Your textbook reports that the Unique Company 's management control system gathers and

reports information for management control at various levels. For each of the following
levels list examples of the information needed:
a. Total-organization level
b. Customer/market level
c. Individual-facility level
d. Individual-activity level

Answer: (The following is a partial list)

a. Total-organization level Stock price, net income, return on investment, cash

flow from operations, total employment, pollution control.
b. Customer/market level Customer satisfaction, time taken to respond to customer
requests for products, and cost of competitor’s products.
c. Individual-facility level Materials costs, labor costs, absenteeism, and accidents
in various divisions or business functions.
d. Individual-activity level The time taken and the costs incurred for receiving,
storing, assembling, and dispatching goods in a warehouse; scrap rates, defects, and
units reworked on a manufacturing line; and the number of sales transactions and
revenue dollars per salesperson.

72. For each of the following activities, characteristics, and applications, identify whether they
can be found in a centralized organization, a decentralized organization, or both types of
organizations.

_______________ a. Freedom for managers at

lower organizational levels to make decisions
_______________ b. Gathering information may
be very expensive
_______________ c. Greater responsiveness to
user needs
_______________ d. Have few interdependencies
among divisions
_______________ e. Maximum constraints and
minimum freedom for managers at lowest levels
_______________ f. Maximization of benefits
over costs
_______________ g. Minimization of duplicate
functions
_______________ h. Minimum of suboptimization
 _______________ i. Multiple responsibility
centers with various reporting units
_______________ j. Profit centers

Answer:

a. Decentralization
b. Decentralization
c. Decentralization
d. Decentralization
e. Centralization
f. Both
g. Centralization
h. Centralization
i. Both
j. Both

Difficulty: 2 Objective: 2

73. For each of the following, identify whether it BEST relates to market-based, cost-based,
negotiated, or all types of transfer pricing.

_______________a.Bargaining between selling and buying units

_______________b.Budgeted costs
_______________c.145% of full costs
_______________d.Internal product transfers are required if goods are available internally
_______________e.Manufacturing costs plus marketing costs plus distribution costs plus
customer service costs
_______________f.Prices listed in a trade journal
_______________g.Selling price less normal sales commissions
_______________h.Variable manufacturing cost plus a markup

Answer:

a. Negotiated
b. Cost-based
c. Cost-based
d. Any method
e. Cost-based
f. Market-based
g. Market-based
h. Cost-based