A decentralized organization is one in which:
| a. each stockholder is given decision-making authority. | |
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| b. only top-level management is given decision-makingauthority. | |
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| c. each employee in the organization is given permission to makedecisions about their company. | |
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| d. managers at various levels throughout the organization aregiven decision-making authority. |
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A local chain department store grants each of its store managersthe authority to make buying decisions for their stores. Grantingmanagers this kind of authority is found in which type oforganization?
A local chain electronics store does not allow its store ordistrict managers to make important decisions about their stores.The main role of store managers is to supervise employees and makesure day-to-day transactions run smoothly while district managerssupervise store managers and report profitability data back totop-level management. Not allowing store or district managersdecision-making authority is most likely to be found in which typeof organization?
When a few individuals at the top of an organization retaindecision-making authority, the organization is referred to asa(n):
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| b. centralized organization. | |
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| c. decentralized organization. | |
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Which of the following statements regarding the structure oforganizations is false?
| a. In a decentralized organization, decision-making authority isconfined to top-level management. | |
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| b. Decentralization may make it difficult for managers to shareunique and innovative ideas. | |
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| c. When decision-making authority is spread among too manymanagers, managers may become so concerned with their own area ofresponsibility that they lose sight of the company's overallfocus. | |
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| d. In a decentralized organization, there may be a lack ofcoordination and communication between segments. |
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Which of the following is an advantage of decentralization?
| a. It allows top-level management who normally work at corporateheadquarters to get involved with the day-to-day decisions thatneed to be made at lower levels. | |
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| b. It allows managers to focus on their own area ofresponsibility rather than what is best for the company as awhole. | |
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| c. It requires very little as far as manager training costs. | |
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| d. It allows decisions to be made in a more timely manner. |
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Which of the following is not an advantage ofdecentralization?
| a. It allows lower-level managers to focus on their ownparticular goals and objectives without having to consider theoverall company's goals and objectives. | |
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| b. It allows top-level managers more time to devote tolong-range strategic planning. | |
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| c. It permits lower-level managers to gain valuable on-the-jobtraining in order to become better managers. | |
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| d. It often creates higher job satisfaction for managers. |
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Which of the following is often not a disadvantage ofdecentralization?
| a. Lack of coordination and communication between segments. | |
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| b. Higher training costs for lower-level managers. | |
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| c. Lack of company focus as lower-level managers may makedecisions that benefit their own particular segment. | |
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| d. Decreased job satisfaction for lower-level managers.
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Which of the following is a disadvantage ofdecentralization?
| a. Lower training costs for lower-level managers. | |
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| b. Less timely decisions are able to be made on a day-to-daybasis. | |
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| c. Decreased job satisfaction for lower-level managers. | |
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| d. Lack of coordination and communication between segments.
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"Responsibility accounting" is the concept that says:
| a. managers should be responsible for both revenues and costs oftheir particular segment. | |
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| b. managers should be held entirely responsible for allinvestment decisions that impact the particular segment in whichthey are in charge. | |
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| c. managers should be held responsible for only those thingsunder their control. | |
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| d. managers should never be held entirely responsible for thingsthat happen within the particular segment in which they are incharge. |
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A budget for a single unit of a product or service is called asa:
Which of the following statements is true regarding the budgetedcost for direct materials?
| a. It must be determined after materials are purchased for theyear. | |
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| b. It can not be determined if a company uses a just-in-timeinventory system. | |
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| c. It would consist of two components - a standard quantity anda standard price. | |
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| d. It would be used on a static budget but not a flexiblebudget. |
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Variance analysis compares:
| a. standard costs and actual costs. | |
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| b. static budgets and flexible budgets. | |
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| c. product costs and period costs. | |
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| d. practical standards and ideal standards.
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Which of the following statements is false regarding taskanalysis?
| a. It uses actual historical data in the determination ofstandard costs. | |
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| b. It emphasizes what it should cost to produce a product ratherthan historical costs. | |
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| c. It examines the production process in detail. | |
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| d. It may involve the use of engineers. |
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Task analysis:
| a. is used to set standard costs. | |
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| b. is used to determine the tasks that production employeesshould complete on a daily basis. | |
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| c. is used to evaluate employee performance. | |
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| d. emphasizes the historical costs of a product. |
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A(n) ____ is attainable only when near-perfect conditionsexist.
In most companies, machines break down occasionally andemployees are often less than perfect. Which type of standardacknowledges these characteristics when determining the standardcost of a product?
Hathaway Inc. produces and sells golf umbrellas to localresorts. Hathaway anticipates April to be a busy month with thesale of 2,000 umbrellas. The company has prepared the followingstatic budget for April:
Sales revenue (2,000 units) | $60,000 |
Variable costs: | |
Direct materials | 6,000 |
Direct labor | 8,000 |
Overhead | 2,500 |
Fixed costs | 6,000 |
Net operating income | $37,500 |
During April, Hathaway actually produced and sold 2,300 umbrellas.What should be Hathaway's net operating income in April based on aflexible budget?
Hoppe Inc. manufactures widgets. Management has determined thateach widget has a standard materials cost of $3.50 when 2.5 ouncesof raw material at a cost of $1.40 per ounce are used. The staticbudget for the month of December showed an estimated production of4,000 widgets in December. During December, 4,300 widgets wereactually produced. The actual cost for each widget was $3.60 when2.25 ounces of raw material at a cost of $1.60 per ounce werepurchased and used. What should be the total direct materials costaccording to Hoppe's flexible budget for December?
Violetta Inc. manufactures plastic storage boxes. Management hasdetermined that each medium-sized box has a standard materials costof $1.20 when 4 pounds of raw material at a cost of $.30 per poundare used. The static budget for the month of March showed anestimated production of 15,000 boxes in March. During March, 17,000boxes were actually produced. The actual cost for each box was$1.56 when 3.9 pounds of raw material at a cost of $.40 per poundwere purchased and used. What should be the total direct materialscost according to Violetta's flexible budget for March?
