Larger Organizations

question 77

Multiple Choice

Larger organizations:

• A)make greater use of standardization than do smaller firms.
• B)have similar structures to smaller organizations.
• C)operate without any form of departmentalization for long periods of time.
• D)make less use of informal communication as a coordinating mechanism.
• E)are never decentralized.

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Definitions:

Fixed Costs

Expenses that do not change in proportion to the activities of a business, such as rent and salaries, within a certain period or level of production.

Cost Equation

A formula used to predict the total costs of production, based on fixed and variable costs, as a function of activity levels.

Contribution Margin

The selling price per unit minus the variable cost per unit, which helps determine how much sales contribute to covering fixed costs and generating profit.

Variable Costs

These are costs that vary directly with the level of production or sales volume, such as raw materials and direct labor costs.