Question 1

Centralized operations are better for small companies due to the smaller scope of their operations.

Accepted Answer

Centralized operations are better suited for small companies because they have a smaller scope of operations which makes it easier to manage and control from a central location.

Question 2

Managerial accountants can design performance evaluation systems that encourage goal congruence.

Accepted Answer

Managerial accountants are responsible for designing performance evaluation systems that align the goals of the organization with the goals of its employees. This helps to promote goal congruence, as employees are motivated to work towards goals that are in line with the overall objectives of the organization. By designing effective performance evaluation systems, managerial accountants can help to ensure that employees are rewarded for their efforts and are incentivized to work towards achieving common goals.

Question 3

Which of the following is an advantage of decentralization?
A)Managers' motivation and retention can be increased by empowering segment managers to make decisions.
B)Certain costs of activities may be duplicated.
C)Customer response time is generally decreased.
D)Top management can concentrate on decisions that relate to day-to-day operations of segments.

Accepted Answer

Decentralization can empower segment managers to have more decision-making power and responsibility, which can increase their motivation and job satisfaction. This can lead to higher retention rates and lower turnover costs for the organization.

Question 4

Which of the following is a disadvantage of decentralization?
A)It results in increased customer response time.
B)It allows only the top management to make decisions.
C)It does not motivate employees because the decision-making powers are not delegated.
D)It results in problems with achieving goal congruence.

Accepted Answer

Decentralization may lead to problems with achieving goal congruence because different units or departments may pursue their own goals and objectives, which may not align with those of the organization as a whole. Additionally, coordination between different units may become more difficult, and decision-making may become slower or less efficient. However, A, B, and C are not necessarily disadvantages of decentralization - in fact, decentralization can lead to increased customer response times, increased employee motivation, and more delegation of decision-making power throughout the organization.

Question 5

The manager of a revenue center is responsible for generating profits.

Accepted Answer

The manager of a revenue center is responsible for generating revenue, not necessarily for generating profits, which are the concern of a profit center.

Question 6

Which of the following is NOT an advantage of decentralization?
A)provides training
B)frees top management time
C)works to achieve goal congruence
D)supports the use of expert knowledge

Accepted Answer

Decentralization does not inherently ensure goal congruence; it can sometimes lead to divisions or departments pursuing their own objectives that may not align with the overall goals of the organization.

Question 7

Discuss the difference between a centralized company and a decentralized company.

Accepted Answer

The answer of Discuss the difference between a centralized company...

Question 8

The term "goal congruence" refers to the ________.
A)matching of financial goals of the company with its nonfinancial goals
B)aligning the goals of business segment managers with the goals of top management
C)achievement of the goals set by the management by utilizing the resources available
D)duplication of costs as a result of decentralization

Accepted Answer

Goal congruence refers to the alignment of the goals of lower-level managers or business segments with the goals of top management. This ensures that everyone is working towards the same overall objectives and helps to prevent conflicts or competing priorities. Option A is not entirely correct, as it only focuses on financial goals and does not include nonfinancial goals. Option C is too broad and does not capture the specific concept of goal congruence. Option D is incorrect, as it describes a negative consequence of decentralization rather than a concept related to goal alignment.

Question 9

One of the advantages of decentralization is that it allows top management to concentrate on long-term strategic planning.

Accepted Answer

Decentralization allows lower-level managers to handle day-to-day operations and decision making, freeing up top management to focus on long-term strategic planning.

Question 10

In a decentralized company,segment managers may not fully understand the big picture when making decisions.

Accepted Answer

Decentralized companies allow for more autonomy and decision-making power at the segment level, but this can result in a lack of coordination and understanding of the overall goals and strategies of the company.

Question 11

Centralized companies split their operations into segments and top management delegates decision making to the segment managers.

Accepted Answer

In centralized companies, decision-making authority is typically concentrated at the top level, and lower-level managers have less autonomy in decision-making.

Question 12

Decentralized companies often lead to diminished customer relations and slower customer response time.

Accepted Answer

Decentralized companies can actually improve customer relations and response times by empowering local or regional managers to make decisions and address customer needs more directly and quickly.

Question 13

The manager of a cost center is responsible for controlling costs and generating revenues for the company.

Accepted Answer

The manager of a cost center is responsible for controlling costs, but not for generating revenues; revenue generation is typically the responsibility of profit centers.

Question 14

For a centralized company,the major planning and controlling decisions are made by top management.

Accepted Answer

In a centralized company, the decision-making authority is concentrated at the top level of management. This means that major planning and controlling decisions are made by top management.

Question 15

Decentralized companies rarely struggle to achieve goal congruence.

Accepted Answer

Decentralized companies may face challenges in achieving goal congruence as different departments or units may pursue their own goals that are not aligned with the overall goals of the company. Coordination and communication are critical for ensuring goal congruence in decentralized companies.

Question 16

A responsibility accounting system evaluates the performance of each responsibility center and its manager.

Accepted Answer

A responsibility accounting system is designed to evaluate the performance of each responsibility center and its manager, making them accountable for achieving their goals and objectives. This allows for better control over the organization, as well as increased transparency and efficiency.

Question 17

Decentralization may cause the company to duplicate certain costs or activities.

Accepted Answer

Decentralization may lead to the duplication of certain costs or activities, as different units or departments may carry out similar activities or functions independently. This can result in increased costs and inefficiencies for the company. However, decentralization can also lead to faster decision-making, better responsiveness to local needs, and improved performance in certain areas.

Question 18

Companies in which owners or top executives make all of the planning,directing and controlling decisions are ________ companies.
A)centralized
B)decentralized
C)formalized
D)segmented

Accepted Answer

In centralized companies, all major decision-making authority is held by a small group at the top, typically the owners or top executives of the organization. They make all of the planning, directing, and controlling decisions. This leads to a hierarchical structure and centralized power.

Question 19

In a decentralized company,all the planning and controlling decisions are made by top management.

Accepted Answer

In a decentralized company, planning and controlling decisions are delegated to lower levels of the organizational hierarchy, allowing for greater autonomy and flexibility in decision-making. Top management may still play a role in setting overall strategic direction and monitoring performance, but they do not make all the decisions themselves.

Question 20

Empowering segment managers to make decisions increases managers' motivation and retention.

Accepted Answer

Empowering segment managers to make decisions gives them a sense of ownership and responsibility towards their segment. This, in turn, can increase their motivation and job satisfaction. When employees feel valued and trusted, they are more likely to stay with the company, leading to better retention rates.

Quiz 24: Responsibility Accounting and Performance Evaluation