Multiple Choice Questions
1.The practice of delegating authority and responsibility is referred to as:
A. Centralization of authority.
B. Standard costing.
C. Management by exception.
D. Decentralization.
2.A major benefit of a decentralized organization is that:
A. Lower level managers are more motivated to improve productivity.
B. Upper level managers are more involved in routine decisions.
C. It avoids the necessity for a managerial accounting system.
D. It avoids decision making by less experienced lower level managers.
3.Thanks to his firm's decentralization and use of responsibility accounting, Matt has more time to review a proposed new joint venture with one of the firm's business partners. What advantage of decentralization does this illustrate?
A. Encourages upper level management to concentrate on strategic decisions
B. Trains lower level managers to accept higher responsibilities
C. Improves performance evaluation
D. Motivates managers to improve productivity
4.Which of the following is a potential disadvantage of decentralization?
A. Decentralization does not prepare lower level managers to accept higher level responsibilities.
B. Managers may neglect their own needs while working to achieve the objectives of the firm as a whole.
C. If authority is too widely disbursed, the cohesiveness of the overall organization may suffer.
D. All of these.
5.Which of the following is
not
typically found in a decentralized organization?
A. Cost center
B. Decision center
C. Investment center
D. Profit center
6.Packrall Company makes computer chips. Curtis is manager of the company's maintenance department. Because his maintenance technicians are so well trained in maintaining expensive and sensitive circuit board stamping equipment, Curtis has been authorized to contract to perform maintenance for outside customers. In
this
company, the maintenance department is likely organized as:
A. A profit center.
B. A revenue center.
C. A cost center.
D. An investment center.
7.The research and development department of Apple Computers would likely be organized as:
A. A profit center.
B. A cost center.
C. A revenue center.
D. An investment center.
8.Contribution margin would be the most important variable in evaluating the performance of:
A. A cost center.
B. A production center.
C. An investment center.
D. A profit center.
9.The kind of responsibility center that would be evaluated by comparing income on assets to the amount of assets invested is:
A. An investment center.
B. An asset center.
C. A cost center.
D. A profit center.
10.A tool that is often used to depict the lines of authority and responsibility within a firm is:
A. A variance report.
B. An organization chart.
C. A master budget.
D. A responsibility report.