Scenario: Model Industries, Inc

question 78

Multiple Choice

Scenario: Model Industries, Inc.Burt, Ryan, and Heather are members of the marketing team at Model Industries, Inc.(MII) , responsible for generating ideas for new marketing strategies.Burt has done a phenomenal job in gathering information necessary to help the team understand the desires and needs of the client.All things being equal, Heather has the best record of making good recommendations to Jeremy, vice president of marketing.Ryan can make some good recommendations, but sometimes his recommendations are completely off base.Usually, Jeremy pays careful attention to what Heather has to say, but generally does not pay much attention to what Ryan proposes.In addition to Jeremy, Heather has been meeting with the vice president of operations and other members of the executive team to gain support for their request to increase the marketing budget.Burt's action would contribute to which factor in effective decision making at MII?

• A)Production blocking
• B)Staff validity
• C)Hierarchical sensitivity
• D)Decision informity
• E)Transactive memory

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Definitions:

Differential Cost

The difference in cost between two alternative decisions, or a change in cost from one period to the next.

Incremental Cost

The additional cost that a company incurs when producing one more unit of a product.

Incremental Costs

Costs that change as a result of a decision to increase or decrease the level of an activity or operation.

Sunk Costs

Costs that have already been incurred and cannot be recovered or altered by future actions, and therefore should not influence current or future business decisions.