Multiple-Choice Questions
1. The practice of delegating authority to division-level managers by top management is
a. Centralization.
b. Good business practice.
c. Decentralization.
d. Autonomy.
e. Never done in business today.
2. Which of the following is a reason for decentralizing?
a. Training and motivating managers.
b. Unmasking inefficiencies in subdivisions of an overall profitable company.
c. Allowing top management to focus on strategic decision making.
d. Allowing top management to make all key operating decisions throughout the company.
e. All of the above are reasons for decentralizing.
3 A responsibility center in which a manager is responsible for both revenues and costs is a(n)
a. Cost center.
b. Profit center.
c. Revenue center.
d. Investment center.
4 A responsibility center in which a manager is responsible for revenues, costs, and investments is a(n)
a. Cost center.
b. Profit center.
c. Revenue center.
d. Investment center.
5 If sales and average operating assets for year 2 are identical to their values in year 1, yet operating income is higher, year 2 return on investment (compared with year 1 ROI) will
a. Increase.
b. Decrease.
c. Stay the same.
d. The direction of change in ROI cannot be determined by this information.
6. If sales and average operating assets for year 2 are identical to their values in year 1, yet operating income is higher, year 2 turnover (compared with year 1 turnover) will
a. Increase.
b. Decrease.
c. Stay the same.
d. The direction of change in turnover cannot be determined by this information.