Decentralization Is the Delegation of Decision-Making Authority to Subordinates in the Organization's

question 51

Essay

Decentralization is the delegation of decision-making authority to subordinates in the organization's name. A key part of this is the principal-agent relationship. Explain what this relationship is and give examples.

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Definitions:

Fixed Costs

Expenses that do not change in total despite fluctuations in the volume of goods or services produced or sold.

Flexible Budget

A budget that adjusts or varies with changes in the volume of activity, often used to provide more realistic performance comparisons.

Variable Costs

Variable Costs are expenses that vary in direct proportion to changes in the levels of an activity or production volume, such as materials and labor costs.

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent and salaries.