affected by the choice of the transfer-pricing method. 22-16(25 min. )Decentralization, responsibility centers. 1. The manufacturing plants in the Manufacturing Division are cost centers.

Senior management determines the manufacturing schedule based on the quantity of each type of lighting product specified by the sales and marketing division and detailed studies of the time and cost to manufacture each type of product. Manufacturing managers are accountable only for costs. They are evaluated based on achieving target output within budgeted costs. 2a. If manufacturing and marketing managers were to directly negotiate the prices for manufacturing various products, Quinn should evaluate manufacturing plant managers as profit centers—revenues received from marketing minus the costs incurred to produce and sell output. b. Quinn Corporation would be better off decentralizing its marketing and manufacturing decisions and evaluating each division as a profit center. Decentralization would encourage plant managers to increase total output to achieve the greatest profitability, and motivate plant managers to cut their costs to increase margins. Manufacturing managers would be motivated to design their operations according to the criteria that meet the marketing managers’ approval, thereby improving cooperation between manufacturing and marketing. Under Quinn's existing system, manufacturing managers had every incentive not to improve.

Manufacturing managers' incentives were to get as high a cost target as possible so that they could produce output within budgeted costs. Any significant improvements could result in the target costs being lowered for the next year, increasing the possibility of not achieving budgeted costs. By the same line of reasoning, manufacturing managers would also try to limit their production so that production quotas would not be increased in the future. Decentralizing manufacturing and marketing decisions overcomes these problems. 22-17(15 min. ) Decentralization, goal congruence, responsibility centers. . The environmental management organization appears to be decentralized because managers of the environmental management group have considerable freedom to make decisions. They can choose which projects to work on and which projects to reject. Top management will adjust the size of the environmental management group to match the demand for the group’s services by operating divisions. 2. The environmental management group is a cost center. The group is required to charge the operating divisions for environmental services at cost and not at market prices that would help earn the group a profit. . The benefits of structuring the environmental management group in this way are: a. The operating managers have incentives to carefully weigh and conduct cost-benefit analyses before requesting the environmental group's services. b. The operating managers have an incentive to follow the work and the progress made by the environmental team. c. The environmental group has incentives to fulfill the contract, to do a good job in terms of cost, time, and quality, and to satisfy the operating division in order to continue to get business.

The problems in structuring the environmental group in this way are: a. The contract requires extensive internal negotiations in terms of cost, time, and technical specifications. b. The environmental group needs to continuously "sell" its services to the operating division, and this could potentially result in loss of morale. c. Experimental projects that have long-term potential may not be undertaken because operating division managers may be reluctant to undertake projects that are costly and uncertain, whose benefits will be realized only well after they have left the division.

To the extent that the focus of the environmental group is on short-run projects demanded by the operating divisions, the current structure leads to goal congruence and motivation. Goal congruence is achieved because both operating divisions and the environmental group are motivated to work toward the organizational goals of reducing pollution and improving the environment. The operating divisions will be motivated to utilize the services of the environmental group to achieve the environmental goals set for them by top management.

The environmental group will be motivated to deliver high-quality services in a cost-effective way in order to continue to create a demand for their services. The one issue that top management needs to guard against is that experimental projects with long-term potential that are costly and uncertain may not be undertaken under the current structure. Top management may want to set up a committee to study and propose such long-run projects for consideration and funding by corporate management. 22-18(35 min. )Multinational transfer pricing, effect of alternative transfer-pricing methods, global income tax minimization. . This is a three-country, three-division transfer-pricing problem with three alternative transfer-pricing methods. Summary data in U. S. dollars are: China Plant Variable costs: 1,000 Yuan ? 8 Yuan per $ = $125 per subunit Fixed costs: 1,800 Yuan ? 8 Yuan per $ = $225 per subunit South Korea Plant Variable costs: 360,000 Won ? 1,200 Won per $ = $300 per unit Fixed costs: 480,000 Won ? 1,200 Won per $ = $400 per unit U. S. Plant Variable costs:= $100 per unit Fixed costs:= $200 per unit Market prices for private-label sale alternatives: China Plant:3,600 Yuan ? Yuan per $ = $450 per subunit South Korea Plant: 1,560,000 Won ? 1,200 Won per $= $1,300 per unit The transfer prices under each method are: a. Market price •China to South Korea = $450 per subunit •South Korea to U. S. Plant = $1,300 per unit b. 200% of full costs •China to South Korea 2. 0 ( ($125 + $225) = $700 per subunit •South Korea to U. S. Plant 2. 0 ( ($700 + $300 + $400) = $2,800 per unit c. 300% of variable costs •China to South Korea 3. 0 ( $125 = $375 per subunit •South Korea to U. S. Plant 3. 0 ( ($375 + $300) = $2,025 per unit 22-18 (Cont’d. ) |Method A |Method B |Method C | | |Internal |Internal |Internal | | |Transfers |Transfers |Transfers | | |at Market |at 200% of |at 300% of | | |Price |Full Costs |Variable Costs | | | | | | | | | | | | |1.

China Division | | | | | | | | | | |Division revenue per unit | |$ 450 | | |$ 700 | | |$ 375 | | |Deduct: | | | | | | | | | | |Division variable cost per unit | |125 | | |125 | | |125 | | |Division fixed cost per unit | |225 | | |225 | | |225 | | |Division operating income per unit | |100 | | |350 | | |25 | | |Income tax at 40% | |40 | | |140 | | |10 | | |Division net income per unit | |$ 60 | | |$ 210 | | |$ 15 | | | | | | | | | | | | | |2.

South Korea Division | | | | | | | | | | |Division revenue per unit | |$1,300 | | |$2,800 | | |$2,025 | | |Deduct: | | | | | | | | | | |Transferred-in cost per unit | |450 | | |700 | | |375 | | |Division variable cost per unit | |300 | | |300 | | |300 | | |Division fixed cost per unit | |400 | | |400 | | |400 | | |Division operating income per unit | |150 | | |1,400 | | |950 | | |Income tax at 20% | |30 | | |280 | | |190 | | |Division net income per unit | |$ 120 | | |$1,120 | | |$ 760 | | | | | | | | | | | | | |3.

United States Division | | | | | | | | | | |Division revenue per unit | |$3,200 | | |$3,200 | | |$3,200 | | |Deduct: | | | | | | | | | | |Transferred-in cost per unit | |1,300 | | |2,800 | | |2,025 | | |Division variable cost per unit | |100 | | |100 | | |100 | | |Division fixed cost per unit | |200 | | |200 | | |200 | | |Division operating income per unit | |1,600 | | |100 | | |875 | | |Income tax at 30% | |480 | | |30 | | |262. 5 | | |Division net income per unit | |$1,120 | | |$ 70 | | |$ 612. 5 | | 2. Division net income: |Market |200% of |300% of | | |Price |Full Costs |Variable Cost | | | | | | |China Division |$ 60 |$ 210 |$ 15. 00 | |South Korea Division |120 |1,120 |760. 00 | |U. S. Division |1,120 |70 |612. 50 | |User Friendly Computer Inc. |$1,300 |$1,400 |$1,387. 50 | 22-18 (Cont’d. ) User Friendly will maximize its net income by using the 200% of full costs, transfer-pricing method.

This is because the 200% of full cost method sources most income in the countries with the lower income tax rates. |22-18 Excel Application | | | |User Friendly Computer, Inc. | | | | | | | |Original Data | | | | | |U. S. $ per yuan |0. 125 | | |U. S. $ per won |0. 0083 | | | | | | |China Division | | | |Price per memory/keyboard package |3,600 |yuan | |Variable costs |1,000 |yuan | |Fixed costs |1,800 |yuan | |Income tax rate |40% | | | | | | |South Korea Division | | | |Price per computer |1,560,000 |won | |Variable costs |360,000 |won | |Fixed costs |480,000 |won | |Income tax rate |20% | | | | | | |U. S. Division | | | |Price per computer |$3,200 | | |Variable costs |$100 | | |Fixed costs |$200 | | |Income tax rate | 30% | | | | | | 22-18(Cont’d. ) Problem 1 | | | | | |Method A: |Method B: |Method C: | | |Internal |Internal |Internal | | |Transfers at |Transfers at |Transfers at | | |Market Price |200% of Full Costs |300% of Variable Costs | | | | | | | | | | | | | | | | |China Division | | | | |Division revenues per unit | $450 | $700 | $375 | |Deduct: | | | | |Division variable costs per unit | 125 | 125 | 125 | |Division fixed costs per unit | 225 | 225 | 225 | |Division operating income per unit | 100 | 350 | 25 | |Income tax | 40 | 140 | 10 | |Division net income per unit | $ 60 | $210 | $ 15 | | | | | | |South Korea Division | | | | |Division revenues per unit | $1,300 $2,800 | $2,025 | |Deduct: | | | | |Transferred in costs per unit |450 | 700 | 375 | |Division variable costs per unit | 300 | 300 | 300 | |Division fixed costs per unit | 400 | 400 | 400 | |Division operating income per unit | 150 | 1,400 | 950 | |Income tax | 30 | 280 | 190 | |Division net income per unit | $ 120 | $1,120 | $ 760 | | | | | | |United States Division | | | | |Division revenues per unit | $3,200 | $3,200 | $3,200 | |Deduct: | | | | |Transferred in costs per unit | 1,300 | 2,800 | 2,025 | |Division variable costs per unit | 100 | 100 | 100 | |Division fixed costs per unit | 200 | 200 | 200 | |Division operating income per unit | 1,600 | 100 | 875 | |Income tax | 480 | 30 | 262. 50 | |Division net income per unit | $1,120 | $ 70 | $612. 50 | | | | | | |Problem 2 | | | | | | | | |Division Net Income |Market Price |200% of Full Costs |300% of Variable | | | | |Costs | |China Divison | $60 | $210 | $15 | |South Korea Division | $120 | $1,120 | $760 | |U. S. Division | $1,120 | $70 | $612. 50 | |User Friendly Computer, Inc. | $1,300 | $1,400 | $1,387. 50 | | | | | | 22-19(30 min. ) Transfer-pricing methods, goal congruence. 1. Alternative 1: Sell as raw lumber for $200 per 100 board feet: Revenue$200

