07 X07 A responsibility

07 X07 A - (A MODULE 7 RESPONSIBILITY ACCOUNTING AND TRANSFER PRICING A DECENTRALIZATION AND PERFORMANCE EVALUATION THEORIES Centralization vs

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Responsibility Accounting and Transfer Pricing (A. Decentralization and Performance Evaluation) MODULE 7 RESPONSIBILITY ACCOUNTING AND TRANSFER PRICING A. DECENTRALIZATION AND PERFORMANCE EVALUATION THEORIES: Centralization vs. decentralization Centralization 3. In a company with a centralized approach to responsibility accounting, upper-level managers typically A. make key decisions only B. implement key decisions only C. both make and implement key decisions D. review the outcomes of key decisions only Decentralization 1. Why would a company decentralize? A. to train and motivate division managers B. to focus top management’s attention to operating decisions C. to allow division managers to concentrate on strategic planning D. all of the above 2. Advantages of decentralization include all of the following except A. divisional management is able to react to changing market conditions more rapidly than top management B. divisional management is a source of personnel for promotion to top management positions C. decentralization can motivate divisional managers D. decentralization permits divisional management to concentrate on company-wide problems and long-range planning 4. In a company with a decentralized approach to responsibility accounting, lower-level managers typically A. make key decisions only B. implement key decisions only C. both make and implement key decisions D. review the outcomes of key decisions only 7. Decentralization occurs when A. the firm’s operations are located over a large geographic area to reduce risk B. authority for important decisions is delegated to lower segments of the organization C. important decisions are made at the upper levels and the lower levels of the organization are responsible for implementing the decisions D. none of the above Goal congruence 8. Consistency between goals of the firm and the goals of its employees is: A. goal optimization C. goal congruence B. goal conformance D. goal compensation 16. Goal congruence is most likely to result when A. reports to managers include all costs B. managers’ behavior is affected by the criteria used to judge their performance C. performance evaluation criteria encourage behavior in the company’s best interests as well as in the manager’s best interests D. a manager knows the criteria used to judge his or her performance 35. When a manager takes an action that benefits his or her responsibility center, but not the company as a whole, A. it is a non-controllable action B. there is a lack of goal congruence C. the center must be an artificial profit center D. the manager should be fired Suboptimization 19. A management decision may be beneficial for a given profit center, but not for the entire company. From the overall company viewpoint, this 111
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Responsibility Accounting and Transfer Pricing (A. Decentralization and Performance Evaluation) decision would lead to A. goal congruence C. centralization B. suboptimization D. maximization
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This note was uploaded on 11/22/2010 for the course CAC BSA taught by Professor Kairus during the Spring '10 term at Korea University.

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07 X07 A - (A MODULE 7 RESPONSIBILITY ACCOUNTING AND TRANSFER PRICING A DECENTRALIZATION AND PERFORMANCE EVALUATION THEORIES Centralization vs

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