In Which of the Following Cases Are Bureaucratic Costs Likely

question 67

Multiple Choice

In which of the following cases are bureaucratic costs likely to be lowest?

• A) A vertically integrated company with five divisions that pursues full integration
• B) A company with five divisions that pursues related diversification based on economies of scope
• C) A company with five divisions that pursues related diversification based on transferring competencies
• D) A company with five divisions that pursues unrelated diversification based on acquisitions and restructuring
• E) A company with twenty divisions that pursues taper integration

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Definitions:

Break-Even Point

The level of sales at which total revenues equal total costs, resulting in zero profit.

Break-Even

The moment when total expenditures coincide with total income, ensuring there is no financial loss or gain.

Monthly Dollar Sales

The total revenue generated from sales of goods or services within a specific month, expressed in dollars.

Variable Cost

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