The Chief Disadvantages of a Decentralized Organizational Structure Include

question 25

Multiple Choice

The chief disadvantages of a decentralized organizational structure include

• A) increasing the size of the corporate bureaucracy.
• B) slowing a company's response times to changing external events because approval of what course of action to take has to go up the chain of command to the top of the management bureaucracy.
• C) discouraging lower-level managers and rank-and-file employees from exercising initiative, engaging in creative thinking, and taking responsibility for their actions.
• D) putting the organization at risk if many "bad" decisions are made at lower levels in the organization-top management lacks "full control."
• E) creating more layers of management.

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Definitions:

Activity Rates

These are costs assigned to cost objects based on the activities those objects require, often used in activity-based costing.

Traditional Costing System

A costing methodology that assigns costs to products based on direct costs like materials and labor, and allocates overhead costs based on a predetermined rate.

Activity-Based Costing System

An accounting method that assigns costs to products based on the activities they require for production.

Batch-Level Costs

Costs that are incurred for every batch produced, regardless of the size of the batch, such as setup costs or inspection costs.