Question 1

​Conflicts can arise between divisions because

Accepted Answer

A) ​Coordination between divisions does not benefit all divisions equally 
B) managers of profit centers care too little about the effects of their decisions on other divisions 
C) managers are rewarded only for actions that increase their own divisional profit regardless of their effects on other divisions 
D) ​all of the above 
A) ​Coordination between divisions does not benefit all divisions equally 
B) managers of profit centers care too little about the effects of their decisions on other divisions 
C) managers are rewarded only for actions that increase their own divisional profit regardless of their effects on other divisions 
D) ​all of the above

Question 2

​Ways to "game" the budgeting process include

Accepted Answer

A) ​delaying sales if just short of a target 
B) accelerating expenses if just short of a target 
C) accelerating sales once a target is met 
D) ​accelerating expenses costs once a target is met 
A) ​delaying sales if just short of a target 
B) accelerating expenses if just short of a target 
C) accelerating sales once a target is met 
D) ​accelerating expenses costs once a target is met

Question 3

​Straight line pay for performance

Accepted Answer

A) ​Eliminates the managers' incentives to lie about the budget 
B) Eliminates the perverse incentive to hide information 
C) Does not link compensation to meeting a budget target 
D) ​All of the above 
A) ​Eliminates the managers' incentives to lie about the budget 
B) Eliminates the perverse incentive to hide information 
C) Does not link compensation to meeting a budget target 
D) ​All of the above

Question 4

​All of the following can cause conflict between divisions EXCEPT

Accepted Answer

A) ​Divisional managers are rewarded on the profitability of the firm,instead of profitability of the division 
B) managers of profit centers care too little about the effects of their decisions on other divisions 
C) managers are rewarded only for how much profit their division generates 
D) ​corporate executives cannot tell when one divisional manager's decisions are appropriate or not 
A) ​Divisional managers are rewarded on the profitability of the firm,instead of profitability of the division 
B) managers of profit centers care too little about the effects of their decisions on other divisions 
C) managers are rewarded only for how much profit their division generates 
D) ​corporate executives cannot tell when one divisional manager's decisions are appropriate or not

Question 5

​"Divisions" of a University
The separate colleges within universities are often operated as profit centers.While a student takes courses throughout the university,the budget of a specific dean is based on the students it serves.Two models are 1)basing funds on the number of student hours generated by a college and 2)basing funds on the number of students completing majors within the college.How do these two models affect the incentives for which courses included in the degree programs?

Accepted Answer

Under the first model,course enrollments

Question 6

​A parent company rewarding managers on profit centers can simply

Accepted Answer

A) ​Subtract division costs from the division revenue and reward the manager on the difference 
B) Add the division costs to the division revenue and reward the manager on the sum 
C) Reward the manager on the revenue of the division 
D) ​Reward the manager on the costs of the division 
A) ​Subtract division costs from the division revenue and reward the manager on the difference 
B) Add the division costs to the division revenue and reward the manager on the sum 
C) Reward the manager on the revenue of the division 
D) ​Reward the manager on the costs of the division

Question 7

​When a transfer price decreases

Accepted Answer

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

Question 8

​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 do not have the information to run their division efficiently 
C) Managers' decisions can 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 do not have the information to run their division efficiently 
C) Managers' decisions can affect other divisions 
D) ​Managers typically do not have the incentives to run their division efficiently

Question 9

​For managers who have already met their goals,high powered sales goals

Accepted Answer

A) ​Give an incentive to spread out their sales into the year 
B) Give an incentive to accelerate costs or delay sales 
C) Give no incentive to accelerate sales or delay costs 
D) ​None of the above 
A) ​Give an incentive to spread out their sales into the year 
B) Give an incentive to accelerate costs or delay sales 
C) Give no incentive to accelerate sales or delay costs 
D) ​None of the above

Question 10

​An example of organizational architecture based on production of intermediate products 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 11

​Tom & Jerry are running Hanna Barbera's lemonade stand as two profit centers.Tom makes the lemonade while Jerry sells it.Jerry argues that Tom is transferring the lemonade to him priced too high,which forces him to charge the customers a high price,losing sales.Does the decision maker have the incentive to make a good decision?

