Chapter 18 MC homework

The "risk-averse" manager will be improperly biased to: 1) Avoid decisions with uncertain outcomes. 2) Make risky decisions. 3) Seek out decisions with uncertain outcomes. 4) Maximize his or her own risk and minimize the company's risk. 5) Use resources beyond his/her control.

1) Avoid decisions with uncertain outcomes.

Which one of the following is a drawback of decentralization? 1) May hinder coordination among independent strategic business units (SBU). 2) Offers an inefficient method of performance evaluation. 3) Uses local knowledge only. 4) Provides less effective operational control. 5) May affect goal congruence.

1) May hinder coordination among independent strategic business units (SBU).

The principal-agent economic model applied to employment contracts includes two of the following management performance aspects: 1) Uncertainty and lack of observability. 2) Controllability and responsibility. 3) Risk and motivation. 4) Rights and duties. 5) Performance and reward.

1) Uncertainty and lack of observability.

What is the manager of a profit center not responsible for? 1) Costs. 2) Invested capital. 3) Revenues. 4) None of the answer choices is correct. 5) Operating profit.

2) Invested capital

Production or support strategic business units (SBU) within the firm that have the goal of providing the best quality product or service at the lowest cost are: 1) Contribution centers. 2) Revenue centers. 3) Cost centers. 4) Profit centers. 5) Investment centers.

3) Cost centers.

For production and support departments, a method of implementing cost centers that is output-oriented is the: 1) Outsourcing method. 2) Discretionary-cost method. 3) Engineered-cost method. 4) Cost shifting method. 5)Budget slack method.

3) Engineered-cost method.

A model that has been used to better understand the key elements that contracts must have in order to achieve the desired objectives is: 1) Goal congruence. 2) Performance evaluation. 3) Principal-agent model. 4)Management control. 5) Operational control.

3) Principal-agent model.

For production and support departments, a method of implementing cost centers that is input-oriented is the: 1) Engineered-cost method. 2) Outsourcing method. 3) Budget slack method. 4) Discretionary-cost method. 5) Cost shifting method.

4) Discretionary-cost method.

The objectives of management control of the manager include: 1) Identification, response and performance. 2) Management by objectives. 3) Cost, quality, and functionality. 4) Motivation, incentive and fairness. 5) Management by exception.

4) Motivation, incentive and fairness.

The replacing of controllable costs with non-controllable costs by a department is: 1) Discretionary-cost method. 2) Engineered-cost approach. 3) Outsourcing. 4) Budget slack. 5) Cost shifting.

5) Cost shifting.

Expenditures made in revenue centers usually include: 1) Order-purchasing costs. 2) Order-scheduling costs. 3) Order-producing costs. 4) Order-delivering costs. 5) Order-getting costs.

5) Order-getting costs.

Strategic business units (SBU) that generate revenues and incur the major portion of the cost for producing those revenues are: 1) Investment centers. 2) Revenue centers. 3) Cost centers. 4) Contribution centers. 5) Profit centers.

5) Profit centers.