Question 1

The taxation department for department store chain is likely to be classified as a(n)
A)cost centre.
B)investment centre.
C)profit centre.
D)revenue centre.

Accepted Answer

The taxation department for a department store chain is typically classified as a cost centre because it does not generate revenue directly but incurs costs that need to be managed efficiently.

Question 2

Decentralization helps keep a company's costs down since each business unit may have its own purchasing department.

Accepted Answer

Decentralization can actually lead to increased costs because each decentralized unit may have its own administrative functions such as purchasing, which can result in duplication of efforts and lack of economies of scale.

Question 3

Small companies tend to use centralized decision making.

Accepted Answer

Small companies often have a flatter organizational structure with fewer layers of management, which results in decision-making being centralized in a few key individuals or a small team. This is because there is typically less complexity and fewer employees to consult and involve in decision-making processes.

Question 4

The human resources department for car dealership is likely to be classified as a(n)
A)cost centre.
B)investment centre.
C)profit centre.
D)revenue centre.

Accepted Answer

The human resources department is responsible for managing the employees of the car dealership and ensuring that they are properly trained and compensated. This function does not directly generate revenue or profit for the dealership, making it a cost center.

Question 5

Decentralization allows top management to hire workers with expert knowledge for each business unit.

Accepted Answer

Decentralization of decision-making allows for greater autonomy for individual business units, which enables them to hire specialized workers with expert knowledge in their respective areas. This enables the organization to make better and more informed decisions at the unit level, which ultimately contributes to the overall success of the organization.

Question 6

Duplication of costs is a disadvantage of decentralized organizations.

Accepted Answer

Decentralized organizations often have duplicate departments or functions in different branches or divisions, resulting in increased costs and inefficiencies.

Question 7

Companies that decentralize split their operations into different divisions or operating units.

Accepted Answer

Companies that decentralize split their operations into different divisions or operating units, allowing for more autonomy and decision-making power at different levels of the organization. This can result in more efficient and effective operations, as well as better alignment with local markets or customer needs.

Question 8

Which of the following is a potential advantage of decentralization?
A)Benchmarking
B)Promotes goal congruence and coordination
C)Provides feedback
D)Provides training

Accepted Answer

The answer of Which of the following is a potential...

Question 9

The laundry department for a Ritz-Carlton hotel is likely to be classified as a(n)
A)cost centre.
B)investment centre.
C)profit centre.
D)revenue centre.

Accepted Answer

The laundry department in a Ritz-Carlton hotel is not directly involved in generating revenue or profit for the hotel. Its primary function is to provide clean linens and towels for guests and maintain cleanliness in the hotel. Therefore, it is best classified as a cost centre, where costs can be closely monitored and controlled in order to maximize efficiency and minimize expenses.

Question 10

The reservations department for a hotel chain is likely to be classified as a(n)
A)cost centre.
B)investment centre.
C)profit centre.
D)revenue centre.

Accepted Answer

The reservations department for a hotel chain is primarily responsible for booking rooms, which directly generates revenue for the hotel. It does not directly control costs, investments, or profits, making it a revenue centre.

Question 11

Goal incongruence frequently exists in centralized organizations.

Accepted Answer

The answer of Goal incongruence frequently exists in centralized organizations....

Question 12

Goal congruence is more likely to be achieved at a decentralized organization rather than a centralized organization.

Accepted Answer

The answer of Goal congruence is more likely to be...

Question 13

Pillsbury produces cookies,pizza,bread,and other food items.Pillsbury was acquired by General Mills in 2001 for $10.4 billion.Pillsbury is likely to be classified as a(n)
A)cost centre.
B)investment centre.
C)profit centre.
D)revenue centre.

Accepted Answer

Pillsbury, being a large subsidiary that produces and sells various food items, would be classified as an investment centre. This is because it not only generates revenue but also incurs costs and investments in assets, giving it the responsibility for profit and investment decisions.

