Management- Chapter 18 Study Problems

For production and support departments, a method of implementing cost centers that is output-oriented is the:

Engineered-cost method.

Among the benefits of centralized management in a firm is(are):

Utilization of expertise of top management.

Which of the following is not a revenue driver factor which affects sales volume for a manufacturing firm? a. Price changes. b. Customer service. c. Delivery dates. d. Discounts. e. Productivity.

productivity

The most relevant factor in deciding how or which costs should be assigned to an SBU is the degree of:

Controllability.

The replacing of controllable costs with non-controllable costs by a department is:

Cost shifting.

A significant problem in comparing profitability measures among companies is the:

Differences in the accounting methods used by the companies.

For production and support departments, a method of implementing cost centers that is input-oriented is the:

Discretionary-cost method.

Order-filling costs:

usually have a relatively clear relationship to sales volume.

The balanced scorecard is particularly important in difficult economic times because:

Financial measures may be distorted.

Which one of the following is not an order-filling cost? a. Freight. b. Warehousing. c. Inspection. d. Collections.

Inspection

SBUs that include the assets they employ as well as profits in the performance evaluation are:

Investment centers

As a strategic issue, "budget slack" could represent a:

Lower overall level of expected performance than is achievable.

Which one of the following is a drawback of decentralization?

May hinder coordination among independent SBUs.

Expenditures made in revenue centers usually include:

Order-getting costs.

Quick Technology Company is a supplier of high-end research equipment for the pharmaceutical industry. Quick currently has a variety of different firms producing computer chips for increased memory and improved processing speeds which are installed in Quick's equipment. In this case, having another firm provide supplies for Quick's equipment is an example of:

Outsourcing

SBUs that generate revenues and incur the major portion of the cost for producing those revenues are:

Profit centers.

Which of the following is not an objective when choosing a cost allocation method? a. Provide an incentive for managers to make decisions consistent with top management's goals. b. Provide an opportunity for managers to make decisions consistent with the manager's goals. c. Provide a basis for a fair evaluation of manager's performance. d. Motivate managers to exert a high level of effort.

Provide an opportunity for managers to make decisions consistent with the manager's goals.

"Outsourcing" a cost center is often done to:

Reduce cost and obtain improve focus.

The main concept of the balanced scorecard is that, to evaluate the SBU's progress to strategic success, an organization must use all of the following except: a. Both financial and non-financial measures. b. Value chain analysis. c. Measures of customer satisfaction. d. Multiple measures for a comprehensive evaluation

b

In a not-for-profit organization, you are more likely to see

cost centers

Production or support SBUs within the firm that have the goal of providing the best quality product or service at the lowest cost are:

cost centers

The benefits of decentralized management in a firm include all of the following except: a. Ability of SBU managers to use their local knowledge effectively. b. Ability of SBU managers to make more timely decisions. c. Motivation provided by the freedom and responsibility of a decentralized environment. d. Improved coordination among divisional managers.

d

Which of the following is not a characteristic of the discretionary-cost approach? a.Costs are mainly fixed. b. Outputs are not controllable. c. The focus is on planning. d. Firms use an output-oriented evaluation focus.

d