Management Accounting - Study Mode
[#61] An organizational practice, according to which decision making freedom is available to lower level managers is known as
Correct Answer
(A) decentralization
Explanation
Solution: An organizational practice, according to which decision making freedom is available to lower level managers is known as decentralization. Decentralization refers to a specific form of organizational structure where the top management delegates decision-making responsibilities and daily operations to middle and lower subordinates.
[#62] Products or services that are transferred between different subunits of a company are classified as
Correct Answer
(C) intermediate product
Explanation
Solution: Products or services that are transferred between different subunits of a company are classified as intermediate product. An intermediate good is a product used to produce a final good or finished product also referred to as a consumer good.
[#63] Means of collecting and using information, to coordinate decision and planning through an organization are termed as
Correct Answer
(D) management control systems
Explanation
Solution: Means of collecting and using information, to coordinate decision and planning through an organization are termed as management control systems. Management control systems are the formal and informal structures put in place by a business that compare the goals and strategy of the organization against the actual outcomes.
[#64] Minimum freedom for managers and maximum constraints are main features of
Correct Answer
(B) total centralization
Explanation
Solution: Minimum freedom for managers and maximum constraints are main features of total centralization. Centralization of authority means the power of planning and decision making are exclusively in the hands of top management.
[#65] Price charged by one subunit to supply products or services to another unit is called
Correct Answer
(B) transfer price
Explanation
Solution: Price charged by one subunit to supply products or services to another unit is called transfer price. Transfer pricing is an accounting practice that represents the price that one division in a company charges another division for goods or services provided. A transfer price is based on market prices in charging another division, subsidiary, or holding company for services rendered.