Which One of the Following Firms Is Likely to Experience

question 57

Multiple Choice

Which one of the following firms is likely to experience dysfunctional motivation on the part of its managers due to its allocation methods? (CMA adapted)

• A) To allocate depreciation of forklifts used by workers at its central warehouse, Amir Electronics uses predetermined amounts calculated on the basis of the long-term average use of the services provided by the warehouse to the various segments.
• B) Seattle Electronics uses the sales revenue of its various divisions to allocate costs connected with the upkeep of its headquarters building. It also uses ROI to evaluate the divisional performance.
• C) Rose Industrial does not allow its service departments to pass on their cost overruns to production departments.
• D) Xi Enterprises' management information system (MIS) is operated out of headquarters and serves its various divisions. Xi's allocation of MIS-related costs to its divisions is limited to costs the divisions will incur if they were to outsource their MIS needs.

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Definitions:

Hoop

A circular band or ring that can be used for various purposes, including sports, jewelry, or as part of mechanisms.

Operant Conditioning

A process of instruction where behavior intensity is adjusted by giving incentives or imposing sanctions.

Allergic Responses

The immune system's hypersensitive reaction to a foreign substance, producing symptoms ranging from mild to life-threatening.

Phobic Response

An intense and irrational fear response to a particular object, situation, or activity, leading to avoidance behavior.