Question 1

The production line at Dell Computers is most likely treated as a(n)
A) cost centre.
B) investment centre.
C) profit centre.
D) revenue centre.

Accepted Answer

The production line at Dell Computers is most likely treated as a cost centre because it is a unit within the organization where the primary responsibility is to control costs, rather than generating revenue, profits, or investments.

Question 2

An amusement park's games department which reports revenues and expenses is likely to be classified as a(n)
A) cost centre.
B) investment centre.
C) profit centre.
D) revenue centre.

Accepted Answer

An amusement park's games department that reports revenues and expenses would be considered a profit center since it has control over both its revenue generation and expenses incurred. A profit center's objective is to generate revenue that exceeds its expenses, resulting in a profit for the company.

Question 3

Which of the following is a potential advantage of decentralization?
A) Benchmarking
B) Promotes goal congruence and coordination
C) Provides feedback
D) Provides training

Accepted Answer

Decentralization can provide training opportunities as it allows lower-level managers to make decisions, thereby gaining experience and developing their skills.

Question 4

The central reservation office at American Airlines is most likely treated as a(n)
A) cost centre.
B) investment centre.
C) profit centre.
D) revenue centre.

Accepted Answer

The answer of The central reservation office at American Airlines...

Question 5

Discuss two potential problems associated with decentralization.

Accepted Answer

The answer of Discuss two potential problems associated with decentralization....

Question 6

The manager of the accounting department at Nike would be in charge of a(n)
A) cost centre.
B) investment centre.
C) profit centre.
D) revenue centre.

Accepted Answer

The manager of the accounting department at Nike would oversee a cost centre, as this department does not directly generate revenue but incurs costs to support the business operations.

Question 7

A product line at Coca-Cola (such as the Diet Coke product line) is most likely treated as a(n)
A) cost centre.
B) investment centre.
C) profit centre.
D) revenue centre.

Accepted Answer

A product line, such as the Diet Coke product line, would most likely be treated as a profit centre. This is because it generates revenue and incurs costs, and managers are responsible for both controlling costs and increasing profits. By focusing on increasing revenue and reducing costs, the managers of the Diet Coke product line can contribute to the overall profitability of the company.

Question 8

List and describe five reasons why a company might choose to decentralize.

Accepted Answer

The answer of List and describe five reasons why a...

Question 9

The manager of the Walt Disney World Resorts (a corporate division) would be in charge of a(n)
A) cost centre.
B) investment centre.
C) profit centre.
D) revenue centre.

Accepted Answer

The manager of the Walt Disney World Resorts would be in charge of an investment centre, as they are responsible for generating profits and making decisions about investments in assets.

Question 10

Comparing company results against industry benchmarks is often less useful than comparing actual results against budget amount.

Accepted Answer

Comparing company results against industry benchmarks is useful for understanding the company's performance relative to its peers, which can offer insights into competitive positioning and potential areas for improvement. Comparing actual results against budget amounts is also important but serves a different purpose, focusing on internal financial management and planning accuracy.

Question 11

The manager of the corporate division of Hollister would be in charge of a(n)
A) cost centre.
B) investment centre.
C) profit centre.
D) revenue centre.

Accepted Answer

The answer of The manager of the corporate division of...

Question 12

Which of the following is a potential disadvantage of decentralization?
A) Benchmarking
B) Duplication of costs
C) Provides feedback
D) Provides training

Accepted Answer

Decentralization can lead to duplication of costs, as each unit or department may end up having its own resources and personnel, which can be inefficient and costly. Benchmarking, providing feedback, and training are potential advantages of decentralization.

Question 13

The manager of the Midwest sales region at Pace Food would be in charge of a(n)
A) cost centre.
B) investment centre.
C) profit centre.
D) revenue centre.

Accepted Answer

The answer of The manager of the Midwest sales region...

Question 14

The manager of a local Walmart would be in charge of a(n)
A) cost centre.
B) investment centre.
C) profit centre.
D) revenue centre.

Accepted Answer

The manager of a Walmart location would be responsible for managing and increasing the profits of the store. As such, they are in charge of a profit centre. They are responsible for controlling costs, increasing sales, and managing inventory to achieve profitability.

Question 15

Match the following:
A) Decentralized
B) Centralized
1) Having formal training programs for lower level managers the company has a policy that they promote from within the company whenever possible.
2) The company is divided into several operating units.
3) Johnson Enterprises is a small molding manufacturer. The owner is also the senior manager.
4) Managers have the authority to make decisions about product offerings and pricing.
5) In order to avoid duplication of services the company has "flattened" its organization structure and now has only one Payroll Department, one Human Resource department and one administrative headquarters.

Accepted Answer

The answer of Match the following:
A) Decentralized
B) Centralized
1) Having formal...

Question 16

Comparing a company's achievements against best practices in the industry is called benchmarking.

Accepted Answer

Benchmarking involves comparing a company's processes, products, and achievements with those of industry leaders or best practices in the industry.

Question 17

Performance evaluation systems provide top management with a framework for maintaining control over the organization.

Accepted Answer

Performance evaluation systems help top management monitor employee performance and ensure that organizational goals are being met, providing a way to maintain control over the organization.

Question 18

The human resources department for car dealership is likely to be classified as a(n)
A) cost centre.
B) investment centre.
C) profit centre.
D) revenue centre.

Accepted Answer

Human resources department is typically considered a cost centre as it incurs expenses related to recruitment, training, and development of employees. The department does not directly generate revenue or profit for the dealership.

Question 19

The Frito-Lay division of PepsiCo is most likely treated as a(n)
A) cost centre.
B) investment centre.
C) profit centre.
D) revenue centre.

Accepted Answer

The answer of The Frito-Lay division of PepsiCo is most...

Question 20

The convenience store owned by a national chain is likely to be classified as a(n)
A) cost centre.
B) investment centre.
C) profit centre.
D) revenue centre.

Accepted Answer

A convenience store owned by a national chain is most likely to be classified as a profit centre since it generates revenue that covers its variable and fixed expenses, and ultimately contributes to the overall profitability of the company. A cost centre is a business unit that incurs expenses but doesn't generate revenue, an investment centre is a business unit that is responsible for generating revenue and managing investments, and a revenue centre is a business unit that generates revenue but is not responsible for managing expenses. Therefore, none of the other choices would be a suitable classification for a convenience store owned by a national chain.

Quiz 11: Performance Evaluation and the Balanced Scorecard

The production line at Dell Computers is most likely treated as a(n)

An amusement park's games department which reports revenues and expenses is likely to be classified as a(n)

Which of the following is a potential advantage of decentralization?

The central reservation office at American Airlines is most likely treated as a(n)

Discuss two potential problems associated with decentralization.

The manager of the accounting department at Nike would be in charge of a(n)

A product line at Coca-Cola (such as the Diet Coke product line) is most likely treated as a(n)

List and describe five reasons why a company might choose to decentralize.

The manager of the Walt Disney World Resorts (a corporate division) would be in charge of a(n)

Comparing company results against industry benchmarks is often less useful than comparing actual results against budget amount.

The manager of the corporate division of Hollister would be in charge of a(n)

Which of the following is a potential disadvantage of decentralization?

The manager of the Midwest sales region at Pace Food would be in charge of a(n)

The manager of a local Walmart would be in charge of a(n)

Comparing a company's achievements against best practices in the industry is called benchmarking.

Performance evaluation systems provide top management with a framework for maintaining control over the organization.

The human resources department for car dealership is likely to be classified as a(n)

The Frito-Lay division of PepsiCo is most likely treated as a(n)

The convenience store owned by a national chain is likely to be classified as a(n)