Businesses that are separated into two or more manageable units in which managers have authority and responsibility for operations are said to bea. diversifiedb. centralizedc. consolidatedd. decentralized


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Which of the following is the best example of a decentralized operation?a. each unit is responsible for its own operations and decision makingb. in a major company, operating decisions are made by top managementc. one owner who prepares, plans, and makes decisions for the entire companyd. None of these choices are correct.
Which of the following is a disadvantage of decentralization?a. Decisions made by one manager may negatively affect the profitability of the entire company.b. Decentralization helps retain quality managers.c. Managers are able to acquire expertise in their areas of responsibility.d. Managers closest to the operations make decisions.
A responsibility center in which the department manager has responsibility for and authority over costs and revenues is called a(n)a. profit centerb. investment centerc. cost centerd. volume center
In evaluating the profit center manager, the income from operations should be compareda. across profit centersb. to historical performance or budgetc. to the total company earnings per shared. to the competitor"s net income
The costs of services charged to a profit center on the basis of its use of those services area. operating expensesb. service department chargesc. noncontrollable chargesd. activity charges
In an investment center, the manager has the responsibility for and the authority to make decisions that affecta. both costs and revenues for the department or divisionb. costs, revenues, and assets invested in the centerc. costs and assets invested in the center, but not revenuesd. the assets invested in the center, but not costs and revenues
The formula for the return on investment isa. Income from Operations/Invested Assetsb. Invested Assets/Income from Operationsc. Income from Operations/Salesd. Sales/Invested Assets
The excess of divisional income from operations over a minimum acceptable amount of divisional income from operations isa. profit marginb. residual incomec. return on investmentd. gross profit
The balanced scorecard measuresa. only nonfinancial informationb. external and internal informationc. both financial and nonfinancial informationd. only financial information
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Fundamentals of Corporate Finance11th EditionBradford D. Jordan, Randolph W. Westerfield, Stephen A. Ross
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