CONTOH KASUS INTRA-GROUP SERVICES - MANAGEMENT FEE FOR CENTRALISED ADMINISTRATIVE SERVICES - 2

SERVICE RECIPIENT PERSPECTIVE

The activities of the group can largely be divided into three major items: 

1. Manufacturing activities (companies A & B as contract manufacturing; company X for the tailor made products);
2. Distributing activities (company X for southern Europe; company Y for northern Europe; companies Y Asian distributors and Y Americas distributors);
3. Activities as a service provider (company Y).

The question now arises whether the manufacturing companies and the distributing companies need the same services? If not, one might argue the correctness of applying the same fee on the same basis (in this case expected sales).  

The following table indicates which of the listed services could be attributed to the manufacturing function, the distribution function or the shareholders’ function

Service	(Contract) Manufacturing	Distribution	Shareholder
Legal and consulting	(X)	X	(X)
Trademark protection and litigation		X
Company secretarial services			X
Audit and accounting			X
Commonly shared personnel	?	?	?
Insurance	?	?	?
Staff travel and personnel deployment	(X)	X
Office supplies, equipment, computerisation	?	?	?
Office rents, utilities, telephone, fax & postage	?	?	?
Corporate finance	?	?	?
Negotiations credit lines	(X)	X
Marketing & promotion		X
Advertising		X
Corporate logo design & production		(X)	X
Sourcing new products		X
Other group related costs			?

The use of only 1 allocation key in this case study does not seem to be appropriate.  The use of sales may be relevant for the distribution activity, but not as such for the (contract) manufacturing activity. Several services, e.g. staff travel and deployment, may be linked more closely to the staff employed, than to sales.  Moreover, for several services (e.g. legal and consulting or computer services) it would be more appropriate to use an allocation key that reflects to what extent each group company have actually used that service (notwithstanding the fact that a basic fee may be required for the “availability” of the service – e.g. a “stand by” charge). 

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