Variable costs 100 Contribution margin$100 per 100 board feet Alternative 2: Sell as finished lumber for $275 per 100 board feet: Revenue$275 Variable costs: Raw lumber$100 Finished lumber 125 225 Contribution margin$ 50 per 100 board feet British Columbia Lumber will maximize its total contribution margin by selling lumber in its raw form. An alternative approach is to examine the incremental revenues and incremental costs in the Finished Lumber Division: Incremental revenues, $275 – $200$ 75 Incremental costs 125 Incremental loss$ (50) per 100 board feet 2. Transfer price at 110% of variable costs: = $100 + ($100 ( 0. 10) = $110 per 100 board feet |Sell as Raw Lumber |Sell as Finished Lumber | |Raw Lumber Division | | | |Division revenues |$200 |$110 | |Division variable costs |100 |100 | |Division operating income |$100 |$ 10 | | | | | |Finished Lumber Division | | | |Division revenues |$ 0 |$275 | |Transferred-in costs |— |110 | |Division variable costs | |125 | |Division operating income |$ 0 |$ 40 | The Raw Lumber Division will maximize reported division operating income by selling raw lumber, which is the action preferred by the company as a whole. The Finished Lumber Division will maximize division operating income by selling finished lumber, which is contrary to the action preferred by the company as a whole. 22-19 (Cont’d. ) 3. Transfer price at market price = $200 per 100 board feet. |Sell as Raw Lumber |Sell as Finished Lumber | |Raw Lumber Division | | | |Division revenues |$200 |$200 | |Division variable costs |100 |100 | |Division operating income |$100 |$100 | | | | | |Finished Lumber Division | | | |Division revenues |$ 0 |$275 | |Transferred-in costs |— |200 | |Division variable costs |— |125 | |Division operating income |$ 0 |$ (50) | The Raw Lumber Division will maximize division operating income by selling raw lumber, which is the action preferred by the company as a whole.

Finished Lumber Division will maximize division operating income by not further processing raw lumber; not further processing is preferred by the company as a whole. 22-20 (30 min. ) Effect of alternative transfer-pricing methods on division operating income. | | |Internal Transfers at 110% of | | | |Internal Transfers at Market |Full Costs | | | |Prices Method A |Method B | | |1.

Mining Division | | | | |Revenues: | | | | |$90, $661 ? 400,000 units |$36,000,000 |$26,400,000 | | |Deduct: | | | | |Division variable costs: | | | | |$522 ? 00,000 units |20,800,000 |20,800,000 | | |Division fixed costs: | | | | |$83 ? 400,000 units |3,200,000 |3,200,000 | | |Division operating income |$12,000,000 |$ 2,400,000 | | | Metals Division | | | | |Revenues: | | | | |$150 ? 00,000 units |$60,000,000 |$60,000,000 | | |Deduct: | | | | |Transferred-in costs: | | | | |$90, $66 ? 400,000 units |36,000,000 |26,400,000 | | |Division variable costs: | | | | |$364 ? 400,000 units |14,400,000 |14,400,000 | | |Division fixed costs: | | | | |$155 ? 00,000 units |6,000,000 |6,000,000 | | |Division operating income |$ 3,600,000 |$13,200,000 | | 1$66 = $60 ? 110% 2Variable cost per unit in Mining Division = Direct materials + Direct manufacturing labor + 75% of Manufacturing overhead = $12 + $16 + 75% ? $32 = $52 3Fixed cost per unit = 25% of Manufacturing overhead = 25% ? $32 = $8 4Variable cost per unit in Metals Division = Direct materials + Direct manufacturing labor + 40% of Manufacturing overhead = $6 + $20 + 40% ? $25 = $36 5Fixed cost per unit in Metals Division = 60% of Manufacturing overhead = 60% ? $25 = $15 22-20 (Cont'd. ) 2. Bonus paid to division managers at 1% of division operating income will be as follows: | |Method B | | |Method A |Internal Transfers at 110% | | |Internal Transfers at Market |of Full Costs | | |Prices | | |Mining Division manager's bonus | | | |(1% ( $12,000,000; 1% ( $2,400,000) |$120,000 |$ 24,000 | |Metals Division manager's bonus | | | |(1% ( $3,600,000; 1% ( $13,200,000) |36,000 |132,000 | The Mining Division manager will prefer Method A (transfer at market prices) because this method gives $120,000 of bonus rather than $24,000 under Method B (transfers at 110% of full costs).

The Metals Division manager will prefer Method B because this method gives $132,000 of bonus rather than $36,000 under Method A. 3. Brian Jones, the manager of the Mining Division, will appeal to the existence of a competitive market to price transfers at market prices. Using market prices for transfers in these conditions leads to goal congruence. Division managers acting in their own best interests make decisions that are also in the best interests of the company as a whole. Jones will further argue that setting transfer prices based on cost will cause Jones to pay no attention to controlling costs since all costs incurred will be recovered from the Metals Division at 110% of full costs. 22-21(30 min. )Transfer pricing, general guideline, goal congruence. . Using the general guideline presented in the chapter, the minimum price at which the Airbag Division would sell airbags to the Igo Division is $110, the incremental costs. The Airbag Division has idle capacity (it is currently working at 80% of capacity). Hence, its opportunity cost is zero—the Airbag Division does not forgo any external sales and, hence, does not forgo any contribution margin from internal transfers. Transferring airbags at incremental cost achieves goal congruence. 2. Transferring products internally at incremental cost has the following properties. a. Achieves goal congruence—Yes, as described in requirement 1 above. b.

Useful for evaluating subunit performance—No, because transfer price does not exceed full costs. By transferring at incremental costs and not covering fixed costs, the Airbag Division will show a loss. This loss, the result of the incremental cost-based transfer price, is not a good measure of the economic performance of the subunit. 22-21 (Cont'd. ) c. Motivating management effort—Yes, if based on budgeted costs (actual costs can then be compared to budgeted costs). If, however, transfers are based on actual costs, Airbag Division management has little incentive to control costs. d. Preserves subunit autonomy—No. Because it is rule-based, the Airbag Division has no say in and, hence, no ability to set the transfer price. 3.

If the two divisions were to negotiate a transfer price, the range of possible transfer prices will be between $110 and $140 per unit. The Airbag Division has excess capacity that it can use to supply airbags to the Igo Division. The Airbag Division will be willing to supply the airbags only if the transfer price equals or exceeds $110, its incremental costs of manufacturing the airbags. The Igo Division will be willing to buy airbags from the Airbag Division only if the price does not exceed $140 per airbag, the price at which the Igo division can buy airbags in the market from outside suppliers. Within the price range or $110 and $140, each division will be willing to transact with the other and maximize overall income of Nogo Motors.

The exact transfer price between $110 and $140 will depend on the bargaining strengths of the two divisions. The negotiated transfer price has the following properties. a. Achieves goal congruence—Yes, as described above. b. Useful for evaluating subunit performance—Yes, because the transfer price is the result of direct negotiations between the two divisions. Of course, the transfer prices will be affected by the bargaining strengths of the two divisions. c. Motivating management effort—Yes, because once negotiated, the transfer price is independent of actual costs of the Airbag Division. Airbag Division management has every incentive to manage efficiently to improve profits. d.

Preserves subunit autonomy—Yes, because the transfer price is based on direct negotiations between the two divisions and is not specified by headquarters on the basis of some rule (for example, Airbag Division incremental costs). 4. Neither method is perfect, but negotiated transfer pricing (described in requirement 3) has more favorable properties than the cost-based transfer pricing (described in requirement 2). Both transfer-pricing methods achieve goal congruence, but negotiated transfer pricing facilitates the evaluation of subunit performance, motivates management effort, and preserves subunit autonomy, whereas the transfer price based on incremental costs does not achieve these objectives. 22-22(25 min. ) General guideline, transfer price range. 1.

If the Screen Division sells screens in the outside market, it will receive, for each screen, the market price of the screen minus variable marketing and distribution costs per screen = $110 – $4 = $106. The incremental cost of manufacturing each screen is $70. The Screen Division is operating at capacity. Hence, the opportunity cost per screen of selling the screen to the Assembly Division rather than in the outside market is the contribution margin the Screen Division would forgo if it transferred screens internally rather than sold them in the outside market. Contribution margin per screen = $106 – $70 = $36. Using the general guideline, [pic]=[pic] That is, Minimum transfer price per screen = $70 + $36 = $106 2.

