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Case 11: Increasing Overhead > CASE STUDY 11: Increasing Overhead - Pg. 173

Case 11: CASE STUDY--Increasing Overhead Case Studies ? CASE STUDY 11: Increasing Overhead Recently, overhead charges at all research sites have been increasing dramatically. In some instanc- es, they have added almost 50 percent to the overall cost of the new product research your com- pany does. This problem has become particularly acute at the larger, most prestigious institutions where you usually fund several different projects. Last week, you met with a representative from one of these institutions. During the meeting, you told him that your firm would only pay 20 percent for overhead. You were somewhat taken aback when he told you that one of your associates from another department had agreed to an overhead of 42 percent just the previous week, and he expected you would pay the same. How should you respond?