... determined by adjusting the fixed price to resemble the price change caused by inflation. The fixed price determination must be established in conformity with all part divisions, AM division, and corporate level as the ultimate controller of company's overall performance. The second focus of concern of the Abrams' top management was the behavior of part divisions, which captivated the AM division. Again, this is the consequence of Abrams Company organizational structure; the treat of divisions as profit centers, according to theory, will abdicate some control of top management since some decision makings authority are delegated to the lower level. This is the case in Abrams Company, where its division losing it synergy to reach companywide common goal. We argue this problem also cued by incentive compensation system been adopted, which will not give extra incentive for the favorable profit variance if it is attributable to the favorable variance gross margin variance ...

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