Accepted Answer

A) ​Yes,because it increases the division profit 
B) No,because it decreases division profit 
C) Yes,because it does not affect division profit 
D) ​No,because it increases company-wide profit 
A) ​Yes,because it increases the division profit 
B) No,because it decreases division profit 
C) Yes,because it does not affect division profit 
D) ​No,because it increases company-wide profit

Question 12

​The M-Form of corporate organization

Accepted Answer

A) ​organizes employees along the functions or tasks that they perform 
B) organizes employees along the customer types that they serve 
C) organizes employees along individual projects that arise 
D) ​organizes employees into softball teams 
A) ​organizes employees along the functions or tasks that they perform 
B) organizes employees along the customer types that they serve 
C) organizes employees along individual projects that arise 
D) ​organizes employees into softball teams

Question 13

​In an M-form organization

Accepted Answer

A) ​The number of divisional conflicts are reduced 
B) Decision making speed increases 
C) Customer retention tends to increase 
D) ​All of the above 
A) ​The number of divisional conflicts are reduced 
B) Decision making speed increases 
C) Customer retention tends to increase 
D) ​All of the above

Question 14

​Which of the following is FALSE?

Accepted Answer

A) ​Maximizing division profits can sometimes lead to reducing company-wide profits 
B) Managers of profit centers are never given any discretion in their decision making 
C) Profit centers usually largely run themselves 
D) ​A manager being rewarded on division revenues has the most incentive to make good decisions for his division 
A) ​Maximizing division profits can sometimes lead to reducing company-wide profits 
B) Managers of profit centers are never given any discretion in their decision making 
C) Profit centers usually largely run themselves 
D) ​A manager being rewarded on division revenues has the most incentive to make good decisions for his division

Question 15

​A division of a firm is

Accepted Answer

A) ​a logical sub-organization of the firm 
B) a level within the firm in which a large degree of autonomy is vested 
C) a level of hierarchy within a firm that defines the scope of a manager 
D) ​all of the above 
A) ​a logical sub-organization of the firm 
B) a level within the firm in which a large degree of autonomy is vested 
C) a level of hierarchy within a firm that defines the scope of a manager 
D) ​all of the above

Question 16

When a transfer price increases

Accepted Answer

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

Question 17

​Which is a possible solution to a divisional conflict regarding a decision?

Accepted Answer

A) ​change the division that has the authority to make the decision 
B) change the information flow so that the decision maker is better informed 
C) change the evaluation and reward scheme governing the decision maker 
D) ​all of the above 
A) ​change the division that has the authority to make the decision 
B) change the information flow so that the decision maker is better informed 
C) change the evaluation and reward scheme governing the decision maker 
D) ​all of the above

Question 18

​Straight line pay for performance

Accepted Answer

A) ​Eliminates the managers' incentives to lie about the budget 
B) Breaks the link between meeting a particular budget goal and compensation 
C) Rewards the manager for doing more and punishes them for doing less 
D) ​All of the above 
A) ​Eliminates the managers' incentives to lie about the budget 
B) Breaks the link between meeting a particular budget goal and compensation 
C) Rewards the manager for doing more and punishes them for doing less 
D) ​All of the above

Question 19

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

Accepted Answer

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

Question 20

​Which of the following is the best example of function based divisions of a firm

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

Conflicts can arise between divisions because

Ways to "game" the budgeting process include

Straight line pay for performance

All of the following can cause conflict between divisions EXCEPT

A parent company rewarding managers on profit centers can simply

When a transfer price decreases

In profit centers

For managers who have already met their goals,high powered sales goals

An example of organizational architecture based on production of intermediate products is when divisions are defined as

The M-Form of corporate organization

In an M-form organization

Which of the following is FALSE?

A division of a firm is

When a transfer price increases

Which is a possible solution to a divisional conflict regarding a decision?

Straight line pay for performance

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

Which of the following is the best example of function based divisions of a firm

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

​Conflicts can arise between divisions because

​Ways to "game" the budgeting process include

​Straight line pay for performance

​All of the following can cause conflict between divisions EXCEPT

​A parent company rewarding managers on profit centers can simply

​When a transfer price decreases

​In profit centers

​For managers who have already met their goals,high powered sales goals

​An example of organizational architecture based on production of intermediate products is when divisions are defined as

​The M-Form of corporate organization

​In an M-form organization

​Which of the following is FALSE?

​A division of a firm is

When a transfer price increases

​Which is a possible solution to a divisional conflict regarding a decision?

​Straight line pay for performance

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

​Which of the following is the best example of function based divisions of a firm

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

Conflicts can arise between divisions because

Ways to "game" the budgeting process include

Straight line pay for performance

All of the following can cause conflict between divisions EXCEPT

A parent company rewarding managers on profit centers can simply

When a transfer price decreases

In profit centers

For managers who have already met their goals,high powered sales goals

An example of organizational architecture based on production of intermediate products is when divisions are defined as

The M-Form of corporate organization

In an M-form organization

Which of the following is FALSE?

A division of a firm is

Which is a possible solution to a divisional conflict regarding a decision?

Straight line pay for performance

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

Which of the following is the best example of function based divisions of a firm