A Disadvantage of Decentralization Is That Decision-Making Is Spread Throughout

question 69

Multiple Choice

A disadvantage of decentralization is that decision-making is spread throughout the organization.This is a disadvantage because

• A)managers tend to focus on interacting with others in the organization.
• B)the potential for sharing ideas throughout the organization is increased.
• C)lower-level managers may not fully understand the ramifications of their localized decisions on the organization as a whole.
• D)lower-level managers are often not trained well enough to run operations.

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Definitions:

FOH Volume Variance

The difference between the budgeted fixed overhead and the applied amount based on the actual activity level.

Fixed Manufacturing Overhead

Costs that do not vary with the level of production or sales, including rent, depreciation, and salaries of certain employees in a manufacturing facility.

Standard Cost Variances

The differences between the actual costs incurred and the standard costs against which they are measured, often analyzed for materials, labor, and overhead.

Cost of Goods Sold

Represents the total direct costs attributable to the production of goods sold in a company, including materials and labor.