SpandoCorp Is a Diversified Firm That Makes Industrial, Military and Consumer

question 45

Multiple Choice

SpandoCorp is a diversified firm that makes industrial, military and consumer products from Spandex. SpandoCorp manages each of the businesses that it operates in as a separate division and treats each as a True profit-and-loss center. In this organization, Grace McKenna is responsible for deciding which set of businesses SpandoCorp will operate in and for encouraging behavior that is consistent with this strategy, Wells Tucker provides information to McKenna about the internal and external environments that she uses in her decision making, and Kelly Rae is one of the individuals who is responsible for evaluating the firm's decision making to ensure that it is consistent with the interests of equity holders.
-If Todd Hienz were the chief operating officer for SpandoCorp, his responsibilities would include

• A) supervision of the board of directors in its monitoring role.
• B) strategy implementation.
• C) strategy formulation.
• D) strategy control.

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Definitions:

Variable Cost

is a cost that varies with the level of output or activity, such as raw materials or piece-rate labor.

Spending Variance

The difference between the budgeted amount of expense or revenue and the actual amount spent or received.

Activity Variance

The difference between planned activity costs and actual activity costs in managerial accounting, used for budget control and performance evaluation.

Fixed Cost

Expenses that do not change with the level of production or sales over a short period, such as rent, salaries, and insurance premiums.