Question 1

​A telecommunication company divided into different divisions for residential and business Internet service is an example of

Accepted Answer

A) ​An M-form of an organization 
B) A functional organization 
C) An N-form organization 
D) ​All of the above 
A) ​An M-form of an organization 
B) A functional organization 
C) An N-form organization 
D) ​All of the above

Question 2

​When a transfer price decreases

Accepted Answer

A) ​the costs of the division using the intermediate product will fall 
B) the profits of the division using the intermediate product will be unaffected 
C) the profits of the division using the intermediate product will fall 
D) ​the profits of the division using the intermediate product will rise 
A) ​the costs of the division using the intermediate product will fall 
B) the profits of the division using the intermediate product will be unaffected 
C) the profits of the division using the intermediate product will fall 
D) ​the profits of the division using the intermediate product will rise

Question 3

​Which of the following is a feature of an M-Form organization?

Accepted Answer

A) ​divisions can respond more easily to changes in customer demand 
B) it is difficult to maintain customer relationships 
C) coordination across divisions is simple and does not take much management time 
D) ​evaluating employees is easier because managers typically are similarly trained 
A) ​divisions can respond more easily to changes in customer demand 
B) it is difficult to maintain customer relationships 
C) coordination across divisions is simple and does not take much management time 
D) ​evaluating employees is easier because managers typically are similarly trained

Question 4

​When a transfer price decreases

Accepted Answer

A) ​the buying division will want to sell less to the selling division 
B) the buying division will want to sell more to the selling division 
C) the selling division will want to sell less to the buying division 
D) ​the selling division will want to sell more to the buying division 
A) ​the buying division will want to sell less to the selling division 
B) the buying division will want to sell more to the selling division 
C) the selling division will want to sell less to the buying division 
D) ​the selling division will want to sell more to the buying division

Question 5

​A solution to the budget-gaming problem is

Accepted Answer

A) ​Remove all kinks from the compensation schedule 
B) Use a straight line pay for performance function 
C) Do not base compensation on meeting a particular budget goal 
D) ​All of the above 
A) ​Remove all kinks from the compensation schedule 
B) Use a straight line pay for performance function 
C) Do not base compensation on meeting a particular budget goal 
D) ​All of the above

Question 6

​Which of the following is TRUE?

Accepted Answer

A) ​Maximizing division profits always leads to maximizing company-wide profits 
B) Managers of profit centers are not given any discretion in their decision making 
C) Profit centers usually require the highest degree of attention of corporate executives 
D) ​A manager being rewarded on division revenues has the most incentive to make good decisions for his division 
A) ​Maximizing division profits always leads to maximizing company-wide profits 
B) Managers of profit centers are not given any discretion in their decision making 
C) Profit centers usually require the highest degree of attention of corporate executives 
D) ​A manager being rewarded on division revenues has the most incentive to make good decisions for his division

Question 7

​If the fixed costs can be ignored,a relatively good approximation of the correct transfer price is

Accepted Answer

A) ​average costs 
B) average fixed costs 
C) average variable costs 
D) ​the market price 
A) ​average costs 
B) average fixed costs 
C) average variable costs 
D) ​the market price

Question 8

​Which of the following is a feature of an M-Form organization?

Accepted Answer

A) ​divisions have difficulty responding to changes in customer demand 
B) it is difficult to maintain customer relationships 
C) there is less coordination across the firm's divisions 
D) ​evaluating employees is easier because managers typically are similarly trained 
A) ​divisions have difficulty responding to changes in customer demand 
B) it is difficult to maintain customer relationships 
C) there is less coordination across the firm's divisions 
D) ​evaluating employees is easier because managers typically are similarly trained

Question 9

​Which of the following is TRUE?

Accepted Answer

A) ​Maximizing division profits always leads to maximizing company-wide profits 
B) Managers of profit centers are not given any discretion in their decision making 
C) Profit centers often largely run by themselves without a lot of executive oversight 
D) ​A manager being rewarded on division revenues has no incentive to make good decisions for his division 
A) ​Maximizing division profits always leads to maximizing company-wide profits 
B) Managers of profit centers are not given any discretion in their decision making 
C) Profit centers often largely run by themselves without a lot of executive oversight 
D) ​A manager being rewarded on division revenues has no incentive to make good decisions for his division

Question 10

​When considering setting the transfer price at the market price of a product similar to the intermediate good that is already available on the market

Accepted Answer

A) ​It is appropriate to ignore that the market price includes a margin above marginal cost 
B) Consider whether the product on the market includes costly features your downstream division does not use 
C) It is OK if the product on the market is inexpensive because its quality is lower than you use 
D) ​If it is similar enough,it is justification for you producing it in-house 
A) ​It is appropriate to ignore that the market price includes a margin above marginal cost 
B) Consider whether the product on the market includes costly features your downstream division does not use 
C) It is OK if the product on the market is inexpensive because its quality is lower than you use 
D) ​If it is similar enough,it is justification for you producing it in-house

Question 11

​Which of the following is TRUE about firms organized along functional lines?

