A Firm Is a Good Candidate for Decentralization If

question 115

Multiple Choice

A firm is a good candidate for decentralization if:

• A) segments buy from the same suppliers
• B) an organization's segments are relatively independent of one another
• C) segments sell to the same customers
• D) there is frequent transferring of products between segments

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Definitions:

Gross Profit Method

An accounting technique used to estimate the ending inventory and cost of goods sold by calculating the gross profit margin.

Destroyed Inventory

Goods that have been damaged or rendered unsellable, resulting in a loss for the business.

Retail Inventory Method

An accounting procedure for estimating the value of a store's merchandise by using a percentage of the retail prices.

Cost-to-Retail Ratio

The cost-to-retail ratio is a calculation used in inventory management to estimate the value of ending inventory at retail prices by considering the cost and retail value of goods available for sale.