| Resumo: | How Common and Corporate Costs should be charged to locations and how these affect each locations’ performance measurement is an issue under discussion on the Group being studied. Managers from the headquarters and from locations perceive the actual system based on volume drivers is unfair and that may leads to distortions on performance measurement by the Board. A new proposed model is developed based on Activity Based Costing combined with Transfer Pricing. Managers that were interviewed during this case study welcomed the activity based perspective. For the purpose of developing the proposed model, Macro-Activities developed for the locations were identified at Headquarters level and segregated from others. Cost drivers were selected for those Macro-Activities identified and a standard unitary cost for each Macro-Activity was computed. New charges were calculated for each location, using a cost plus margin transfer price. The performance of all locations was compared with the one reported using the actual system. Further comparisons as the performance by market segment and raw-materials used were also made. The new model and its implementation on a near future are being studied by the Board of the Group.
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