1. Which of the following best describes an advantage of decentralization from the company's perspective?

a- Managers at the division level might make decisions that are in their best interest even if the decision is not in the best interest of the company as a whole.

b- Decentralization allows top-level management at a corporate headquarters to work with division managers in making day-to-day decisions at the division level.

c- Decentralization allows for the duplication of administrative services.

d- None of the answer choices is correct.

e- Decentralization allows decisions to be made more quickly at the division level.

2. All of the following are false about transfer pricing except:

a- None of the answer choices is correct.

b- the cost approach can base the transfer price on either the variable cost or full absorption cost.

c- using negotiated transfer pricing is always the best approach.

d- using the cost approach is always the best approach.

e- companies should always use the selling division's variable cost as the transfer price.

3. An advantage of return on investment (ROI) as a performance measure is that:

a- None of the answer choices is correct.

b- it includes the use of assets to evaluate performance.

c- net income is used in the numerator.

d- it is calculated the same way by different organizations.

e- operating assets available at year-end is used in the denominator.

4. Which of the following statements is true regarding the use of the operating profit margin as a performance measure?

a- It is calculated as net income divided by sales.

b- None of the answer choices is correct.

c- It ignores the investment in the assets that produced the income.

d- It includes the assets that produced the income.

e- It is calculated as sales divided by operating income.