Asked by Tizi-ann Barendse on Sep 24, 2024
Verified
Managers of profit centers are usually given a lot of discretion because
A) They always do an excellent job
B) They rarely do a good job
C) The company can never judge their performance
D) It is relatively easy to tie management pay to division performance
Profit Centers
Sections or divisions of a business that are directly responsible for generating profit, often evaluated separately for performance analysis.
Management Pay
Compensation, including salaries, bonuses, and other benefits, provided to individuals in managerial positions within organizations.
Division Performance
Evaluation of a specific division's operations within a larger company, focusing on its efficiency, productivity, and contribution to overall corporate goals.
- Understand the principle of discretion allocated to managers overseeing profit centers.
- Comprehend the position and incentives of managers at profit centers.
Verified Answer
AA
Aerikka Alaurin4 days ago
Final Answer :
D
Explanation :
Profit center managers are given a lot of discretion because it is relatively easy to tie their pay to the performance of the division. This encourages them to maximize profits and make decisions that are beneficial for the company as a whole. However, they still need to be monitored and evaluated to ensure they are making decisions that align with the company's goals.
Learning Objectives
- Understand the principle of discretion allocated to managers overseeing profit centers.
- Comprehend the position and incentives of managers at profit centers.