Sarah Is a Designer for a Business That Installs Underground

question 348

Multiple Choice

Sarah is a designer for a business that installs underground sprinkler systems for residential and commercial customers. Tom and Bill share the ownership responsibilities of the business. Tom is in charge of commercial accounts and Bill is in charge of residential accounts. Sometimes Tom and Bill double book Sarah's time, creating frustration and animosity. Since they share supervisory responsibility, there is no clear way to decide whose accounts are most important. This type of situation represents a violation of Fayol's ____________ principle

• A) division of labor
• B) clarity of objective
• C) priority of assignment
• D) unity of command

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Definitions:

Capital Budgeting

The process by which investors and managers decide which significant investments or projects to undertake, based on potential profitability.

Risk

The potential for loss, damage, or any other negative occurrence that may be avoided through preemptive action.

Probability Distributions

Mathematical functions that describe all the possible values and likelihoods that a random variable can take within a given range.

Cost of Capital

The cost of funds used for financing a business, calculated as the weighted average of debt and equity costs.