If the two division managers were to negotiate a transfer price, the range of possible transfer prices is between $106 and $112 per screen. As calculated in requirement 1, the Screen Division will be willing to supply screens to the Assembly Division only if the transfer price equals or exceeds $106 per screen. If the Assembly Division were to purchase the screens in the outside market, it will incur a cost of $112, the cost of the screen equal to $110 plus variable purchasing costs of $2 per screen. Hence, the Assembly Division will be willing to buy screens from the Screen Division only if the price does not exceed $112 per screen. Within the price range of $106 and $112 per screen, each division will be willing to transact with the other.

The exact transfer price between $106 and $112 will depend on the bargaining strengths of the two divisions. 23. (25 min. ) Multinational transfer pricing, global tax minimization. 1. Solution Exhibit 22-23 shows the after-tax operating incomes earned by the U. S. and Austrian divisions from transferring 1,000 units of Product 4A36 using (a) full manufacturing cost per unit, and (b) market price of comparable imports as transfer prices. 2. There are many ways to proceed, but the first thing to note is that the transfer price that minimizes the total of company import duties and income taxes will be either the full manufacturing cost or the market price of comparable imports.

Consider what happens every time the transfer price is increased by $1 over, say, the full manufacturing cost of $500. This results in the following a. an increase in U. S. taxes of 40% ? $1$0. 400 b. an increase in import duties paid in Austria, 10% ? $10. 100 c. a decrease in Austrian taxes of 44% ? $1. 10 (the $1 increase in transfer price + $0. 10 paid by way of import duty) (0. 484) Net effect is an increase in import duty and tax payments of$0. 016 Hence, Mornay Company will minimize import duties and income taxes by setting the transfer price at its minimum level of $500, the full manufacturing cost. 22-23 (Cont’d. ) Solution Exhibit 22-23

Division Incomes of U. S. and Austrian Divisions from Transferring 1,000 Units of Product 4A36 | | |Method A: | | | | | |Internal Transfers |Method B: | | | | |at Full Manufacturing Cost|Internal Transfers | | | | | |at Market Price | | |U. S.

Division | | | | | |Revenues: | | | | | |$500, $650 ? 1,000 units | |$500,000 |$650,000 | | |Deduct: | | | | | |Full manufacturing cost: | | | | | |$500 ? ,000 units | |500,000 |500,000 | | |Division operating income | |0 |150,000 | | |Division income taxes at 40% | |0 |60,000 | | |Division after-tax operating income | |$ 0 |$ 90,000 | | | | | | | | |Austrian Division | | | | | |Revenues: | | | | | |$750 ? ,000 units | |$750,000 |$750,000 | | |Deduct: | | | | | |Transferred-in costs: | | | | | |$500 ? 1,000, $650 ? 1,000 units | |500,000 |650,000 | | |Import duties at 10% of transferred-in price | | | | | |$50 ? 1,000, $65 ? ,000 units | |50,000 |65,000 | | |Division operating income | |200,000 |35,000 | | |Division income taxes at 44% | |88,000 |15,400 | | |Division after-tax operating income | |$112,000 |$ 19,600 | | 22-24 (30 min. ) Multinational transfer pricing, goal congruence (continuation of 22-23). 1. After-tax operating income if Mornay Company sold all 1,000 units of Product 4A36 in the United States is Revenues, $600 ? 1,000 units$600,000 Full manufacturing costs, $500 ? 1,000 units 500,000 Operating income100,000 Income taxes at 40% 40,000 After-tax operating income$ 60,000 From Exercise 22-23, requirement 1, Mornay Company's after-tax operating ncome if it transfers 1,000 units of Product 4A36 to Austria at full manufacturing cost and sells the units in Austria is $112,000. Therefore, Mornay should sell the 1,000 units in Austria. 2. Transferring Product 4A36 at the full manufacturing cost of the U. S. Division minimizes import duties and taxes (Exercise 22-23, requirement 2), but creates zero operating income for the U. S Division. Acting autonomously, the U. S. Division manager would maximize division operating income by selling Product 4A36 in the U. S. market, which results in $60,000 in after-tax division operating income as calculated in requirement 1, rather than by transferring Product 4A36 to the Austrian division at full manufacturing cost.

Hence, the transfer price calculated in requirement 2 of Exercise 22-23 will not result in actions that are optimal for Mornay Company as a whole. 3. The minimum transfer price at which the U. S. division manager acting autonomously will agree to transfer Product 4A36 to the Austrian division is $600 per unit. Any transfer price less than $600 will leave the U. S. Division's performance worse than selling directly in the U. S. market. Because the U. S. Division can sell as many units that it makes of Product 4A36 in the U. S. market, there is an opportunity cost of transferring the product internally equal to $250 (selling price $600 ( variable manufacturing costs, $350). [pic]=[pic] =$350 + $250 = $600

This transfer price will result in Mornay Company as a whole paying more import duties and taxes than the answer to Exercise 22-23, requirement 2, as calculated below: U. S. Division Revenues, $600 ? 1,000 units$600,000 Full manufacturing costs 500,000 Division operating income100,000 Division income taxes at 40% 40,000 Division after-tax operating income$ 60,000 22-24 (Cont’d. ) Austrian Division Revenues, $750 ? 1,000 units`$750,000 Transferred in costs, $600 ? 1,000 units600,000 Import duties at 10% of transferred-in price, $60 ? 1,000 units 60,000 Division operating income90,000 Division income taxes at 44% 39,600 Division after-tax operating income$ 50,400 Total import duties and income taxes at transfer prices of $500 and $600 per unit for 1,000 units of Product 4A36 follow: |Transfer Price of | | | |$500 per Unit | | | |(Exercise 22-23, |Transfer Price of | | |Requirement 2) |$600 per Unit | |(a) U. S. income taxes |$ 0 |$ 40,000 | |(b) Austrian import duties |50,000 |60,000 | |(c) Austrian income taxes |88,000 |39,600 | | |$138,000 |$139,600 | The minimum transfer price that the U. S. ivision manager acting autonomously would agree to results in Mornay Company paying $1,600 in additional import duties and income taxes. A student who has done the calculations shown in Exercise 22-23, requirement 2, can calculate the additional taxes from a $600 transfer price more directly, as follows: Every $1 increase in the transfer price per unit over $500 results in additional import duty and taxes of $0. 016 per unit So, a $100 increase ($600 – $500) per unit will result in additional import duty and taxes of $0. 016 ? 100 = $1. 60 For 1,000 units transferred, this equals $1. 60 ? 1,000 = $1,600 22-25(20 min. )Transfer-pricing dispute.

This problem is similar to the Problem for Self-Study in the chapter. 1. Company as a whole will not benefit if Division C buys on the outside market: Purchase costs from outsider, 1,000 units ? $135 $135,000 Deduct: Savings in variable costs by reducing Division A output, 1,000 units ? $120 120,000 Net cost (benefit) to company as a whole by buying from outside$ 15,000 Any transfer price between $120 to $135 per unit will achieve goal congruence. Division managers acting in their own best interests will take actions that are in the best interests of the company as a whole. 2. Company will benefit if C purchases from the outsider supplier: Purchase costs from outsider, 1,000 units ? 135 $135,000 Deduct: Savings in variable costs, 1,000 units ? $120$120,000 Savings due to A's equipment and facilities assigned to other operations 18,000 138,000 Net cost (benefit) to company as a whole by buying from outside $ (3,000) Division C should purchase from outside suppliers. 3. Company will benefit if C purchases from the outside supplier: Purchase costs from outsider, 1,000 units ? $115 $115,000 Deduct: Savings in variable costs by reducing Division A output, 1,000 units ? $120 120,000 Net cost (benefit) to company as a whole by buying from outside$ (5,000) The three requirements are summarized below (in thousands): |(1) |(2) |(3) | |Total purchase costs from outsider |$135 |$135 |$115 | |Total relevant costs if purchased from Division A | | | | |Total incremental (outlay) costs if purchased from A |120 |120 |120 | |Total opportunity costs if purchased from A |– |18 |– | |Total relevant costs if purchased from A |120 |138 |120 | |Operating income advantage (disadvantage) to | | | | |company as a whole by buying from A |$ 15 |$ (3) |$ (5) | Goal congruence would be achieved if the transfer price is set equal to the total relevant costs of purchasing from Division A. 22-26(5 min. ) Transfer-pricing problem (continuation of 22-25). The company as a whole would benefit in this situation if C purchased from outside suppliers. The $15,000 disadvantage to the company as a whole by purchasing from the outside supplier would be more than offset by the $30,000 contribution margin of A's sale of 1,000 units to other customers.

Purchase costs from outside supplier, 1,000 units ? $135$135,000 Deduct variable cost savings, 1,000 units ? $120 120,000 Net cost to company as a whole by buying units from outside$ 15,000 A's sales to other customers, 1,000 units ? $155$155,000 Deduct: Variable manufacturing costs, $120 ? 1,000 units $120,000 Variable marketing costs, $5 ? 1,000 units 5,000 Total variable costs 125,000 Contribution margin from selling units to other customers$ 30,000 22-27(20–30 min. ) Pertinent transfer price. This problem explores the "general transfer-pricing guideline" discussed in the chapter. 1. No, transfers should not be made to Division B if there is no excess capacity in Division A.

