Asked by Kelly Bazely on Jun 27, 2024
Verified
Which of the following is FALSE?
A) Maximizing division profits can sometimes lead to reducing company-wide profits
B) Managers of profit centers are given a lot of discretion in their decision making
C) Profit centers usually largely run themselves
D) A manager being rewarded on division revenues has no incentive to make good decisions for his division
Division Profits
The financial gains realized by a specific division within a larger company or organization.
Company-wide Profits
The total earnings of a company after all expenses and taxes have been deducted, across all divisions and product lines.
Profit Centers
Divisions or branches within a company that are treated as separate business units, with their own revenues and expenses.
- Acquire knowledge on how divisional profits contribute to the total profits of the organization.
- Acknowledge the duties and benefits for managers in profit centers.
Verified Answer
TD
THE DR EXPERIENCE PODCASTJun 28, 2024
Final Answer :
D
Explanation :
A manager being rewarded on division revenues may prioritize increasing sales revenue over profits, and may make short-term decisions that are not in the best interest of the division or the company as a whole, such as cutting costs that lead to lower quality products or investments in long-term growth. Therefore, this statement is true, and not false.
Learning Objectives
- Acquire knowledge on how divisional profits contribute to the total profits of the organization.
- Acknowledge the duties and benefits for managers in profit centers.