Accepted Answer

A) ​Workers develop functional expertise 
B) Workers can easily share information within their division 
C) They foster the exploitation of economies of scale 
D) ​All of the above 
A) ​Workers develop functional expertise 
B) Workers can easily share information within their division 
C) They foster the exploitation of economies of scale 
D) ​All of the above

Question 12

​A cost center

Accepted Answer

A) ​Records total costs of production 
B) Is rewarded for increasing the costs of producing a specified output 
C) Is rewarded for decreasing the costs of producing a specified output 
D) ​None of the above 
A) ​Records total costs of production 
B) Is rewarded for increasing the costs of producing a specified output 
C) Is rewarded for decreasing the costs of producing a specified output 
D) ​None of the above

Question 13

​"Environmental Awareness" Training
Mega Manufacturing's corporate headquarters requires periodic classes in the green policies that it embraces.The Human Resource Department conducts the relevant classes and is run as a profit center with each plant manager paying a transfer price per employee taking the classes.Recently,some of the plant managers have been hiring outside firms to conduct these classes.HR has complained to corporate that they will have to lay off staff if this continues but the plant managers reply that the outside firms are much cheaper.Why might corporate headquarters want to ban classes run by external firms anyway?

Accepted Answer

The transfer price could be too high.The

Question 14

​Adam Smith's pin factory and Henry Ford's automobile assembly line are examples of

Accepted Answer

A) ​Product lines 
B) Functionally organized firms 
C) Inefficient processes 
D) ​In-line production 
A) ​Product lines 
B) Functionally organized firms 
C) Inefficient processes 
D) ​In-line production

Question 15

​If the fixed costs are relatively large,a relatively good approximation of the correct transfer price is

Accepted Answer

A) ​average costs 
B) average fixed costs 
C) average variable costs 
D) ​the market price 
A) ​average costs 
B) average fixed costs 
C) average variable costs 
D) ​the market price

Question 16

​An example of an M-type organizational architecture based on customer type is when divisions are defined as

Accepted Answer

A) ​R&D,Engineering,Production,Marketing,Sales 
B) Component 1 Plant,Component 2 Plant,Component 3 Plant,Final Assembly 
C) Store 1,Store 2,Store 3,Region A,Region B,Sales Division 
D) ​Business Customers,Educational Customers,Household Customers 
A) ​R&D,Engineering,Production,Marketing,Sales 
B) Component 1 Plant,Component 2 Plant,Component 3 Plant,Final Assembly 
C) Store 1,Store 2,Store 3,Region A,Region B,Sales Division 
D) ​Business Customers,Educational Customers,Household Customers

Question 17

​In profit centers

Accepted Answer

A) ​Managers are difficult to evaluate because there is no simple metric of how well they performed 
B) Managers typically have the necessary information to run their division efficiently 
C) Managers' decisions rarely affect other divisions 
D) ​Managers typically do not have the incentives to run their division efficiently 
A) ​Managers are difficult to evaluate because there is no simple metric of how well they performed 
B) Managers typically have the necessary information to run their division efficiently 
C) Managers' decisions rarely affect other divisions 
D) ​Managers typically do not have the incentives to run their division efficiently

Question 18

Safety Training
One task of Mega Manufacturing's Human Resource Department is to perform periodic safety training at Mega's various plants.HR is run as a profit center with each plant manager paying for this safety training via a transfer price.Recently,some of the plant managers have been hiring outside firms for their safety training.HR has complained to corporate that they will have to lay off staff if this continues but the plant managers reply that they are maintaining their acceptable safety record at a lower cost.What does this imply about the transfer price?

Accepted Answer

The transfer price is too high.If HR is

Question 19

​Which of the following is FALSE about firms organized along functional lines?

