Uptown Promotions Has Three Divisions

question 57

Multiple Choice

Uptown Promotions has three divisions.As part of the planning process,the CFO requested that each division submit its capital budgeting proposals for next year.These proposals represent positive net present value projects that fall within the long-range plans of the firm.The requests from the divisions are $4.2 million,$3.1 million,and $6.8 million,respectively.For the firm as a whole,the management of Uptown Promotions has limited spending to $10 million for new projects next year.This is an example of:

• A)scenario analysis.
• B)sensitivity analysis.
• C)determining operating leverage.
• D)soft rationing.
• E)hard rationing.

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Definitions:

Organization Design

The process of structuring and arranging the components of a system, company, or entity to effectively achieve its objectives and goals.

Centralization

The concentration of decision-making authority at the upper levels of an organization or system.

Decentralization

Refers to distributing the decision-making powers and leadership roles away from a central authority to more local or individual levels within an organization.

Authority

A capability to prescribe actions, make choices, and insist on obedience.