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Chapter 24: Q5RQ (page 1355)

Usually, which outweighs the other in decentralization—advantages ordisadvantages?

Short Answer

Expert verified

Answer

The advantages outweigh the other in decentralization.

Step by step solution

01

Meaning of Decentralization

In business terms, decentralization refers to the process of delegating the activities among the various departments and personnel of the organization by the authorized sources, groups, or locations.

02

Factor that outweighs decentralization

The advantages of decentralization outweigh the disadvantages because of the

following reasons:

  • Decentralization helps in improving motivation and retention.
  • This approach lessens the work pressure because it delegates the task to many.
  • Decentralization facilitates the managers to accomplish their tasks with utmost accuracy.

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Most popular questions from this chapter

Question: How is RI calculated?

Each of the following managers works for a national chain of hotels and has been given certain decision-making authority. Classify each of the managers according to the type of responsibility center he or she probably manages.

a. Manager of the Central Reservation Office

b. Managers of various corporate-owned hotel locations

c. Managers of the Northeast and Southeast Corporate Divisions

d. Manager of the Housekeeping Department at one hotel

e. Manager of the complimentary breakfast buffet at one hotel

One subunit of Harris Sports Company had the following financial results last month:

Harris—Subunit X Actual Results Flexible Budget Flexible Budget Variance (F or U) % Variance (F or U)

Direct Materials \( 28,000 \) 25,900

Direct Labor 13,000 13,800

Indirect Labor 26,400 23,100

Utilities 12,300 11,300

Depreciation 25,000 25,000

Repairs and Maintenance 4,600 5,600

Total \( 109,300 \) 104,700

Requirements

1. Complete the performance evaluation report for this subunit. Enter the variance percent as a percentage of the budgeted amount rounded to two decimal places.

2. Based on the data presented, what type of responsibility center is this subunit?

3. Which items should be investigated if part of management’s decision criteria is to investigate all variances exceeding $2,500 or 10%?

4. Should only unfavorable variances be investigated? Explain.

Well-designed performance evaluation systems accomplish many goals. Describe the potential benefits performance evaluation systems offer.

Explain the difference between a lag indicator and a lead indicator.
See all solutions

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