All of the Following Are Correct Statements About the Market-Based

question 42

Multiple Choice

All of the following are correct statements about the market-based approach EXCEPT that it

• A)assumes that the transfer price should be based on the most objective inputs possible.
• B)provides a fairer allocation of the company's contribution margin to each division.
• C)produces a higher company contribution margin than the cost-based approach.
• D)ensures that each division manager is properly motivated and rewarded.

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Definitions:

Bureaucracies

are complex organizational structures designed to manage and administer the policies, rules, and regulations of larger institutions or governments through a hierarchical system of authority.

Authority Structures

Refer to the systems and frameworks through which power and authority are organized, distributed, and executed within a society or organization.

Democratic Leadership

Offers more guidance than the laissez-faire variety but less control than the authoritarian type. Democratic leaders try to include all group members in the decision-making process, taking the best ideas from the group and molding them into a strategy with which all can identify. Outside of crisis situations, democratic leadership is usually the most effective leadership style.

Group Loyalty

The sense of commitment, support, or allegiance individuals feel towards a specific collective or group to which they belong.