Suboptimization Occurs When

question 11

Multiple Choice

Suboptimization occurs when

• A) a division or functional unit views itself as a separate entity and refuses to cooperate with other divisions or units to the detriment of the organization as a whole.
• B) there is a failure to produce at or near full capacity.
• C) individuals are placed into positions not suited to their abilities.
• D) managers tend to focus more of their attention on those aspects which are measurable than on those which are not.
• E) managers concentrate too much on short-term performance objectives.

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Definitions:

Variable Selling Expenses

Costs that fluctuate with the level of sales, such as commissions or shipping fees.

Variable Administrative Expenses

Expenses that vary with the level of business activity, such as sales commissions or supply costs.

Fixed Selling Expenses

Costs associated with selling that do not change with sales volume, including salaries of sales staff and advertising expenses.

Gross Margin

The difference between sales revenue and the cost of goods sold, divided by revenue, expressed as a percentage.