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13 Dec 2019

Which of the following is true of decentralization?

a. It is usually achieved by creating units called divisions.

b. Decentralization allows only the CEO of a company to make all important decisions.

c. Decentralization allows higher management to make better decisions by using local information.

d. Under decentralization, lower-level managers are responsible only for implementing decisions.

e. It protects segments of a company from competitive pressures.

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Jarrod Robel
Jarrod RobelLv2
17 Dec 2019
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Related questions

A decentralized organization is one in which:

a. each stockholder is given decision-making authority.

b. only top-level management is given decision-makingauthority.

c. each employee in the organization is given permission to makedecisions about their company.

d. managers at various levels throughout the organization aregiven decision-making authority.

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. Desegmented

b. Centralized

c. Segmented

d. Decentralized

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?

a. Centralized

b. Desegmented

c. Segmented

d. Decentralized

When a few individuals at the top of an organization retaindecision-making authority, the organization is referred to asa(n):

a. investment center.

b. centralized organization.

c. decentralized organization.

d. profit center.

Which of the following statements regarding the structure oforganizations is false?

a. In a decentralized organization, decision-making authority isconfined to top-level management.

b. Decentralization may make it difficult for managers to shareunique and innovative ideas.

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.

d. In a decentralized organization, there may be a lack ofcoordination and communication between segments.

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.

b. It allows managers to focus on their own area ofresponsibility rather than what is best for the company as awhole.

c. It requires very little as far as manager training costs.

d. It allows decisions to be made in a more timely manner.

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.

b. It allows top-level managers more time to devote tolong-range strategic planning.

c. It permits lower-level managers to gain valuable on-the-jobtraining in order to become better managers.

d. It often creates higher job satisfaction for managers.

Which of the following is often not a disadvantage ofdecentralization?

a. Lack of coordination and communication between segments.

b. Higher training costs for lower-level managers.

c. Lack of company focus as lower-level managers may makedecisions that benefit their own particular segment.

d. Decreased job satisfaction for lower-level managers.

Which of the following is a disadvantage ofdecentralization?

a. Lower training costs for lower-level managers.

b. Less timely decisions are able to be made on a day-to-daybasis.

c. Decreased job satisfaction for lower-level managers.

d. Lack of coordination and communication between segments.

"Responsibility accounting" is the concept that says:

a. managers should be responsible for both revenues and costs oftheir particular segment.

b. managers should be held entirely responsible for allinvestment decisions that impact the particular segment in whichthey are in charge.

c. managers should be held responsible for only those thingsunder their control.

d. managers should never be held entirely responsible for thingsthat happen within the particular segment in which they are incharge.

A budget for a single unit of a product or service is called asa:

a. real cost.

b. fixed cost.

c. total cost.

d. standard cost.

Which of the following statements is true regarding the budgetedcost for direct materials?

a. It must be determined after materials are purchased for theyear.

b. It can not be determined if a company uses a just-in-timeinventory system.

c. It would consist of two components - a standard quantity anda standard price.

d. It would be used on a static budget but not a flexiblebudget.

Variance analysis compares:

a. standard costs and actual costs.

b. static budgets and flexible budgets.

c. product costs and period costs.

d. practical standards and ideal standards.

Which of the following statements is false regarding taskanalysis?

a. It uses actual historical data in the determination ofstandard costs.

b. It emphasizes what it should cost to produce a product ratherthan historical costs.

c. It examines the production process in detail.

d. It may involve the use of engineers.

Task analysis:

a. is used to set standard costs.

b. is used to determine the tasks that production employeesshould complete on a daily basis.

c. is used to evaluate employee performance.

d. emphasizes the historical costs of a product.

