chapter 10 smartbook part #2 Flashcards
Which of the following business segments would not be considered a cost center?
Personnel department
Retail outlet
Accounting department
Manufacturing facilities
Retail outlet
Which of the following statements is correct?
A project that is not acceptable using residual income calculations may be acceptable when ROI is calculated.
Managers will be more likely to pursue projects that will benefit the entire company when being evaluated on ROI instead of residual income.
A manager might reject a proposal using ROI that the manager would accept using residual income.
A manager might reject a proposal using ROI that the manager would accept using residual income.
Valid criticisms of evaluating performance based on return on investment (ROI) include managers may _________.
reject investment opportunities that are profitable for the company but have a negative impact on a manager’s ROI
take actions that increase ROI in the short-run at the expense of long-term performance
be put in charge of a business segment that includes committed costs over which a manager has no control
reject investment opportunities that are profitable for the company but have a negative impact on a manager’s ROI
take actions that increase ROI in the short-run at the expense of long-term performance
be put in charge of a business segment that includes committed costs over which a manager has no control
Which of the following is not a characteristic of decentralization?
Decentralization allows top management to concentrate on bigger issues such as overall strategy.
Decentralization reduces how accountable lower-level managers are for the outcomes of their decisions.
Decentralization puts the decision-making authority in the hands of those who have the most information on day-to-day operations.
Decentralization helps to train lower-level managers for higher level positions.
Decentralization reduces how accountable lower-level managers are for the outcomes of their decisions.
A disadvantage of the residual income approach is that it ______.
only considers investments acceptable if the return exceeds current ROI
cannot be used to evaluate different sized divisions
sometimes discourages investments that are beneficial to the company as a whole
cannot be used to evaluate different sized divisions
A disadvantage of ROI is that it ______.
sometimes discourages investments that are beneficial to the company as a whole
Operations are able to respond quickly to customers and changes in the environment in a decentralized organization because Blank______.
Multiple choice question.
top management is heavily involved in the day-to-day operations
lower-level managers are judged on non financial measures rather than financial outcomes of their decisions
Reason: A good performance evaluation system judges managers on both financial and nonfinancial measures.
there are fewer managers that must be consulted before a decision is made
there are fewer managers that must be consulted before a decision is made
