Question 1

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

Accepted Answer

A McDonald's restaurant is considered an investment center because it generates revenue and profits for its owners, who have made a financial investment in the business. It also requires ongoing investments in areas such as advertising, equipment maintenance, and employee training to sustain its operations and profitability.

Question 2

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

Accepted Answer

The accounting department of a department store chain is not likely to be considered an investment center because it does not directly generate revenue or profits for the company. An investment center typically refers to a division or department within a company that has significant control over its own operations and generates revenue and profits for the overall organization. Examples of investment centers may include product divisions or regional offices.

Question 3

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

Accepted Answer

False

Question 4

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

Accepted Answer

Decentralization can lead to increased costs due to duplication of functions, such as multiple purchasing departments, which may not benefit from economies of scale.

Question 5

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 center.
B)investment center.
C)profit center.
D)revenue center.

Accepted Answer

Pillsbury, as a company acquired by General Mills, would be classified as an investment center because it is responsible for generating profits and managing its own revenues and expenses, as well as making decisions about investments in assets.

Question 6

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

Accepted Answer

The human resources department in a car dealership is responsible for managing employee relations, recruitment, and training. These responsibilities do not generate revenue directly for the dealership. Instead, they are considered as support functions and fall under the category of cost centers. Cost centers are responsible for controlling and reducing costs within an organization.

Question 7

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

Accepted Answer

Decentralization allows for more autonomy and decision-making power to be given to lower-level managers in each business unit, which can result in the hiring of workers with specialized knowledge and expertise for that unit.

Question 8

Small companies tend to use centralized decision making.

Accepted Answer

Small companies typically have a more centralized decision-making process due to having a smaller management team and fewer departments. This allows for quicker decision-making and easier communication within the organization.

Question 9

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

Accepted Answer

Since the games department reports revenues and expenses, it is likely responsible for generating its own profits or losses, making it a profit center.

Question 10

Duplication of costs is a disadvantage of decentralized organizations.

Accepted Answer

In a decentralized organization, each department may have its own resources, such as accounting and administrative staff, which can lead to duplication of costs. This can be a disadvantage to the organization as a whole.

Question 11

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 different departments or units may have redundant resources or may operate independently without coordinating with each other. Benchmarking, feedback, and training are not inherently disadvantages of decentralization.

Question 12

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

Accepted Answer

Decentralized companies divide their operations into different divisions or units, thus spreading out decision-making and responsibility across various levels of the organization.

Question 13

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 of the disadvantages of decentralization is that unit managers may not understand the big picture of the company, leading to decisions that benefit their individual unit but may not be in the best interest of the overall organization. The other options listed are not disadvantages of decentralization. A is a potential disadvantage of being too focused on day-to-day operations rather than long-term planning, but it is not specific to decentralization. C and D are actually advantages of decentralization, as it allows managers to have more autonomy and can lead to increased motivation and opportunities for advancement.

Question 14

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

Accepted Answer

A profit center is a business unit that generates revenue and incurs expenses, and is accountable for its profitability. A convenience store owned by a national chain is likely to be classified as a profit center since it generates revenue and incurs expenses, and the company will likely analyze its profitability.

Question 15

Goal incongruence frequently exists in centralized organizations.

Accepted Answer

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

Question 16

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

Accepted Answer

Decentralization involves delegating decision-making authority to lower-level managers, allowing top management to focus on high-level, long-term planning and strategy.

Question 17

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

Accepted Answer

The taxation department is typically a cost center because it does not directly generate revenue or profits but incurs costs to support the organization's operations.

Question 18

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

Decentralization allows lower-level managers to make decisions, which provides them with training and experience in decision-making.

Question 19

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

Accepted Answer

The answer of  The reservations department for a hotel...

Question 20

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

Accepted Answer

The laundry department is typically a cost center because it incurs costs but does not directly generate revenue or profits.

Quiz 11: Performance Evaluation and the Balanced Scorecard

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

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

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

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

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) :

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.

Small companies tend to use centralized decision making.

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

Duplication of costs is a disadvantage of decentralized organizations.

Which of the following is a potential disadvantage of decentralization?

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

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) :

Goal incongruence frequently exists in centralized organizations.

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

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

Which of the following is a potential advantage of decentralization?

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

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