When a Firm Grows Larger,many Additional Layers of Managers Are

question 16

Multiple Choice

When a firm grows larger,many additional layers of managers are sometimes added that do not actually produce any output.At the same time,the firm gains additional bargaining power over the prices it pays to its suppliers.If both of these factors have an equal effect,we would expect this firm to experience

• A) diminishing marginal returns.
• B) diseconomies of scale.
• C) constant returns to scale.
• D) economies of scale.
• E) increasing marginal returns.

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Definitions:

Management Accounting System

A system used by businesses to provide financial and statistical information to managers for making short-term and long-term decisions.

Shareholder Value

The value delivered to shareholders of a corporation through dividends and appreciation of the company's stock price.

Customer Value

The perception of the benefits a product or service provides to a customer compared to its cost.

Traditional Management Accounting

A method of accounting focused on reporting financial information to managers for the purpose of planning, decision making, and controlling operations within an organization.