State University's College of Business Is Divided into Three Departments

question 109

Multiple Choice

State University's College of Business is divided into three departments, accounting, marketing, and management. Relevant information for each department is provided below: The Dean of the College of Business is trying to assign funds from the operating budget to the three departments. Assuming that the chair of each department is trying to attain the highest funding possible for his/her department, which of the following most accurately describes the allocation base that each chair will favor?
$$\begin{array} { | l | l | l | l | } \hline \text { Cost Driver } & \text { Accounting } & \text { Marketing } & \text { Management } \\\hline \text { Number of students } & 700 & 400 & 200 \\\hline \begin{array} { l } \text { Number of classes per } \\\text { semester }\end{array} & 32 & 18 & 14 \\\hline \text { Number of faculty } & 10 & 12 & 5 \\\hline\end{array}$$

• A)The chair of the Management department will want to use the number of classes while the chair of the Marketing department will prefer the number of faculty.
• B)The chair of the Accounting department and the chair of the Management department will want to use the number of faculty.
• C)The chair of the Marketing department will want to use number of students, while the chair of the Accounting department will want to use number of classes per semester.
• D)The chair of the Accounting department will want to use number of students while the chair of the Management department will want to use number of faculty.

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Definitions:

Labor

The body of physical and mental effort used in the production of goods and services.

Isocost Line

A graphical representation showing all possible combinations of inputs that cost the same amount.

Capital

Refers to financial assets or the financial value of assets, such as funds held in deposit accounts, as well as the tangible machinery and production equipment used in environments such as factories and other manufacturing facilities.

Labor

The physical and mental effort used in the production of goods and services.