An incremental (outlay) cost approach shows a positive contribution for the company as a whole. Selling price of final product$300 Incremental costs in Division A$120 Incremental costs in Division B 150 270 Contribution$ 30 However, if there is no excess capacity in Division A, any transfer will result in diverting products from the market for the intermediate product. Sales in this market result in a greater contribution for the company as a whole. Division B should not assemble the bicycle since the incremental revenue Europa can earn, $100 per unit ($300 from selling the final product – $200 from selling the intermediate product) is less than the incremental costs of $150 to assemble the bicycle in Division B. Alternatively put,

Europa’s contribution margin from selling the intermediate product exceeds Europa’s contribution margin from selling the final product. Selling price of intermediate product$200 Incrementral (outlay) costs in Division A 120 Contribution$ 80 The general guideline described in the chapter is =+ =$120 + ($200 – $120) =$200, which is the market price 22-27 (Cont’d. ) The market price is the transfer price that leads to the correct decision; that is, do not transfer to Division B unless there are extenuating circumstances for continuing to market the final product. Therefore, B must either drop the product or reduce the incremental costs of assembly from $150 per bicycle to less than $100. 2.

If (a) A has excess capacity, (b) there is intermediate external demand for only 800 units at $200, and (c) the $200 price is to be maintained, then the opportunity costs per unit to the supplying division are $0. The general guideline indicates a minimum transfer price of: $120 + $0 = $120, which is the incremental or outlay costs for the first 200 units. B would buy 200 units from A at a transfer price of $120 because B can earn a contribution of $30 per unit [$300 – ($120 + $150)]. In fact, B would be willing to buy units from A at any price up to $150 per unit because any transfers at a price of up to $150 will still yield B a positive contribution margin.

Note, however, that if B wants more than 200 units, the minimum transfer price will be $200 as computed in requirement 1 because A will incur an opportunity cost in the form of lost contribution of $80 (market price, $200 – outlay costs of $120) for every unit above 200 units that are transferred to B. The following schedule summarizes the transfer prices for units transferred from A to B. Units Transfer Price 0–200$120–$150 200–1,000$200 For an exploration of this situation when imperfect markets exist, see the next problem. 3. Division B would show zero contribution, but the company as a whole would generate a contribution of $30 per unit on the 200 units transferred. Any price between $120 and $150 would induce the transfer that would be desirable for the company as a whole.

A motivational problem may arise regarding how to split the $30 contribution between Division A and B. Unless the price is below $150, B would have little incentive to buy. Note: The transfer price that may appear optimal in an economic analysis may, in fact, be totally unacceptable from the viewpoints of (1) preserving autonomy of the managers, and (2) evaluating the performance of the divisions as economic units. For instance, consider the simplest case discussed previously, where there is idle capacity and the $200 intermediate price is to be maintained. To direct that A should sell to B at A's variable cost of $120 may be desirable from the viewpoint of B and the company as a whole.

However, the autonomy (independence) of the manager of A is eroded. Division A will earn nothing, although it could argue that it is contributing to the earning of income on the final product. If the manager of A wants a portion of the total company contribution of $30 per unit, the question is: How is an appropriate amount determined? This is a difficult question in practice. The price can be negotiated upward to somewhere between $120 and $150 so that some "equitable" split is achieved. A dual transfer-pricing scheme has also been suggested, whereby the supplier gets credit for the full intermediate market price and the buyer is charged with only 22-27 (Cont’d. ) variable or incremental costs.

In any event, when there is heavy interdependence between divisions, such as in this case, some system of subsidies may be needed to deal with the three problems of goal congruence, management effort, and subunit autonomy. Of course, where heavy subsidies are needed, a question can be raised as to whether the existing degree of decentralization is optimal. 22-28 (30–40 min. ) Pricing in imperfect markets (continuation of 22-27). An alternative presentation, which contains the same numerical answers, can be found at the end of this solution. 1. Potential contribution from external intermediate sale is 1,000 ( ($195 – $120)$75,000 Contribution through keeping price at $200 is 800 ( $80. 64,000 Forgone contribution by transferring 200 units$11,000 Opportunity cost per unit to the supplying division by transferring internally: pic] = $55 Transfer price = $120 + $55 = $175 An alternative approach to obtaining the same answer is to recognize that the incremental or outlay cost is the same for all 1,000 units in question. Therefore, the total revenue desired by A would be the same for selling outside or inside. Let X equal the transfer price at which Division A is indifferent between selling all units outside versus transferring 200 units inside. 1,000 ( $195 = (800 ( $200) + 200X X = $175 The $175 price will lead to the correct decision. Division B will not buy from Division A because its total costs of $175 + $150 will exceed its prospective selling price of $300.

Division A will then sell 1,000 units at $195 to the outside; Division A and the company will have a contribution margin of $75,000. Otherwise, if 800 units were sold at $200 and 200 units were transferred to Division B, the company would have a contribution of $64,000 plus $6,000 (200 units of final product ( $30), or $70,000. A comparison might be drawn regarding the computation of the appropriate transfer prices between the preceding problem and this problem: 22-28 (Cont’d. ) = + Perfect markets:= $120 + (Selling price – Outlay costs per unit) = $120 + ($200 – $120) = $200 Imperfect markets:= $120 + = $120 + [pic]= $175 aMarginal revenues of Division A from selling 200 units outside rather than transferring to Division B ($195 ? 1,000) – ($200 ? 800) = $195,000 – $160,000 = $35,000. bIncremental (outlay) costs incurred by Division A to produce 200 units = $120 ? 200 = $24,000. Therefore, selling price ($195) and marginal revenues per unit ($175 = $35,000 ? 200) are not the same. The following discussion is optional. These points should be explored only if there is sufficient class time: Some students will erroneously say that the "new" market price of $195 is the appropriate transfer price. They will claim that the general guideline says that the transfer price should be $120 + ($195 – $120) = $195, the market price. This conclusion assumes a perfect market.

But, here, there are imperfections in the intermediate market. That is, the market price is not a good approximation of alternative revenue. If a division's sales are heavy enough to reduce market prices, marginal revenue will be less than market price. It is true that either $195 or $175 will lead to the correct decision by B in this case. But suppose that B's variable costs were $120 instead of $150. Then B would buy at a transfer price of $175 (but not at a price of $195, because then B would earn a negative contribution of $15 per unit [$300 – ($195 + $120)]. Note that if B's variable costs were $120, transfers would be desirable: Division A contribution is: 00 ( ($200 – $120) + 200 ($175 – $120)= $75,000 Division B contribution is: 200 ( [$300 – ($175 + $120)]= 1,000 Total contribution$76,000 22-28 (Cont’d. ) Or the same facts can be analyzed for the company as a whole: Sales of intermediate product, 800 ( ($200 – $120)=$64,000 Sales of final products, 200 ( [300 – ($120 + $120)]= 12,000 Total contribution$76,000 If the transfer price were $195, B would not accept the transfer and would not earn any contribution. As shown above, Division A and the company as a whole will earn a total contribution of $75,000 instead of $76,000. 2. a. Division A can sell 900 units at $195 to the outside market and 100 nits to Division B, or 800 at $200 to the outside market and 200 units to Division B. Note that, under both alternatives, 100 units can be transferred to Division B at no opportunity cost to A. Using the general guideline, the minimum transfer price of the first 100 units [901–1000] is: TP1 = $120 + 0 = $120 If Division B needs 100 additional units, the opportunity cost to A is not zero, because Division A will then have to sell only 800 units to the outside market for a contribution of 800 ( ($200 – $120) = $64,000 instead of 900 units for a contribution of 900 ( ($195 – $120) = $67,500. Each unit sold to B in addition to the first 100 units has an opportunity cost to A of ($67,500 – $64,000) ? 00 = $35. Using the general guideline, the minimum transfer price of the next 100 units [801–900] is: TP2 = $120 + $35 = $155 Alternatively, the computation could be: Increase in contribution from 100 more units, 100 ( $75$7,500 Loss in contribution on 800 units, 800 ( ($80 ( $75) 4,000 Net "marginal revenue"$3,500 ? 100 units = $35 (Minimum) transfer price applicable to first 100 units offered by A is $120 + $0 = $120 per unit (Minimum) transfer price applicable to next 100

Air Conditioning Systems An air conditioning, or HVAC&R, system is composed of components and equipment arranged in sequence to condition the air, to transport it to the conditioned space, and to control the indoor environmental parameters of a specific space within required limits. Most air conditioning systems perform the following functions: 1. Provide the cooling and heating energy required 2. Condition the supply air, that is, heat or cool, humidify or dehumidify, clean and purify, and attenuate any objectionable noise produced by the HVAC&R equipment 3.

Distribute the conditioned air, containing sufficient outdoor air, to the conditioned space 4. Control and maintain the indoor environmental parameters–such as temperature, humidity, cleanliness, air movement, sound level, and pressure differential between the conditioned space and surroundings—within predetermined limits Parameters such as the size and the occupancy of the conditioned space, the indoor environmental parameters to be controlled, the quality and the effectiveness of control, and the cost involved determine the various types and arrangements of components used to provide appropriate characteristics.

Air conditioning systems can be classified according to their applications as (1) comfort air conditioning systems and (2) process air conditioning systems. Comfort Air Conditioning Systems Comfort air conditioning systems provide occupants with a comfortable and healthy indoor environment in which to carry out their activities. The various sectors of the economy using comfort air conditioning systems are as follows: 1. The commercial sector includes office buildings, supermarkets, department stores, shopping centers, restaurants, and others.

