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:

Joint Cost Allocation

The process of distributing the costs of production that are incurred in producing multiple products at the same point of the process across those products.

Joint Costs

Costs that are incurred up to a split-off point in the production process, making them inseparable costs shared by more than one product.

Sunk Costs

Costs that have already been incurred and cannot be recovered, which should not influence future business decisions since they cannot be changed.

Split-off

A point in a production process where multiple products are generated from a single input, each having its own identifiable market.