A Common Mistake Managers Make in Deciding to Close a Division

question 27

Multiple Choice

A common mistake managers make in deciding to close a division is allowing

• A)allocated fixed costs to influence the decision.
• B)qualitative issues to influence the decision.
• C)avoidable costs to influence the decision.
• D)customer needs and desires to influence the decision.

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Definitions:

WorldCom

A former American telecommunications company that became infamous for its massive accounting scandal, leading to its bankruptcy in 2002.

Enron

An American energy company known for one of the largest cases of corporate fraud and bankruptcy in history.

Sarbanes-Oxley Act

A U.S. law enacted in 2002 to protect investors by improving the accuracy and reliability of corporate disclosures.

Financial Reporting

The method of generating reports that reveal the financial condition of an organization to its management, investors, and governmental authorities.