Many high-rise office buildings, including such structures as the World Trade Center in New York City and the Sears Tower in Chicago, use complicated air conditioning systems to satisfy multiple-tenant requirements. In light commercial buildings, the air conditioning system serves the conditioned space of only a single-zone or comparatively smaller area. For shopping malls and restaurants, air conditioning is necessary to attract customers. 2. The institutional sector includes such applications as schools, colleges, universities, libraries, museums, indoor stadiums, cinemas, theaters, concert halls, and recreation centers.

For example, one of the large indoor stadiums, the Superdome in New Orleans, Louisiana, can seat 78,000 people. 3. The residential and lodging sector consists of hotels, motels, apartment houses, and private homes. Many systems serving the lodging industry and apartment houses are operated continuously, on a 24-hour, 7-day-a-week schedule, since they can be occupied at any time. 4. The health care sector encompasses hospitals, nursing homes, and convalescent care facilities.

Special air filters are generally used in hospitals to remove bacteria and particulates of submicrometer size from areas such as operating rooms, nurseries, and intensive care units. The relative humidity in a general clinical area is often maintained at a minimum of 30 percent in winter. 5. The transportation sector includes aircraft, automobiles, railroad cars, buses, and cruising ships. Passengers increasingly demand ease and environmental comfort, especially for longdistance travel. Modern airplanes flying at high altitudes may require a pressure differential of about 5 psi between the cabin and the outside atmosphere.

According to the Commercial Buildings Characteristics (1994), in 1992 in the United States, among 4,806,000 commercial buildings having 67. 876 billion ft2 (6. 31 billion m2) of floor area, 84. 0 percent were cooled, and 91. 3 percent were heated. Process Air Conditioning Systems Process air conditioning systems provide needed indoor environmental control for manufacturing, product storage, or other research and development processes. The following areas are examples of process air conditioning systems: 1. In textile mills, natural fibers and manufactured fibers are hygroscopic.

Proper control of humidity increases the strength of the yarn and fabric during processing. For many textile manufacturing processes, too high a value for the space relative humidity can cause problems in the spinning process. On the other hand, a lower relative humidity may induce static electricity that is harmful for the production processes. 2. Many electronic products require clean rooms for manufacturing such things as integrated circuits, since their quality is adversely affected by airborne particles. Relative-humidity control is also needed to prevent corrosion and condensation and to eliminate static electricity.

Temperature control maintains materials and instruments at stable condition and is also required for workers who wear dust-free garments. For example, a class 100 clean room in an electronic factory requires a temperature of 72  2°F (22. 2  1. 1°C), a relative humidity at 45  5 percent, and a count of dust particles of 0. 5-m (1. 97  105 in. ) diameter or larger not to exceed 100 particles/ ft3 (3531 particles /m3). 3. Precision manufacturers always need precise temperature control during production of precision instruments, tools, and equipment.

Bausch and Lomb successfully constructed a constanttemperature control room of 68  0. 1°F (20  0. 56°C) to produce light grating products in the 1950s. 4. Pharmaceutical products require temperature, humidity, and air cleanliness control. For instance, liver extracts require a temperature of 75°F (23. 9°C) and a relative humidity of 35 percent. If the temperature exceeds 80°F (26. 7°C), the extracts tend to deteriorate. High-efficiency air filters must be installed for most of the areas in pharmaceutical factories to prevent contamination. . Modern refrigerated warehouses not only store commodities in coolers at temperatures of 27 to 32°F (2. 8 to 0°C) and frozen foods at 10 to 20°F (23 to 29°C), but also provide relative-humidity control for perishable foods between 90 and 100 percent. Refrigerated storage is used to prevent deterioration. Temperature control can be performed by refrigeration systems only, but the simultaneous control of both temperature and relative humidity in the space can only be performed by process air conditioning systems.

[pic] Enterprise and Social Responsibility Academic Year 2010/2011 Question 1. 1 Identify each of the stakeholders and how they are affected. What are the main harms and benefits in this case for the different stakeholders based on the current situation? Stakeholders |Harm |Benefits | | | | | | | | | | | | | British Gas, better known as BG T&T is an established company in Trinidad and Tobago.

This company supplies natural gas for domestic use and also liquefaction and export. In addition, BG T&T is a significant shareholder in the Atlantic LNG plant in Point Fortin, Trinidad, and has recently acquired the central block upstream operations on land. BG Trinidad & Tobago (BG T&T) has been operating in the region since 1989. It is operator (? ) and has 50 per cent equity in the Dolphin field, off the east coast of Trinidad. The field supplies up to 264 million standard cubic feet of gas per day to the National Gas Company of Trinidad and Tobago under a 20-year supply contract.

A development plan for the ‘Dolphin Deep' and ‘Starfish' fields in the East Coast Marine Area has been submitted to the Government of Trinidad & Tobago. 1. 1 SOCIAL ISSUES Of great importance to the gas exploration and development activities are the impacts on the social, economic and Is this Essay helpful? Join OPPapers to read more and access more than 250,000 just like it! GET BETTER GRADES environment. BG, therefore has an obligation to recognize and manage the potential impact of their industry on national and local communities, on economies and the environment in which they operate.

British Gas believes that their business activities can create economic opportunities and benefits to enhance the quality of life for both their employees and the communities in which they operate. Therefore, BG has put into place a policy defined as Corporate Responsibilities to manage its' role in society in a responsible way. There has been pressure for a mandatory system of corporate reporting by Non-Governmental Organizations and the politicians who have recognized the value of corporate responsibilities.

There was a risk that mandatory approach would suppress innovation and impose unnecessary burdens with the natural result of cost increase on data collection. However, the expected requirement that social, material and environmental risk must be reported publicly was an efficient way to... Summary BP is one of the largest companies in the world - with a turnover dwarfing that of some nation states. As an oil company, it is directly linked with the use of fossil fuels linked with major environmental challenges on a global scale.

No company has achieved a higher profile in its stated determination to completely re-orientate the business to adapt to the needs of a more sustainable society. With its major - and controversial - rebranding and commitment to becoming a sustainable energy company rather than simply an oil company - it has inspired and impressed some, and irritated others. During his time in charge, Lord John Browne established himself as one of the most thoughtful business leaders taking a lead in corporate social responsibility.

This was, however, a position that became tarnished at the end when a series of major accidents hit the company as a result of safety and maintenance failures. BP the company BP is one of the world's leading oil companies on the basis of market capitalisation and proven reserves. Its main businesses are Exploration and Production, Refining and Marketing, and Chemicals. Exploration and Production's activities include oil and natural gas exploration and field development and production, together with pipeline transportation, natural gas processing and gas and power marketing.

The activities of Refining and Marketing include oil supply and trading as well as refining and marketing. Chemicals activities include petrochemicals manufacturing and marketing. In addition, the Company has a solar energy business which is one of the world's largest manufacturers of photovoltaic modules and systems. What are the issues? There are very few aspects of how a company behaves as a corporate citizen that do not apply to a company of the size and nature of BP.

The most significant of these are the sheer environmental impact - not simply of the extraction of oil and the energy use of BP's own operation, but more significantly of the impact on climate change of the actual use of all the oil by BP's customers. The state of current scientific evidence raises serious question marks over whether or not human society can actually afford to burn all the hydrocarbons whose existence we have already identified - never mind potential future discoveries. Twenty years ago, people worried that one day the oil would run out.

Now, it is the case that the real issue has been identified as one of emissions. A company with such extensive operations in developing countries also needs to carefully manage its approach to human rights, and ethical business practices. BP will have significant impact on local communities - both as a huge employer and through the nature of its on-the-ground operations. It should expect to seriously seek to reduce negative impacts here, and to invest seriously in those communities. BP as a global player, is immensely powerful.

It has no democratic legitimacy, but often is better able to lead on the social development of the planet than national governments. This is a dilemma it needs to handle carefully. What do the critics say? BP's move towards positioning itself as a sustainable energy company has been the proverbial red rag to a bull for some. They point out that BP's claim to be a global leader in producing the cleanest burning fossil fuel (natural gas) is an incremental improvement over oil at best, and a distraction from getting away from fossil fuels at worst.

BP, they claim, has co-opted the language of the environmentalists without the real commitment to deliver. Campaigners named BP as one of the "top ten worst corporations" in 2006 following the Prudhoe Bay oil spill. They say that since branding itself an environmentally sound corporation with the "Beyond Petroleum" tagline in 1997, BP has been hit with a number of fines for major pollution incidents. What does BP say? BP states that it recognises the significant environmental and social challenges faced by the world in the 21st century.

It believes it can, and should, play a part in addressing and resolving many of the issues associated with sustainable development. It also accepts that while the company can be part of the solution, it cannot and should not be the whole solution. Governments, companies and civil society must fins effective ways of working together. Alongside the standard financial figures, BP reports its own greenhouse gas and other emissions, oil spillages, employee satisfaction, days lost through injury at work, and community investment across the world. BP's policy statement commits the company to ambitious and wide-ranging business principles.

