Question 1

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) delaying sales once a target is met 
D) delaying 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) delaying sales once a target is met 
D) delaying expenses costs once a target is met

Question 2

If products similar to the intermediate good are sold,an approximation to 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 3

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 4

An example of organizational architecture based on the different functions of a firm 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

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 6

When a transfer price is set lower

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 7

If the fixed costs are relatively large,a relatively good approximation to 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

If the fixed costs are relatively small,a relatively good approximation to 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 9

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

Question 10

All of the following describe the conflict between divisions EXCEPT

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) A divisional manager does not have authority to run her division efficiently 
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) A divisional manager does not have authority to run her division efficiently

Question 11

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 12

The U-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

Ways to "game" the budgeting process include

Accepted Answer

A) delaying sales if just short of a target 
B) delaying 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) delaying sales if just short of a target 
B) delaying 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 14

The features of the M-Form of firm organization are

Accepted Answer

A) divisions can respond more easily to change 
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 change 
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 15

Annual budgeting of production goals of a division within a firm

Accepted Answer

A) is an accounting mechanism to plan for the costs and revenues over a time period 
B) increase the burden on the division when goals rise 
C) can lead to accumulated inventory when goals rise 
D) all of the above 
A) is an accounting mechanism to plan for the costs and revenues over a time period 
B) increase the burden on the division when goals rise 
C) can lead to accumulated inventory when goals rise 
D) all of the above

Question 16

When a transfer price is set lower

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 17

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) 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 calls into question whether there are gains from 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) 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 calls into question whether there are gains from producing it in-house

Question 18

When a transfer price is set higher

Accepted Answer

A) the profits of the division using the intermediate product will rise 
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 costs of the division using the intermediate product will fall 
A) the profits of the division using the intermediate product will rise 
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 costs of the division using the intermediate product will fall

Question 19

Transfer prices

Accepted Answer

A) are an accounting devise to allocate the costs and revenues of intermediate products across divisions 
B) increase the 'profits' of the profit center producing the intermediate product when they rise 
C) decrease the 'profits' of the profit center using the intermediate product when they rise 
D) all of the above 
A) are an accounting devise to allocate the costs and revenues of intermediate products across divisions 
B) increase the 'profits' of the profit center producing the intermediate product when they rise 
C) decrease the 'profits' of the profit center using the intermediate product when they rise 
D) all of the above

Ways to "game" the budgeting process include

If products similar to the intermediate good are sold,an approximation to the correct transfer price is

In profit centers

An example of organizational architecture based on the different functions of a firm is when divisions are defined as

In profit centers

When a transfer price is set lower

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

If the fixed costs are relatively small,a relatively good approximation to the correct transfer price is

The features of the M-Form of firm organization are

All of the following describe the conflict between divisions EXCEPT

The M-Form of corporate organization

The U-Form of corporate organization

Ways to "game" the budgeting process include

The features of the M-Form of firm organization are

Annual budgeting of production goals of a division within a firm

When a transfer price is set lower

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

When a transfer price is set higher

Transfer prices

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

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

Ways to "game" the budgeting process include

If products similar to the intermediate good are sold,an approximation to the correct transfer price is

In profit centers

An example of organizational architecture based on the different functions of a firm is when divisions are defined as

In profit centers

When a transfer price is set lower

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

If the fixed costs are relatively small,a relatively good approximation to the correct transfer price is

The features of the M-Form of firm organization are

All of the following describe the conflict between divisions EXCEPT

The M-Form of corporate organization

The U-Form of corporate organization

Ways to "game" the budgeting process include

The features of the M-Form of firm organization are

Annual budgeting of production goals of a division within a firm

When a transfer price is set lower

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

When a transfer price is set higher

Transfer prices

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