Which of These Statements About Decentralization Is FALSE

question 51

Multiple Choice

Which of these statements about decentralization is FALSE?

• A)Organizations decentralize as they grow larger.
• B)Different degrees of decentralization can occur simultaneously in different parts of the organization.
• C)Organizations operating in diverse environments are more effective when they centralize decision making.
• D)Large organizations should worry about having too much decentralization.
• E)Large organizations that remain centralized tend to become less responsive to the external environment.

---

Definitions:

Operating Leverage

The extent to which a company can increase operating income by increasing revenue, attributable to the proportion of fixed costs in total costs.

Fixed Expenses

Costs that remain constant in total over a specified period, regardless of changes in the level of activity or volume of output.

Unit Variable Cost

The variable cost incurred to produce one unit of a product, such as materials or labor.

Net Operating Income

The profitability of a company's core business operations, calculated as gross profit minus operating expenses, excluding interest and taxes.