The company's reporting seeks to illustrate how the company is meeting these commitments in a manner that supports the profitability of the business. In his final introduction to a BP social responsibility report, Lord Browne said: "The past two years have been difficult for BP. In March 2005, at the Texas City refinery, we suffered a tragedy in which 15 people died and many more were seriously injured. We have also experienced operational difficulties in Alaska and the potentially destabilizing effects of intense and at times unbalanced media scrutiny and criticism. Given that context, the achievements recorded in this document, our sixteenth annual report on non-financial performance, are remarkable and a great testimony to the BP team across the world: • an improvement in personal safety, with reported recordable injury frequency the lowest in our recorded history • ongoing improvements in our environmental impact across a series of measures • an improvement in the development of people, including an increase in the number of women in leadership since 2000 • and, of course, a strong financial performance allowing us to invest for the future and to reward those who trust us with their savings" Find out for yourself BP's site dealing with environment and society issues. Go ;; The Wikipedia entry for BP (at the time of writing, a bit of an ideological battlground between the different opinions) Go ;; The alternative case from one of the company's key critics, Sourcewatch. Go >> 1. www. psiru. org/reports/2002-07-E-UKSustainReforms. doc 2. http://www. pc-freak. net/files/university/Business_Ethics-DeepWater-Horizon_final. pdf

Name:Andrew Grainger Course:PTLLS Tuesday Night Tutor:Roberta Hall Theory Task 5 (Level 4) – Explain ways to embed elements of Functional Skills in your specialist area. Functional Skills are commonly referred to as the core skills in English, Maths and ICT. Developed to replace Key Skills, Functional Skills are seen as being vital in helping students gain useful, transferable skills in Maths, English and IT which will help prepare them for employment or further learning.

Functional Skills can be delivered as a ‘stand alone’ qualification, or as part of (or along side) other academic or vocational qualifications such Modern Apprenticeships or Diplomas. The delivery methods for functional skills can vary between colleges, schools and training providers – there is no right or wrong way to deliver them, but each method can have its advantages and disadvantages. The main methods are: • Discrete. This is where functional skills are delivered separately from the students other subjects, usually by a dedicated team of functional skills tutors. Advantages: |Disadvantages: | |Easier to track learners progress |Learners do not see the relevance of functional skills to their| | |learning | |Dedicated functional skills tutor/s |Learning may lack context with subject area | | |Can have poor attendance – students do not see the importance | | |of functional skills | • Embedded. This is where functional skills are taught by tutors within the students usual study programme using opportunities within that study for functional skills. Wilson (2008:45) defines this well: ‘Embedding means that functional skills are taught within the main subject topic in a seamless way. ’ |Advantages: |Disadvantages: | |Learners see the relevance of functional skills as it is part |More difficult to track progress | |of their chosen subject areas. | |Attendance no problem – part of usual study classes |If student is doing more than one subject functional skills may| | |be repeated | |Do not have to timetable extra lessons in |Tutors may not be experts in functional skills and be | | |uncomfortable with their delivery | |Due to relevance and attendance achievements generally higher | | |No need to ‘contextualize’ functional skills as they are part | | |of regular study pattern | | There can also be a mixture of the two methods, with functional skills taught by specialists within the context of the learners usual study programme in conjunction with other subject tutors. This is usually referred to as partly embedding. Wilson (2008:45) and Scales (2008:255) both agree that embedding functional skills is the favorable way from a learners perspective and also that integrating functional skills into the subject areas needn’t be difficult given a little planning and thought: ‘(The skills) are best acquired when embedded. There are so many instances when embedding is natural and easy’. (Scales) Wilson argues that every teaching and learning activity has the potential for embedding functional skills and uses an example of a catering student to demonstrate this: ‘A catering student baking a cake will have to: • Read the recipe • Calculate the time the task will take • Measure the ingredients • Talk to the teacher • Talk to other learners • Solve problems’ The student above has carried out their normal curriculum activity, but has used skills which can be measured against functional skills. Functional skills can be embedded in most vocational areas in this way, thus putting them into context and removing the fear of ‘doing’ Maths and English.

In my role as a Key/ Functional Skills Tutor working with Electricians I do not deliver the main aspect of students learning (Technical Certificate, done elsewhere), and so cannot embed their Maths and English as in the examples above. I have therefore had to develop ways of delivery which contextualize the subjects for the students. This is a case of discrete delivery of Maths, English and ICT, but using the students subject area to keep it as real and relevant to them as possible. In Maths for example the students are given a plan of a house and a customer specification and are required to put a quote together for the work. This involves: • Estimating cable runs • Working out floor areas • Calculating time and labour costs • Calculating a percentage profit mark up • Pricing materials and working out a total cost etc. etc.

Similar strategies are used for English - for example producing a report on electrical safety or ‘Part P’ and writing to a customer with a quotation for the job, and also ICT – preparing a business letterhead in Word for example. In conclusion it is generally agreed that the delivery of functional skills is best for the learner when embedded, however if this is not possible (as with myself) we need to be creative in keeping the delivery as real and in context as possible to keep them relevant and interesting to the learner. This in turn leads to higher attendance and achievement rates which is the desired outcome. Word Count: 782 References: Scales P (2008) Teaching in the Lifelong Learning Sector 2nd edition, Open University Press Wilson, L (2008) Practical Teaching, Melody Dawes http://www. qcda. gov. uk/qualifications/functional-skills

Not your average bedtime story The Arabian Nights is a book with no author its tales immerge from the trade routes and centers of the Middle East. A thousand nights and a night refers to one story that is wrapped around others and is an assembly of wonder, tales of magic, mysticism, eroticism and comedy. It’s a book of dark tales and ruthless men in ancient times. Women were not valued only punished if they did wrong to their men. The very beginning of this web of tales starts with King Shahryar sends for his younger brother Shah Zaman and, Scheherazade, King Shahryar’s wife, she tells stories just to stay alive.

These tales are about lust and the fear of betrayal, power, love, and are full of angles and cliff hangers. This is not something you read to children instead of Cinderella or Beauty and the Beast, so in reading the two tales that follow, this lovely and educated woman tells of The Fisherman and the Jinni and The Ensorcelled Prince revealing more than the reader expects. Islamic values appear throughout the readings of The Arabian Nights. Before Shaha Zaman’s departure to his brother’s palace he returns to his chambers to find that his queen has committed adultery with a “blackamoor” and was grief-stricken.

Eventually King Shahryar suffers the same fate as his wife too is caught with a slave. The unfaithfulness of the women to their husbands goes against the Islamic beliefs. Both had been done a great shame so they set forth wondering and King Shahryar declares, "Let us up as we are and depart forthright hence, for we have no concern with kingship, and let us overwander Allah's earth, worshiping the Almighty till we find someone to whom the like calamity hath happened. And if we find none then will death be more welcome to us than life. After the King found someone, a jinni, who had suffered a greater happening, both returned to their kingdoms and King Shahryar “swore to himself that whatever wife he married he would abate her maidenhead at night and slay her next morning, to make sure of his honor. For, said he, "there never was nor is there one chaste woman upon the face of earth. " This is where Scheherazade starts her tales. The second of her stories is full of unfaithfulness and justice called The Ensorcelled Prince where a Prince finds his wife also in the arms of a slave. The points of being unfaithful are key in the stories nd are looked down upon not only in Islamic culture but throughout the world. Unfaithfulness is a crime not left unpunished and is awarded with justice. King Shahryar and his brother both put their wives to death upon their discovery. The Prince was wronged by his wife but is unable to put her to death for she had the power to cast a spell on him. Half of his body is turned to stone and his upper body remains young so he is helpless. The sad prince is heard in his palace by a King whom the prince tells his tale. After hearing what the Prince had endured the King would bring him justice and kill his wife.

By doing this, the Prince was free, the Kingdom restored, and its people were back to their normal lives. The punishment of death for the justice of another is cruel, and it shows the culture finds this value important. In the beginning of The Arabian Nights, the two kings find an Ifrit and a jinni after they vowed to wonder the earth until they found someone with a similar experience. The Jinni had been stolen away on her wedding night by the Ifrit who hid her for himself. In a rebellious act she has lain with several hundred lovers.

Scheherazade at this point has brought along her sister for help and instructs her on how to convince the King on letting her tell another story. So goes her first story, the story of the Fisherman and the Jinni. The elderly fisherman casts his net only four times a day. On this one particular day he catches no fish for three times he throws the net. Discouraged he prays and throws the net for the last time and pulls up a jar sealed with a leaden cap stamped with the seal ring of Lord Solomon. Upon opening the jar smoke “spired heavenward” that became a Jinni. The fisherman is told by the Ifrit he will die with his choosing of death.

The man asks his crime and thereupon the jinni speaks and since she has been stuck there for many years she has vowed death to the next that frees her. It is only through tricking the jinni back into the bottle does the fisherman get away with his life. Pleading to the fisherman not to toss her back to the water says "Allah upon thee, O Fisherman, don't! Spare me, and pardon my past doings, and as I have been tyrannous, so be thou generous, for it is said among sayings that go current: 'O thou who doest good to him who hath done thee evil, suffice for the ill-doer his ill deeds, and do not deal with me as did Umamah to 'Atikah. " The fisherman releases the Jinni and she gives him four colored fish to bring to the King. Trickery was also used when the king had released the prince from his wife’s powers while pretending to be the love of the wife; the king hides and kills the woman. The Prince’s people are restored (having before been turned into four different colors of fish) and his kingdom back to its former glory (instead of being a pond back to the kingdom), the king before revealing his deception and ends the woman’s pitiful life.

So, for each story Scheherazade tells is full of cleverness, and mystery which shows us some of the cultures values as well as faithfulness’s importance and justice for the people. In the end Scheherazade convinces King Shahryar to spare her life and live happily ever after. This is defiantly not your average bedtime story. Works cited The Arabian Nights. Comp. Richard Burton, 1850. Cornell University Library, Cornell University, n. d. Web. 20 Feb. 2011.

