Many Firms Feel a Strong Obligation to Establish and Use

question 37

Multiple Choice

Many firms feel a strong obligation to establish and use a standard rate for fixed factory overhead because:

• A) Generally accepted accounting principles in the U.S. require full costing of inventories for financial reporting purposes.
• B) The resulting data are useful for performance-evaluation purposes.
• C) Larger income tax deductions result when fixed overhead costs are treated as product costs rather than period costs.
• D) This approach improves upon management's ability to more accurately forecast future overhead costs.
• E) None of the above—fixed overhead costs are typically expensed as period costs.

Comprehend the significance of authority, responsibility, and span of control in organizational hierarchies.

Recognize Mintzberg's organizational structures and their characteristics.

Understand the impact of organizational size and complexity on structure and design.

Distinguish between vertical and horizontal organizational structures and their implications.

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Definitions:

Sensory Demand

The requirement for engaging the senses to process and respond to environmental stimuli.

Information Overload

The state of being overwhelmed by the amount of information one is exposed to, making it difficult to process or make decisions.

Information-Processing Capacity

The maximum amount of information an individual or organization can effectively handle and process.

Information Load

The point at which the volume of information exceeds an individual's capacity to process it.