Question 1

When a transfer price is set higher

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 A

Question 2

The features of the U-Form of firm organization are

Accepted Answer

A) workers have trouble developing a high degree of functional expertise 
B) it is difficult for employees to share information across positions within a division 
C) employee evaluation is simplified by managers having similar skill sets than workers 
D) coordination across divisions is simple and does not take much management time 
A) workers have trouble developing a high degree of functional expertise 
B) it is difficult for employees to share information across positions within a division 
C) employee evaluation is simplified by managers having similar skill sets than workers 
D) coordination across divisions is simple and does not take much management time C

Question 3

The features of the M-Form of firm organization are

Accepted Answer

A) divisions have difficulty responding to market changes 
B) it is difficult to maintain customer relationships 
C) coordination across divisions is simple and does not take much management time 
D) employee evaluation is hampered by managers often having different skill sets than those the manage 
A) divisions have difficulty responding to market changes 
B) it is difficult to maintain customer relationships 
C) coordination across divisions is simple and does not take much management time 
D) employee evaluation is hampered by managers often having different skill sets than those the manage D

Question 4

An example of organizational architecture based on customer location 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 5

A problem with using the price of a product similar to the intermediate good sold on the market is

Accepted Answer

A) the market price includes a margin above marginal cost 
B) the product on the market may include costly features your downstream division does not use 
C) the product on the market may be cheap because it is not as high of quality as your downstream division uses 
D) all of the above 
A) the market price includes a margin above marginal cost 
B) the product on the market may include costly features your downstream division does not use 
C) the product on the market may be cheap because it is not as high of quality as your downstream division uses 
D) all of the above

Question 6

Conflicts can arise between divisions because

Accepted Answer

A) some activities across divisions benefit from coordination 
B) managers of profit centers care too little about the effects of their decisions on other divisions 
C) managers are rewarded only for how well their own division is run 
D) all of the above 
A) some activities across divisions benefit from coordination 
B) managers of profit centers care too little about the effects of their decisions on other divisions 
C) managers are rewarded only for how well their own division is run 
D) all of the above

Question 7

A production goal may be set too high by upper management because

Accepted Answer

A) they are unsure about the actual costs of production 
B) they under-estimate the difficulty of meeting a goal 
C) division managers over-state the difficulty of meeting the goal 
D) all of the above 
A) they are unsure about the actual costs of production 
B) they under-estimate the difficulty of meeting a goal 
C) division managers over-state the difficulty of meeting the goal 
D) all of the above

Question 8

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) It is OK if the product on the market includes costly features your downstream division does not use 
C) Consider whether 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) It is OK if the product on the market includes costly features your downstream division does not use 
C) Consider whether 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 9

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 10

The features of the U-Form of firm organization are

Accepted Answer

A) workers can easily develop a high degree of functional expertise 
B) it is difficult for employees to share information across positions within a division 
C) employee evaluation is hampered by managers having different skill sets than workers 
D) coordination across divisions is simple and does not take much management time 
A) workers can easily develop a high degree of functional expertise 
B) it is difficult for employees to share information across positions within a division 
C) employee evaluation is hampered by managers having different skill sets than workers 
D) coordination across divisions is simple and does not take much management time

Question 11

All of the following describe the conflict between divisions EXCEPT

Accepted Answer

A) some activities across divisions benefit from coordination 
B) managers of cost centers care too little about enhancing revenues 
C) managers are rewarded only for how well their own division is run 
D) corporate executives cannot tell when one divisional manager's decision is appropriate or not 
A) some activities across divisions benefit from coordination 
B) managers of cost centers care too little about enhancing revenues 
C) managers are rewarded only for how well their own division is run 
D) corporate executives cannot tell when one divisional manager's decision is appropriate or not

Question 12

The advantages of the M-Form of firm organization is

Accepted Answer

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

Question 13

All of the following describe the conflict between divisions EXCEPT

Accepted Answer

A) Divisional managers are rewarded for the efficiency of their divisions 
B) managers of profit centers care too little about the effects of their decisions on other divisions 
C) managers are rewarded only for how well their own division is run 
D) corporate executives cannot tell when one divisional manager's decision is appropriate or not 
A) Divisional managers are rewarded for the efficiency of their divisions 
B) managers of profit centers care too little about the effects of their decisions on other divisions 
C) managers are rewarded only for how well their own division is run 
D) corporate executives cannot tell when one divisional manager's decision is appropriate or not

Question 14

The features of the M-Form of firm organization are

Accepted Answer

A) divisions have difficulty responding to market changes 
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 market changes 
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 15

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 16

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 17

In profit centers

Accepted Answer

A) Managers are easy to evaluate because there is a simple metric of how well they performed 
B) Managers typically do not have the 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 easy to evaluate because there is a simple metric of how well they performed 
B) Managers typically do not have the 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

Ways to "game" the budgeting process include

Accepted Answer

A) accelerating 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) delaying expenses costs once a target is met 
A) accelerating 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) delaying expenses costs once a target is met

Question 19

Managers of profit centers earn more when their divisions

Accepted Answer

A) increase their sales and increase their costs 
B) decrease their sales and increase their costs 
C) decrease the costs of the components for which they are responsible 
D) increase the costs of the components for which they are responsible 
A) increase their sales and increase their costs 
B) decrease their sales and increase their costs 
C) decrease the costs of the components for which they are responsible 
D) increase the costs of the components for which they are responsible

Question 20

When a transfer price is set lower

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

Exam 22: Getting Divisions to Work in the Firms Best Interest

When a transfer price is set higher

The features of the U-Form of firm organization are

The features of the M-Form of firm organization are

An example of organizational architecture based on customer location is when divisions are defined as

A problem with using the price of a product similar to the intermediate good sold on the market is

Conflicts can arise between divisions because

A production goal may be set too high by upper management because

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

Ways to "game" the budgeting process include

The features of the U-Form of firm organization are

All of the following describe the conflict between divisions EXCEPT

The advantages of the M-Form of firm organization is

All of the following describe the conflict between divisions EXCEPT

The features of the M-Form of firm organization are

A profit center is

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

In profit centers

Ways to "game" the budgeting process include

Managers of profit centers earn more when their divisions

When a transfer price is set lower

The One Lessor of Business

Benefits, Costs, and Decisions

Extent How Muchdecisions

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 Indirect 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