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Chapter 12 Quiz 4
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1
An investment centre is a unit in an organisation where the manager is held accountable for the unit’s costs and cost variances:
A)True
B)False
2
The use of transfer prices is intended to discourage autonomy within business units:
A)True
B)False
3
In recent years the theory of shared services has emerged as a way of improving performance. One clear aim of this concept is to improve the quality of the services delivered:
A)True
B)False
4
In a decentralised organisation, corporate management usually has control in deciding whether to accept or reject orders for goods or services, and whether to source their materials and components, or services, from inside or outside the organisation. They also retain control when setting and accepting transfer prices:
A)True
B)False
5

Some of the costs involved when implementing self-managed work teams include:

  • increased labour costs as team members’ salaries increase
  • increased costs in employee selection and training
  • increased stress among team members as a result of additional responsibility
A)True
B)False
6
There is little benefit in distinguishing between the performance of business units and the performance of business unit managers:
A)True
B)False
7
Market-based prices can often result in decisions that are consistent with responsibility accounting concepts and decentralisation philosophies. However, an important issue in considering the appropriate level of transfer price is whether or not the supplying unit has spare capacity:
A)True
B)False





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