Accepted Answer

A) ​Workers find it difficult to develop functional expertise 
B) Workers can easily share information within their division 
C) They foster the exploitation of economies of scale 
D) ​None of the above 
A) ​Workers find it difficult to develop functional expertise 
B) Workers can easily share information within their division 
C) They foster the exploitation of economies of scale 
D) ​None of the above

Question 20

​The major problem with running a functionally organized firm is

Accepted Answer

A) ​Measuring divisions' performance 
B) Tying pay to performance 
C) Ensuring that the functional divisions are working towards a common goal 
D) ​All of the above 
A) ​Measuring divisions' performance 
B) Tying pay to performance 
C) Ensuring that the functional divisions are working towards a common goal 
D) ​All of the above

A telecommunication company divided into different divisions for residential and business Internet service is an example of

When a transfer price decreases

Which of the following is a feature of an M-Form organization?

When a transfer price decreases

A solution to the budget-gaming problem is

Which of the following is TRUE?

If the fixed costs can be ignored,a relatively good approximation of the correct transfer price is

Which of the following is a feature of an M-Form organization?

Which of the following is TRUE?

When considering setting the transfer price at the market price of a product similar to the intermediate good that is already available on the market

Which of the following is TRUE about firms organized along functional lines?

A cost center

Adam Smith's pin factory and Henry Ford's automobile assembly line are examples of

If the fixed costs are relatively large,a relatively good approximation of the correct transfer price is

An example of an M-type organizational architecture based on customer type is when divisions are defined as

In profit centers

Which of the following is FALSE about firms organized along functional lines?

The major problem with running a functionally organized firm is

The One Lessor of Business

Benefits, Costs, and Decisions

Extent How Much Decisions

Investment Decisions: Look Ahead and Reason Back

Simple Pricing

Economies of Scale and Scope

Understanding Markets and Industry Changes

Market Structure and Long Run Equilibrium

Strategy: the Quest to Keep Profit From Eroding

Foreign Exchange, Trade, and Bubbles

More Realistic and Complex Pricing

Direct Price Discrimination

Strategic Games

Bargaining

Making Decisions With Uncertainty

Auctions

The Problem of Adverse Selection

The Problem of Moral Hazard

Getting Employees to Work in the Firms Best Interest

Managing Vertical Relationships

Filters

Exam 20: Getting Divisions to Work in the Firms Best Interest

​A telecommunication company divided into different divisions for residential and business Internet service is an example of

​When a transfer price decreases

​Which of the following is a feature of an M-Form organization?

​When a transfer price decreases

​A solution to the budget-gaming problem is

​Which of the following is TRUE?

​If the fixed costs can be ignored,a relatively good approximation of the correct transfer price is

​Which of the following is a feature of an M-Form organization?

​Which of the following is TRUE?

​When considering setting the transfer price at the market price of a product similar to the intermediate good that is already available on the market

​Which of the following is TRUE about firms organized along functional lines?

​A cost center

​Adam Smith's pin factory and Henry Ford's automobile assembly line are examples of

​If the fixed costs are relatively large,a relatively good approximation of the correct transfer price is

​An example of an M-type organizational architecture based on customer type is when divisions are defined as

​In profit centers

​Which of the following is FALSE about firms organized along functional lines?

​The major problem with running a functionally organized firm is

The One Lessor of Business

Benefits, Costs, and Decisions

Extent How Much Decisions

Investment Decisions: Look Ahead and Reason Back

Simple Pricing

Economies of Scale and Scope

Understanding Markets and Industry Changes

Market Structure and Long Run Equilibrium

Strategy: the Quest to Keep Profit From Eroding

Foreign Exchange, Trade, and Bubbles

More Realistic and Complex Pricing

Direct Price Discrimination

Strategic Games

Bargaining

Making Decisions With Uncertainty

Auctions

The Problem of Adverse Selection

The Problem of Moral Hazard

Getting Employees to Work in the Firms Best Interest

Managing Vertical Relationships

Filters

A telecommunication company divided into different divisions for residential and business Internet service is an example of

When a transfer price decreases

Which of the following is a feature of an M-Form organization?

When a transfer price decreases

A solution to the budget-gaming problem is

Which of the following is TRUE?

If the fixed costs can be ignored,a relatively good approximation of the correct transfer price is

Which of the following is a feature of an M-Form organization?

Which of the following is TRUE?

When considering setting the transfer price at the market price of a product similar to the intermediate good that is already available on the market

Which of the following is TRUE about firms organized along functional lines?

A cost center

Adam Smith's pin factory and Henry Ford's automobile assembly line are examples of

If the fixed costs are relatively large,a relatively good approximation of the correct transfer price is

An example of an M-type organizational architecture based on customer type is when divisions are defined as

In profit centers

Which of the following is FALSE about firms organized along functional lines?

The major problem with running a functionally organized firm is