Question 16 1 pts Tom & Jerry are running Hanna Barbera’s lemonade stand as two

Question

Question 16

1 pts

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. Who is making the bad decision?

   Tom

   Jerry

   Hanna Barbera

   None of them

Q17 Managers of profit centers usually have

   A lot of discretion over decisions

   Most of their decisions overseen by corporate executives

   No discretion over decisions

   Given excessively high bonuses

Question 19

1 pts

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

   In functional organizations workers develop functional expertise

   Workers find it difficult to share information within their division

   They inhibit the exploitation of economies of scale

   All of the above

Question 21

1 pts

Annual budgeting of production goals of a division within a firm

   is an accounting mechanism to plan for the costs and revenues over a time period

   increase the burden on the division when goals rise

   can lead to accumulated inventory when the goals of an upstream division are arbitrarily set too high

   all of the above

Question 22

1 pts

For managers who know that they have no chance of meeting their goals, high powered sales goals

   Give an incentive to spread out their sales into the year

   Give an incentive to accelerate costs or delay sales

   Give no incentive to accelerate sales or delay costs

   None of the above

Explanation / Answer

1) Solution: Jerry

Explanation: Tom is charging aprice high price i.e. a price above marginal cost. Optimal transfer product pricing is marginal cost

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2) Solution: No discretion over decisions

Explanation: The profit center manager usually hold the authority to reach decisions regarding how to earn revenue, and which expenses to incur

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3) Solution: All of the above

Explanation: Since employees with shared knowledge and skills are grouped together by function thus leads to a greater operational efficiency

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4) Solution: is an accounting mechanism to plan for the costs and revenues over a time period

Explanation: The targets are set for overhead and production spending levels

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5) For managers who know that they have no chance of meeting their goals, high powered sales goals

Solution: Give no incentive to accelerate sales or delay costs

Explanation: When the goals are unachievable it provide no incentive to accelerate sales or delay costs

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