A(n) ____ is attainable only when near-perfect conditionsexist.

a. static budget

b. ideal standard

c. flexible budget

d. practical standard

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?

a. Practical standard

b. Ideal standard

c. Efficiency standard

d. Budgeted standard

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?

a. $35,025

b. $43,125

c. $44,025

d. $37,500

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?

a. $14,000

b. $15,480

c. $14,400

d. $15,050

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?

a. $26,520

b. $23,400

c. $18,000

d. $20,400

Complete the following exercise and provide a recommendation foreach of the four scenarios presented. There is often more than oneway to improve a performance measure. Unfortunately, some of theactions taken by managers to make their performance look better mayactually harm the organization. For example, suppose the marketingdepartment is held responsible only for increasing the performancemeasure "total revenues," Increases in total revenues may beachieved by working harder and smarter, but they can also usuallybe achieved by simply cutting prices. The increase in volume fromcutting prices almost always results in greater total revenues;however, it does not always lead to greater total profits. Thosewho design performance measurement systems need to keep in mindthat managers who are under pressure to perform may take actions toimprove performance measures that have negative consequenceselsewhere. For each of the following situations, describe actionsthat managers might take to show improvement in the performancemeasure but which do not actually lead to improvement in theorganization's overall performance.

Concerned with the slow rate at which new products are brought tomarket, top management of a consumer electronics company introducesa new performance measure--speed-to-market. The research anddevelopment department is given responsibility for this performancemeasure, which measures the average amount of time a product is indevelopment before it is released to the market for sale.
The CEO of a telephone company has been under public pressure fromcity officials to fix the large number of public pay phones that donot work. The company's repair people complain that the problem isvandalism and damage caused by theft of coins from coinboxes--particularly in high-crime areas in the city. The CEO saysshe wants the problem solved and has pledged to city officials thatthere will be substantial improvement by the end of the year. Toensure that this is done, she makes the managers in charge ofinstalling and maintaining pay phones responsible for increasingthe percentage of public pay phones that are fullyfunctional.
A manufacturing company has been plagued by the chronic failure toship orders to customers by the promised date. To solve thisproblem, the production manager has been given the responsibilityof increasing the percentage of orders shipped on time. When acustomer calls in an order, the production manager and the customeragree to a delivery date. If the order is not completed by thatdate, it is counted as a late shipment.
Concerned with the productivity of employees, the board ofdirectors of a large multinational corporation has dictated thatthe manager of each subsidiary will be held responsible forincreasing the revenue per employee of his or her subsidiary.

Can someone please summarize this from "the top 10 reasons to fix the FASB's conceptual framework"

9. Costs and Benefits

The FASB and IASB would do everyone a good turn by abandoning the timeworn notion that only statement preparers incur reporting costs and that only users reap the benefits. This chestnut isn’t true and never has been.

The costs of reporting aren’t borne by preparers but by their entities’ owners, who are also among the reports’ pri- mary users. Furthermore, managers benefit greatly from better public information that enables capital markets to establish more efficient security prices that reflect real risks.

There are no reasonable grounds for believing that markets respond to today’s inferior public information by bidding prices higher and accepting returns that are too low for their risk. In fact, the only rational response to incomplete and untrustworthy financial reports is lower security prices and higher capital costs.

The Boards’ discussions must articulate the point that management policies intended to reduce preparation costs diminish information quality and thus lead to higher information-gathering and processing costs. The seem- ingly economical practice of reporting only the bare min- imum is actually much more costly than just reporting what management already knows (or ought to know).

If users want to know assets’ market values not dis- closed by management, then all users must make deci- sions under uncertainty or elect to go through their own expensive estimation process. Adding to the total cost is the fact that the users’ self-generated data has question- able reliability and limited capacity to reduce uncertainty. If so, they demand higher returns, which, in turn, increase the reporting company’s cost of capital.

A decision to reduce accounting costs unavoidably caus- es total costs to go higher. Considered within the context that the highest objective of financial reporting is promot- ing economic productivity, it’s clear that overall savings can be achieved by mandating additional disclosures of useful information. (In fact, we’re confident that managers and owners can reap even greater savings by voluntarily disclos- ing useful information that isn’t required.)

These points are controversial, but we encourage the Boards to expand their discussion to include all costs and benefits, not just the simplistic idea that managers bear all costs and gain no benefits while users gain all benefits and bear no costs. In fact, both sides incur costs and gain benefits; once that relationship is clear, constructive progress is sure to follow.

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