Question 1

​Managers of profit centers are usually given a lot of discretion because

Accepted Answer

A) ​They always do an excellent job 
B) They rarely do a good job 
C) The company can never judge their performance 
D) ​It is relatively easy to tie management pay to division performance 
A) ​They always do an excellent job 
B) They rarely do a good job 
C) The company can never judge their performance 
D) ​It is relatively easy to tie management pay to division performance

Question 2

​A profit center is

Accepted Answer

A) ​evaluated based on minimizing costs within the division 
B) evaluated based on maximizing costs within the division 
C) evaluated based on minimizing profits generated by the division 
D) ​evaluated based on maximizing profits generated by the division 
A) ​evaluated based on minimizing costs within the division 
B) evaluated based on maximizing costs within the division 
C) evaluated based on minimizing profits generated by the division 
D) ​evaluated based on maximizing profits generated by the division

Question 3

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

Accepted Answer

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

Question 4

​A cost center is

Accepted Answer

A) ​evaluated based on minimizing costs within the division 
B) evaluated based on maximizing costs within the division 
C) evaluated based on minimizing profits generated by the division 
D) ​evaluated based on maximizing profits generated by the division 
A) ​evaluated based on minimizing costs within the division 
B) evaluated based on maximizing costs within the division 
C) evaluated based on minimizing profits generated by the division 
D) ​evaluated based on maximizing profits generated by the division

Question 5

​R&D lab organization
The key assets of Prescott Pharmaceuticals are its capable R&D scientists who generate and evaluate countless new chemical compounds for possible product profitability.They had structured their various laboratories based on the diseases and patient classes the new drugs would treat,e.g. ,skin cancer,COPD,Irritable Bowel Syndrome.Recently,the scientific discoveries have made biologicals,or "large molecules," a much more promising avenue of treatment.However,the skills required to synthesize,produce,and evaluate biologicals are represented by more narrow and distinct fields of study.Scientists benefit greatly from sharing knowledge gained within their own field but they have few skills that span across these fields.How does this change affect Prescott's organization of its scientists?

Accepted Answer

The new developments in biologicals acce

Question 6

​Straight line pay for performance

Accepted Answer

A) ​Provides incentives to increase performance 
B) Eliminates the perverse incentive to hide information 
C) Does not link compensation to where the performance is relative to the budget target 
D) ​All of the above 
A) ​Provides incentives to increase performance 
B) Eliminates the perverse incentive to hide information 
C) Does not link compensation to where the performance is relative to the budget target 
D) ​All of the above

Question 7

​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 easier 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 have difficulty responding to changes in customer demand 
B) it is easier 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 8

​When a transfer price is decreased

Accepted Answer

A) ​the buying division will chose to purchase less from the selling division 
B) the buying division will chose to purchase more from the selling division 
C) the selling division will chose to purchase less from the buying division 
D) ​the selling division will chose to purchase more from the buying division 
A) ​the buying division will chose to purchase less from the selling division 
B) the buying division will chose to purchase more from the selling division 
C) the selling division will chose to purchase less from the buying division 
D) ​the selling division will chose to purchase more from the buying division

Question 9

​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 given a lot of discretion in their decision making 
C) Profit centers usually largely run themselves 
D) ​A manager being rewarded on division revenues has no 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 given a lot of discretion in their decision making 
C) Profit centers usually largely run themselves 
D) ​A manager being rewarded on division revenues has no incentive to make good decisions for his division

Question 10

​Which of the following is FALSE?

Accepted Answer

A) ​Maximizing division profits always leads to maximizing company-wide profits 
B) Managers of profit centers are usually given a lot of 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 always leads to maximizing company-wide profits 
B) Managers of profit centers are usually given a lot of 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 11

​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 usually given a lot of discretion in their decision making 
C) Profit centers usually require the highest degree of attention by corporate headquarters 
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 usually given a lot of discretion in their decision making 
C) Profit centers usually require the highest degree of attention by corporate headquarters 
D) ​A manager being rewarded on division revenues has the most incentive to make good decisions for his division

Question 12

​Managers of profit centers usually have

Accepted Answer

A) ​A lot of discretion over decisions 
B) Most of their decisions overseen by corporate executives 
C) No discretion over decisions 
D) ​Given excessively high bonuses 
A) ​A lot of discretion over decisions 
B) Most of their decisions overseen by corporate executives 
C) No discretion over decisions 
D) ​Given excessively high bonuses

Question 13

​The advantages of the M-Form of firm organization is

Accepted Answer

A) ​divisions can respond more easily to changes in customer demand 
B) it is easier to maintain customer relationships 
C) there is less coordination across the firm's divisions 
D) ​all of the above 
A) ​divisions can respond more easily to changes in customer demand 
B) it is easier to maintain customer relationships 
C) there is less coordination across the firm's divisions 
D) ​all of the above

Question 14

​The manager of the sales department (a profit center)at Harvey's HVAC,decides to outsource any sales training that the division needs since in house training is expensive,even though the outsourced training does not cover the company's repair and warranty information from the service department.Does the Sales department have enough information to make the right decision?

Accepted Answer

A) ​No 
B) Yes 
C) Uncertain 
D) ​None of the above 
A) ​No 
B) Yes 
C) Uncertain 
D) ​None of the above

Question 15

​If products similar to the intermediate good can be bought externally,an 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

Managers of profit centers are usually given a lot of discretion because

A profit center is

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

A cost center is

Straight line pay for performance

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

When a transfer price is decreased

Which of the following is FALSE?

Which of the following is FALSE?

Which of the following is FALSE?

Managers of profit centers usually have

The advantages of the M-Form of firm organization is

If products similar to the intermediate good can be bought externally,an approximation of the correct transfer price 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

​Managers of profit centers are usually given a lot of discretion because

​A profit center is

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

​A cost center is

​Straight line pay for performance

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

​When a transfer price is decreased

​Which of the following is FALSE?

​Which of the following is FALSE?

​Which of the following is FALSE?

​Managers of profit centers usually have

​The advantages of the M-Form of firm organization is

​If products similar to the intermediate good can be bought externally,an approximation of the correct transfer price 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

Managers of profit centers are usually given a lot of discretion because

A profit center is

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

A cost center is

Straight line pay for performance

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

When a transfer price is decreased

Which of the following is FALSE?

Which of the following is FALSE?

Which of the following is FALSE?

Managers of profit centers usually have

The advantages of the M-Form of firm organization is

If products similar to the intermediate good can be bought externally,an approximation of the correct transfer price is