Asked by Joseph Prejean on Sep 24, 2024
Verified
Which of the following is TRUE?
A) Maximizing division profits always leads to maximizing company-wide profits
B) Managers of profit centers are not given any discretion in their decision making
C) Profit centers usually require the highest degree of attention of corporate executives
D) A manager being rewarded on division revenues has the most incentive to make good decisions for his division
Division Profits
The earnings attributed to a specific division or segment within a larger company.
Profit Centers
Segments or areas within a business that are responsible for generating profit, with their performance measured based on the income they produce.
Decision Making
The method of selecting options through recognizing a decision to be made, collecting data, and evaluating different solutions.
- Identify the differences between the pursuit of maximized profits within individual divisions versus the pursuit of maximized profits across the entire organization.
- Investigate the consequences of incentivizing managers with rewards tied to divisional revenues as opposed to divisional profits.
Verified Answer
LC
Lindsay Chessonabout 7 hours ago
Final Answer :
D
Explanation :
Managers who are rewarded on division revenues have the most incentive to make good decisions for their division as their compensation is directly tied to the division's financial performance. However, this may not always align with maximizing company-wide profits, as decisions that are beneficial for one division may not be beneficial for the company as a whole.
Learning Objectives
- Identify the differences between the pursuit of maximized profits within individual divisions versus the pursuit of maximized profits across the entire organization.
- Investigate the consequences of incentivizing managers with rewards tied to divisional revenues as opposed to divisional profits.