Custom Leather CEO, Standish, Is Considering Doubling the Size of His

question 6

Multiple Choice

Custom Leather CEO, Standish, is considering doubling the size of his workforce in conjunction with expanding the number of retail outlets that carry Custom Leather products.Lacey tells him that he should expect the organization to become ________ as a result of this change.

• A) more mechanistic
• B) more decentralized
• C) more organic
• D) less formalized

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Definitions:

Net Operating Income

Income derived from the main activities of a business, not including interest and tax deductions.

Variable Expenses

Costs that change in proportion to the activity of a business, such as raw materials and direct labor costs.

Fixed Expenses

Costs that do not change with the level of production or sales over a short period, such as rent or salaries.

Break Even

A financial situation where total costs equal total revenues, resulting in no net profit or loss.