The Patchwork of Reality and Fiction in Tim O’Brien’s The Things They Carried Tim O’ Brien, in his recent fictional story The Things They Carried, illustrates the struggle to unravel and grasp ambiguities of the war in the most unusual way, by understanding it through the mind’s eye. He resolutely transgressed the boundary between fiction and reality, and struggles to demonstrate that the illusory dimension can frequently be more real, particularly in the events leading to the Vietnam War, than reality itself.

Communicating the view of ambiguity of an ordinary soldier about what really took place in Vietnam by narrating the imagined domain as though it is the real work, and afterwards challenging these realities once more, can be viewed as a deviation of the poignant and disturbing statements American soldiers use to express their own doubt about what took place in Vietnam. They drew on these expressions to transform the inexpressible and horrifying and ambiguous into reality. Likewise, O’Brien narrates tales and realities that are merely fleetingly definite and factual.

In the section ‘Notes’, O’Brien illustrated the process of merging illusion and reality (O’Brien 1990, 152): By telling stories, you objectify you own experience. You separate it from yourself. You pin down certain truths. You make up others. You start sometimes with an incident that truly happened, like the night in the shit field, and you carry it forward by inventing incidents that did not in fact occur but that nonetheless help to clarify and explain. In the above passage, O’Brien shows that impossibility of knowing exactly what took place.

He urges his readers to become aware of the events in the Vietnam War that they do not know and perhaps will never be aware of. The Things They Carried brings the readers to the Vietnam War through the author’s webs of narratives. O’Brien informs us that we will never truly know what exactly happened in Vietnam. And the realities of the Vietnam War will die alongside the people who experienced the ‘real’ and ‘unreal’. References O’Brien, T. The Things They Carried. New York: Mariner Books, 1990.

I. Long Ago and Far Away Midwives have been part of the human experience for as long as we know. "The ancient Jews called her the wise woman, just as she is known in France as the sage-femme, and in Germany, the weise frau and also Hebamme or mother's adviser, helper, or friend. The English 'midwife' is derived from midwife, or with-woman"(J. H. Aveling). The Latin term cum-mater and the Spanish and Portuguese term comadre, have the same meaning: with woman. The midwife is mentioned in the Book of Genesis, 35:17: "And when she (Rachel) was in her hard labor, the midwife said to her, 'Fear not, for now you will have another son. " The book of Exodus, 1:20 states, "Therefore God dealt well with the midwives: and the people multiplied, and waxed very mighty. " In ancient times and in primitive societies, the work of the midwife had both a technical or manual aspect and a magical or mystical aspect. Hence, the midwife was sometimes revered, sometimes feared, sometimes acknowledged as a leader of the society, sometimes tortured and killed. The midwife had knowledge and skill in an area of life that was a mystery to most people.

Since women had no access to formal education, it was widely assumed that the midwife's power must come from supernatural sources, such as an alliance with the devil. During the Middle Ages, a frenzy of witch-burning, promoted by both church and civic authorities, was responsible for the killing of up to several million women, many of whom were midwives and healers. In her book on Woman as Healer, Jeanne Achterberg describes the witch-hunts as "an evil that surpasses rational understanding. Here was, indeed, the worst aberration of humanity, and it trickled down the hierarchy of authority. Today, in much of the world, professional midwives are responsible for attending women in labor and birth. In fact, in the countries with the best pregnancy outcomes, midwives are the primary providers of care to pregnant women. However, midwives are still prosecuted and persecuted for following their vocation, although not in the extreme way that characterized the Middle Ages. {mospagebreak} II. The Beginnings of Midwifery in America In the U. S. , midwives, like physicians, practiced without specific education, standards, or regulations until the early part of the 20th century.

Although detailed statistics were lacking, the evidence available showed that midwives' patients were less likely than physicians' patients to die of childbed fever or puerperal infection, the most significant cause of maternal morbidity and mortality at the time. One American midwife and healer named Martha Ballard, who practiced in Maine between 1785 and 1812, kept a diary of her life and work. On the basis of this diary, Laurel Thatcher Ulrich wrote a portrait of Martha Ballard's life and work, A Midwife's Tale, published in 1990. Ulrich's book won a Pulitzer Prize and was made into a film.

To explore more about Martha Ballard, visit www. dohistory. org, or read Ulrich's fascinating account by clicking on the title to order. To find other books about traditional midwives in America, go to the "homage to our foremothers page" on Marilyn Greene's midwifery site. In the half-century between 1770 and 1820, upper-class women in American cities started to favor "male midwives," or physicians. According to Catherine Scholten in her book, "Childbearing in American Society: 1650-1850," "the presence of male physicians in the lying-in room signaled a general change in attitudes toward childbirth.

With changing conditions of urban life, new perceptions of women, and advancements in medical science, birth became increasingly viewed as a medical problem to be managed by physicians. At the same time, because medical training was restricted to men, women lost their positions as assistants at childbirth, and an event traditionally managed by a community of women became an experience shared primarily by a woman and her doctor. " However, since the interest of the male midwife was an economic one, it did not extend to lower-class women, black women, or immigrants. During the nineteenth century, midwives continued to care for these women.

As medicine gained legitimacy and power toward the end of the nineteenth century, it called for the abolition of midwifery and home birth in favor of obstetrics in a hospital setting, a goal that it almost accomplished. In 1900, midwives attended almost half of all births; by 1935, the number had decreased to 12. 5%. Midwives were portrayed as dirty, illiterate, and ignorant, and women were convinced that they were safer in the hands of doctors and hospitals. After providing care to women during the formative decades of our country, midwives were effectively stamped out in the early years of the 20th century. mospagebreak} III. The Medicalization of Childbirth Physicians trained in the specialty of obstetrics and gynecology declared themselves to be the proper caregivers for childbearing women, and the hospital was deemed to be the proper setting for that care. Birth evolved from a physiological event into a medical procedure. According to one of the foremost authorities of the day, Dr. Joseph DeLee, birth was a dangerous process from which few women escaped unscathed, and proper management of this pathological condition required a program of routine medical intervention.

DeLee's recommended interventions included anesthesia, episiotomy, and assisted (forceps) delivery. By the 1960s, these interventions were common in all American hospitals and women were unaware of any other way to give birth (as well as unaware when they were giving birth! ). In addition, women were forced to labor without presence or support from partners or family, infants were taken from the mother at delivery and cared for in newborn nurseries, bottlefeeding became the norm, and babies born outside the sterile environment of the operating room were labeled contaminated and kept separately.

There was no scientific rationale for any of these procedures; to the contrary, many of them were eventually shown to be harmful. Midwifery, meanwhile, was declared to be illegal in most jurisdictions, and as the old "granny" midwives died out, the profession almost died with them. Midwifery never succumbed completely to the campaign waged against its practitioners by the medical profession. Granny midwives in the rural south continued to serve poor, mostly black women.

Motherwit is the story of one such midwife, Onne Lee Logan, who was born in 1910 in Sweet Water, Alabama, the fourteenth of sixteen children and the daughter of a midwife. She learned her midwifery by accompanying her mother to births. Eventually she became the most widely respected and sought after midwife in the region; in the book, she share her stories, secrets, faith, and wisdom. Listen to Me Good: The Life Story of an Alabama Midwife is the story of another Alabama midwife, Margaret Charles Smith. {mospagebreak} IV. Modern Nurse-Midwifery

During its darkest times, the seeds of the future of midwifery were being sowed. Although slow to grow, they proved to be enduring. On one front, public health nurses with the Frontier Nursing Service in the mountains of Kentucky and the Maternity Center Association in the medically underserved neighborhoods of New York City in the 1920s acquired additional training in midwifery to provide maternity services to women who were being ignored by the physicians and receiving inadequate maternity care. They called themselves nurse-midwives. To learn more about the history of the Frontier Nursing Service, read Wide Neighborhoods, the autobiography of its founder, Mary Breckenridge. Mary Breckenridge introduced modern nurse-midwifery, based on the British model, into the United States. In 1925 she established the FNS as a demonstration project of complete family health care in a remote rural area, and directed it until her death in 1965. ) By the 1950s, nurse-midwives were well established in several medical institutions, and nurse-midwifery education was moving into institutions of higher learning and becoming standardized.

In 1955, a small group of nurse-midwives founded the American College of Nurse-Midwifery, which merged with the American Association of Nurse-Midwives in 1968 to become the American College of Nurse-Midwives (ACNM). Although home birth had been the norm in the early days, nurse-midwives gradually moved almost completely into hospital settings, usually relinquishing control and autonomy over their practice to physicians and adopting some of the interventive procedures used by them. The trade-offs for these losses included a legal sanction to practice, assurance of appropriate physician consultation when needed, and a living wage.

More recently, most nurse-midwives have been able to obtain prescriptive privileges, hospital-admitting privileges, and the right to third-party reimbursement (insurance payment). Nurse-midwifery practice grew rapidly in the 1980s and 1990s, with nurse-midwives assuming a large part of the care of underserved and vulnerable women from isolated rural and impoverished inner-city areas. Many of these women bring with them significant psychosocial problems that put them at an increased risk for poor obstetric outcomes.

