Short Answer 132 Before a company makes the decision to change the degree of decentralization, top m
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Short Answer
132
Before a company makes the
decision to change the degree of decentralization, top management must consider
the advantages and disadvantages of such a move.
Required:
a.
List three advantages of
decentralization.
b.
List three disadvantages of
decentralization.
133
Common allocated fixed costs
are an issue in evaluating segment performance.
Answer the following questions relating to common fixed costs.
a.
What are two other terms used
in referring to common costs?
b.
Where are common allocated
fixed costs shown on a segment margin income statement?
c.
When do traceable fixed costs
become common costs?
134
The DuPont Model decomposes the
original ROI formula into two components to show the different choices managers
have to improve ROI. What are the terms for the two components and how do you
calculate the ratios?
135
What is EVA and how is it
calculated?
136
What is the minimum acceptable
transfer price for a division that has excess operating capacity?
137
What is a transfer price? List the four ways of determining a transfer
price.
Essay
138
When a small business begins,
it is generally simple for the owner or manager to stay on top of everything
going on in the business. However, as the business adds more product lines and
locations and hires more employees, it becomes more and more difficult for top
management to remain informed about the company’s activities.
Required:
a.
What is decentralization?
b.
What are four advantages of
decentralization?
c.
Identify and describe the three
organizational centers of responsibility under a unit manager’s control.
139
A segment of an organization is
any part of the organization that management wishes to evaluate. Segment margin
income statements highlight the elements under the segment manager’s control.
Required:
a.
What is “segment margin†and
how is it calculated?
b.
What is the difference between
“segment margin†and a segment’s “net operating income?â€
c.
Why are common allocated fixed
costs an issue in evaluating the performance of a segment manager?
140
You are assigned to a team
responsible for evaluating segment managers’ performance measures. A team
member has indicated that a friend who is a manager at a competitor’s company
is evaluated using “ROIâ€, but does not know what ROI is.
Required:
a.
Explain what ROI is and why it
is a useful tool in measuring managers’ performance.
b.
Give an example of when ROI
would not be an appropriate performance measurement.
141
A disadvantage of evaluating
managers’ performance based on ROI is that it can lead to undesirable
managerial actions. Residual income can overcome many of the problems of
ROI>
Required:
a.
Define residual and explain how
it is calculated.
b.
What are the shortcomings of
residual income? Give an example of when
ROI is a better measure than residual income.
142
When organizations choose to
decentralize their operations, divisions may end up exchanging goods and
services with one another rather than with external suppliers or customer.
Since managers are evaluated based on how well their divisions perform, they
want any transaction with another division to generate positive results.
Required:
Discuss the four ways
of determining a transfer price and explain the advantages and disadvantages of
each.
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Short Answer 132 Before a company makes the decision to change the degree of decentralization, top m was first posted on June 29, 2020 at 4:05 pm.
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Short Answer 132 Before a company makes the decision to change the degree of decentralization, top m was first posted on June 29, 2020 at 4:10 pm.
©2020 "homeworkcrew". Use of this feed is for personal non-commercial use only. If you are not reading this article in your feed reader, then the site is guilty of copyright infringement. Please contact me at homeworkcrew.com@gmail.com
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