Question 14

An amusement park's games department which reports revenues and expenses is likely to be classified as a(n)
A)cost centre.
B)investment centre.
C)profit centre.
D)revenue centre.

Accepted Answer

The amusement park's games department reports both revenues and expenses, indicating that it is responsible for generating its own profits or losses. As such, it is likely to be classified as a profit centre. Cost centres are responsible for managing costs, investment centres are responsible for generating returns on investments, and revenue centres are responsible for generating revenue but may not have control over expenses.

Question 15

The accounting department for a department store chain is likely to be considered an investment centre.

Accepted Answer

While the accounting department may play a critical role in tracking and analyzing financial performance, it is not typically considered an investment centre. An investment centre is a business unit that is responsible for making significant investments and decisions related to capital expenditures, such as expanding existing stores or opening new ones. Examples of potential investment centres within a department store chain may include the real estate department or the store operations team.

Question 16

Which of the following is a disadvantage of decentralization?
A)Management does not have time to concentrate on long-term strategic planning.
B)Unit managers may not understand the big picture of the company.
C)Unit managers have decreased motivation and retention.
D)Managers receive training and experience to allow advancement in the organization.

Accepted Answer

One disadvantage of decentralization is that unit managers may not fully understand the overall strategy and goals of the company. This may lead to decisions being made that are not in the best interest of the company as a whole.

Question 17

The convenience store owned by a national chain is likely to be classified as a(n)
A)cost centre.
B)investment centre.
C)profit centre.
D)revenue centre.

Accepted Answer

A profit centre is a business unit that generates revenue and incurs expenses and is responsible for profitability. Since the convenience store is owned by a national chain, it is likely to be treated as a profit centre, responsible for generating revenue and profitability. Cost centres are responsible for incurring expenses only, investment centres are responsible for generating revenue and managing investments, and revenue centres are responsible for generating revenue only.

Question 18

The local McDonald's restaurant is likely to be considered to be an investment centre.

Accepted Answer

The local McDonald's restaurant is a physical asset that generates a return on investment, making it an investment centre.

Question 19

Which of the following is a potential disadvantage of decentralization?
A)Benchmarking
B)Duplication of costs
C)Provides feedback
D)Provides training

Accepted Answer

Decentralization can lead to duplication of costs as each department or unit may have its own budget and resources, which can result in inefficiency and waste. Benchmarking, feedback, and training are potential advantages of decentralization.

Question 20

Decentralization allows top management to concentrate on long-term strategic planning.

Accepted Answer

Decentralization allows for decision-making to be delegated to lower level managers, freeing up top management's time and focus for long-term strategic planning.

Quiz 11: Performance Evaluation and the Balanced Scorecard

The taxation department for department store chain is likely to be classified as a(n)

Decentralization helps keep a company's costs down since each business unit may have its own purchasing department.

Small companies tend to use centralized decision making.

The human resources department for car dealership is likely to be classified as a(n)

Decentralization allows top management to hire workers with expert knowledge for each business unit.

Duplication of costs is a disadvantage of decentralized organizations.

Companies that decentralize split their operations into different divisions or operating units.

Which of the following is a potential advantage of decentralization?

The laundry department for a Ritz-Carlton hotel is likely to be classified as a(n)

The reservations department for a hotel chain is likely to be classified as a(n)

Goal incongruence frequently exists in centralized organizations.

Goal congruence is more likely to be achieved at a decentralized organization rather than a centralized organization.

Pillsbury produces cookies,pizza,bread,and other food items.Pillsbury was acquired by General Mills in 2001 for $10.4 billion.Pillsbury is likely to be classified as a(n)

An amusement park's games department which reports revenues and expenses is likely to be classified as a(n)

The accounting department for a department store chain is likely to be considered an investment centre.

Which of the following is a disadvantage of decentralization?

The convenience store owned by a national chain is likely to be classified as a(n)

The local McDonald's restaurant is likely to be considered to be an investment centre.

Which of the following is a potential disadvantage of decentralization?

Decentralization allows top management to concentrate on long-term strategic planning.