Nonetheless, data showed from the beginning, and continue to show, that these women experience superior outcomes with nurse-midwifery care. {mospagebreak} V. The Rebirth of Home Birth On a second front, in the late 1950s, consumers of hospital-based, medicalized maternity care began to rebel. There was a growing interest in childbirth education, breastfeeding, and natural childbirth. Women and families who were pessimistic about their chances of having a safe and satisfying birth in the hospital began to explore the option of home births with midwives.

The midwives who attended these births were unlikely to be professionally educated as midwives; their interest in midwifery was frequently though personal birth experiences; their training was by apprenticeship, and their practice was by and large unregulated, either illegal or not mentioned in the law. Initially, they were not organized, but worked in isolation in diverse parts of the country. Gradually, the phenomenon attracted the attention of state regulatory authorities and the medical profession, who began to clamp down on "lay" midwives, in some cases arresting or prosecuting them for practicing medicine without a license.

Despite restrictions, a small but steady number of families continued to demand alternative childbirth, and the midwives attending them began to organize to share experiences, support one another, and learn together. During the 1970s, the proportion of out-of-hospital births almost doubled, although the overall number was small. In 1975, the publication of Ina May Gaskin's book, "Spiritual Midwifery," spread the word that childbirth could be an experience of growth, empowerment, and joy.

For an interesting recent online article on Ina May, see http://www. salon. com/people/bc/1999/06/01/gaskin/. In 1982, the Midwives' Alliance of North America (MANA) was founded. The organization embraces all midwives, regardless of training or credentials; however, its focus became the expansion of practice rights for direct-entry midwives who attended home births. The midwives represented by MANA have steadfastly insisted on autonomy and control over their practice, and differentiation of the midwifery model of care from the medical model.

This freedom to practice without outside control has not been without costs; the midwives have had to confront lack of legal standing, hostile practice environments, lack of appropriate medical consultation and referral mechanisms, and low pay for long hours of work. {mospagebreak} VI. Current Trends and the Future of Midwifery During the 1990s, differences between the two groups of midwives became less distinct. Through MANA, direct-entry midwives developed standards for accreditation of educational pathways and for certification of midwives; they formed separate organizations to perform these functions.

They worked for legalization of midwifery practice at the federal and state level, and for improved interaction with the health-care system. Meanwhile, ACNM began to accredit direct-entry midwifery educational programs and to work for increased autonomy of nurse-midwives through legislative and regulatory changes. Most importantly, scientific validation for the midwifery model of care began to emerge in the literature, much of it contained in a massive review of 7000 clinical research studies known as "Effective Care in Pregnancy and Childbirth," or familiarly as the Cochrane database.

This systematic review of the scientific evidence classified the elements of care during pregnancy and childbirth as effective, promising, not proven either way, or not worth using. Many of the elements of the midwifery model of care were validated by this ongoing review, which became the midwives' bible. At the present time, there is no doubt that midwives offer women safe, effective care with good outcomes; now midwives ourselves are looking at our practice to see just what we do that makes this so. We believe that the answer lies in our name; that is, we are "with women. We listen to women, we talk with women, we stay with women. Every year, more American babies are born into the hands of midwives. The national average is 7. 4%, although in some states it is as high as 20%. Still, the rate is very low compared to that in the European countries with the best birth outcomes. Midwives believe that our care can enhance the experience of pregnancy and birth for women. Hopefully, this website will inform women about midwives and encourage midwives to come together and to learn from one another. (http://www. midwifeinfo. com/articles/a-short-history-of-midwifery 24/7/2011 7:25pm)

Gerald Prime M. Onate Assignment Catering- a preparation and delivery of food, service, staff and all amenities to a site or within the company premises. Caterer- refers to the one who “supplies the viand of an entertainment”. Banquet- It is a food and beverage service at a specific time and place for given number of people, agreed menu and price. On-premise- Food preparation and service is done in a facility that is owned based or rented by a caterer.

Off-premise- Type of catering wherein the foods are prepared in a licensed commissary and transported to a location selected by the client. Types of catering establishment: -Restaurant-Industrial Catering -Airline Catering-Leisure-Linked Catering -Transport Catering-Club Catering -Railway Catering-Welfare Catering -Ship Catering-Retail Store Catering -Surface Catering-Outdoor Catering Basic styles of Table Service: 1. Butler service 2. Russian service 3. American service 4. French Service 5.

Buffet Organizational Chart of Catering Banquet personnel and its functions: Banquet Chef- will support and assist the Executive Chef in the oversight of the banquet and commissary kitchen operation and assisting in the preparation of food items for all Banquet meals and commissary items, hiring, training, scheduling, and directing Banquet culinary staff; visually inspecting all food products to be served to ensure they all meet the quality standards set out by departmental and resort management.

Banquet Captain- Perform supervision of banquet service personnel and service of banquet events for the banquet manager and banquet sales coordinator. As leader of the service team, the captain is primarily responsible for ensuring that guests receive proper service, enjoy their meal, and want to return. The captain achieves this goal by providing the guest with the highest possible standard in service. Banquet Manager- Train and develop the banquet staff. Ensure satisfaction of banquet guests by supervising and coordinating banquet personnel.

Ensure banquet rooms are set up in accordance with customer specifications by supervising set-up staff and inspecting room comfort, lighting and temperature prior to event. Assistant Banquet Manager- Under limited supervision, this position works closely to assist the Banquet Manager in the preparation, set up and overall operations of banquet area. Banquet Pantry- Assists the Executive chef in accomplishing catering goals and objectives. Communicates all unusual occurrences to management immediately.

Assists kitchen personnel when directed by supervisor. Banquet Server- Responsible for providing dining and beverage service in a Banquet setting to all guest in an efficient, courteous and professional manner displaying a high standard of guest service. Perform all duties in accordance with Valley View policies and within the realm of the Valley View's Mission Statement. Food and Beverage Service Sequence: i. Greet ii. Flow iii. Order iv. Place ; Deliver Order v. Deliver the Entree vi. Clearing the table

Direct Method and Grammar Translation Method are the two oldest methods for teaching foreign languages. Grammar Translation Method first appeared in the 18th century and was originally used for teaching old languages like Greek, Latin then failed in teaching communication skills. After that, Direct Method was built with the attempts to overcome the weakness of the Grammar Translation Method. As a result of that, there are many differences in the principles of these two methods which will be summarized into three following main ones.

The first and foremost difference between the Direct Method and The Grammar Translation method is the goals of the teachers using them. In Grammar translation Method, the teachers’ fundamental purpose is to help the students read and appreciate literature written in the target language. To be able to do this students have to learn a lot about the grammar rules and vocabularies. On the contrary, the teachers who use the Direct Method intend that the students learn how to communicate in the target language.

It is very important that the students are believed to think in the target language. In addition, due to the different teaching goals, there is a great disparity in teaching and learning process of the Grammar Translation Method and the Direct Method. In a typical Grammar Translation Method class, students are taught to translate from one language to another. They are also asked to memorize the native language equivalents for the target language vocabulary words. In contrast, the native language should not be used in the classroom.

The students need to associate the meaning and the target language directly. To help the students to do this, the teacher demonstrates the meanings through pictures, realia, or pantomime. In other words, translation is never used in this type of class. Another obvious difference between the two methods is the dealing with grammar. Whereas grammar is taught deductively in the Grammar Translation Method, the Direct method uses an inductively way so the students are given examples and they figure out the rules or generalization from those examples.

It might happen that the explicit grammar rule is never given. In Grammar Translation method, grammar rules are presented with examples. The students are asked to memorize those rules and then apply to other examples and exercises. To conclude, I can rightly say that both methods have advantages and disadvantages. It’s up to the teachers to choose or combine the methods according to their teaching situation so that their students will get the most benefit.

In my own teaching context, I use the principles of the Direct Method more due to the needs of my students. I am teaching a class of international students who come from different countries and their native languages are different from mine. Therefore, translation is impossible. To make the meaning clear, I usually use pictures, realia, or pantomime. The target language is the mean of every communication taking place in the classroom. I believe that this very good environment for their language learning.

In the holly quran allah has dictated,’he will virtuos who will plant more trees. ’so from time to time immemorial trees are greatly related to human beings. they are the most important and useful gift of the nature. they provides immense wealth and riches to us. they are delicious and contains vitamins that makes us healthy. they also supply us with goods to build dwelling houses to live a happy and comfortable life. they give us flowers to decorate our house beautifully. they absorb carbon-dy-oxide from air and resease oxygen which is needed for our life line. we depend on trees. hey maintain a balance in the gaseous elements of air and prevent floods. besides,they keep our environment cool and make fit for comfortable living. they induce rain,prevent erosion and maintain ecological balance. trees are our great frnds but we are destroying them unscrupulously. they are destroyes mostly for being used in fire,woods and household furnitures. bangladesh is the most affected country in regard to the thoughtless distructiion of trees. 25% forest area is a must for the environmental balance of a country. but the fertile land of Bangladesh has only 16% forest area. it is now adversely affecting our nature. or the last few years,the heat and the sun both become unbearable during the summer and winter season and natural calamities have become a daily part of our life. to avoid this situation,social foresty should be taken on a large scale and trees should be planted all around where is space for them. fruits and shedy ttrees should be planted in the rainy season specially in the yard,around the ponds,besides the road and the low – lying areas. without trees and forest there should be dewsert and desolation around us. so it is the time we should say as like rabindranath,’tak away the cities,give back the forest. ’