61.Which of the following is an advantage of decentralization?
A. Decentralization encourages managers to focus on strategic decisions.
B. Authority and responsibility is not clear.
C. Decentralization motivates managers to improve productivity.
D. None of these.
62.Which of the following is a characteristic that is needed for decentralization to work well in an organization?
A. Clear lines of authority
B. Responsibility
C. Good communication
D. All of these.
63.A reporting unit of a decentralized business that controls identifiable revenue and/or expense items is known as a(n):
A. Management center.
B. Performance center.
C. Accounting center.
D. Responsibility center.
64.Vanessa Grant is responsible for controlling expenses, but is not responsible for generating revenues. Vanessa Grant is a manager of a(n):
A. Cost center.
B. Profit center.
C. Investment center.
D. Liability center.
65.Which of the following statements regarding cost centers is
incorrect?
A. Cost centers are units within a business that incur expense, but do not have responsibility for generating revenue.
B. Cost centers tend to be found at upper levels on a company's organization chart.
C. A manager of a cost center has less responsibility than a manager in an investment center.
D. Cost center managers are evaluated on their ability to control costs and keep within budget.
66.An organizational unit of a business that incurs costs and generates revenues is known as a(n):
A. Cost center.
B. Sales center.
C. Profit center.
D. Investment center.
67.Which of the following statements regarding profit centers is correct?
A. A manager of a profit center has more responsibility than a manager of an investment center.
B. A manager of profit center is evaluated only on his/her ability to control costs.
C. A manager of a profit center is evaluated on his/her ability to control costs and generate revenues.
D. A manager of a profit center is responsible for assets, liabilities, and earnings.
68.Delegating authority and responsibility throughout an organization is known as:
A. centralization.
B. decentralization.
C. management by exception.
D. suboptimization.
69.Which of the following statements regarding investment centers is
incorrect?
A. A manager of an investment center is responsible for the investment of capital, but not revenues or expenses.
B. Investment centers are commonly found at the higher levels of an organization chart.
C. A manager of an investment center should be accountable for assets, liabilities, earnings.
D. Return on investment and residual income are tools used to assess managers of an investment center.
70.The cellular phone division of Stegall Company had budgeted sales of $950,000 and actual sales of $900,000. Budgeted expenses were $600,000 while actual expenses were $550,000. Based on this information, the responsibility report for the manager of this profit center would show:
A. A favorable revenue variance.
B. A favorable cost variance.
C. Both a favorable revenue variance and a favorable cost variance.
D. None of these.