SpandoCorp Is a Diversified Firm That Makes Industrial, Military and Consumer

question 16

Multiple Choice

SpandoCorp is a diversified firm that makes industrial, military and consumer products from Spandex. SpandoCorp manages each of the businesses that it operates in as a separate division and treats each as a True profit-and-loss center. In this organization, Grace McKenna is responsible for deciding which set of businesses SpandoCorp will operate in and for encouraging behavior that is consistent with this strategy, Wells Tucker provides information to McKenna about the internal and external environments that she uses in her decision making, and Kelly Rae is one of the individuals who is responsible for evaluating the firm's decision making to ensure that it is consistent with the interests of equity holders.
-If SpandoCorp decides to use the method of allocating capital where each project receives funding on its merit and not because it received funding the previous year, it is using

• A) zero-based budgeting.
• B) corporate budgeting.
• C) centralized budgeting
• D) coordinated budgeting.

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Definitions:

Construct Validity

The extent to which a test accurately measures the theoretical, non-observable construct or trait it is intended to assess.

Correlation

A statistical measure that describes the extent to which two variables change together.

Concurrent Validity

Refers to the extent to which the results of a particular test or measurement correspond to those of a previously established measurement for the same construct.

Error Of Measurement

The difference between a measured value and the true value due to limitations in measurement accuracy or technique.