CHAPTER 24: PERFORMANCE EVALUATION FOR DECENTRALIZED
OPERATIONS
1. Separation of businesses into more manageable operating units is termed decentralization.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.24-01 - 24-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
2. The process of measuring and reporting operating data by responsibility centers is termed responsibility accounting.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.24-01 - 24-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
3. A decentralized business organization is one in which all major planning and operating decisions are made by
top management.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.24-01 - 24-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,Chapter 24: Performance Evaluation for Decentralized Operations
4. A centralized business organization is one in which all major planning and operating decisions are made by
top management.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.24-01 - 24-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
5. The primary disadvantage of decentralized operations is that decisions made by one manager may affect
other managers in such a way that the profitability of the entire company may suffer.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.24-01 - 24-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
6. The three common types of responsibility centers are referred to as cost centers, profit centers, and investment
centers.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.24-01 - 24-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,Chapter 24: Performance Evaluation for Decentralized Operations
7.One of the advantages of decentralization is that delegating authority to managers closest to the operation always
results in better decisions.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.24-01 - 24-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
8. Developing and retaining quality managers are advantages of decentralization.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.24-01 - 24-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
9. A responsibility center in which the department manager has responsibility for and authority over costs,
revenues, and assets invested in the department is termed a cost center.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.24-01 - 24-01
ACCT.WARD.16.24-02 - 24-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, Chapter 24: Performance Evaluation for Decentralized Operations
10. A responsibility center in which the authority over and responsibility for costs and revenues is vested in
the department manager is termed a profit center.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.24-01 - 24-01
ACCT.WARD.16.24-03 - 24-03
ACCREDITING STANDARDS: ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
11. In an investment center, the manager has the responsibility and the authority to make decisions that affect not
only costs and revenues, but also the plant assets invested in the center.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.24-01 - 24-01
ACCT.WARD.16.24-04 - 24-04
ACCREDITING STANDARDS: ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
12. Budget performance reports prepared for the vice president of production would generally contain less detail
than reports prepared for the various plant managers.
a. True
b. False
ANSWER: True
DIFFICULTY: Challenging
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.24-02 - 24-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
OPERATIONS
1. Separation of businesses into more manageable operating units is termed decentralization.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.24-01 - 24-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
2. The process of measuring and reporting operating data by responsibility centers is termed responsibility accounting.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.24-01 - 24-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
3. A decentralized business organization is one in which all major planning and operating decisions are made by
top management.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.24-01 - 24-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,Chapter 24: Performance Evaluation for Decentralized Operations
4. A centralized business organization is one in which all major planning and operating decisions are made by
top management.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.24-01 - 24-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
5. The primary disadvantage of decentralized operations is that decisions made by one manager may affect
other managers in such a way that the profitability of the entire company may suffer.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.24-01 - 24-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
6. The three common types of responsibility centers are referred to as cost centers, profit centers, and investment
centers.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.24-01 - 24-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
,Chapter 24: Performance Evaluation for Decentralized Operations
7.One of the advantages of decentralization is that delegating authority to managers closest to the operation always
results in better decisions.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.24-01 - 24-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
8. Developing and retaining quality managers are advantages of decentralization.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.24-01 - 24-01
ACCREDITING STANDARDS: ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
9. A responsibility center in which the department manager has responsibility for and authority over costs,
revenues, and assets invested in the department is termed a cost center.
a. True
b. False
ANSWER: False
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.24-01 - 24-01
ACCT.WARD.16.24-02 - 24-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
, Chapter 24: Performance Evaluation for Decentralized Operations
10. A responsibility center in which the authority over and responsibility for costs and revenues is vested in
the department manager is termed a profit center.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.24-01 - 24-01
ACCT.WARD.16.24-03 - 24-03
ACCREDITING STANDARDS: ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
11. In an investment center, the manager has the responsibility and the authority to make decisions that affect not
only costs and revenues, but also the plant assets invested in the center.
a. True
b. False
ANSWER: True
DIFFICULTY: Easy
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.24-01 - 24-01
ACCT.WARD.16.24-04 - 24-04
ACCREDITING STANDARDS: ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
12. Budget performance reports prepared for the vice president of production would generally contain less detail
than reports prepared for the various plant managers.
a. True
b. False
ANSWER: True
DIFFICULTY: Challenging
Bloom’s: Remembering
LEARNING OBJECTIVES: ACCT.WARD.16.24-02 - 24-02
ACCREDITING STANDARDS: ACCT.ACBSP.APC.36 - Budgeting and Responsibility
ACCT.IMA.09 - Performance Measurement
BUSPROG: Analytic
© 2016 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.
