True-False

Indicate whether each statement is true (T) or false (F).

___ 1. The informal control system in an organization is likely to include a human resources system that provides information on recruiting, training, absenteeism, and accidents.

___ 2. Conceptually, the degree of decentralization in a company depends primarily on determining the optimal number of profit centers.

___ 3. Suboptimal decisions are often associated with a lack of goal congruence.

___ 4. Decentralization is likely to be most beneficial when a companys subunits are highly interdependent.

___ 5. One way to limit decentralization is to impose restrictions on the ability of subunits to outsource products that are available from internal subunits.

___ 6. Profit centers are compatible with high centralization or high decentralization.

___ 7. The choice of a transfer-pricing method can affect how a companys operating-income pie is divided among the individual subunits as well as the size of the operating-income pie itself.

___ 8. If top management imposes insourcing on its subunit managers, total company operating income will be unaffected by the transfer-pricing method used.

____ 9. Full-cost transfer prices are frequently used in practice to help avoid the pitfalls of suboptimal decision making.

____ 10. Compared to domestic companies, multinational companies must consider additional factors in setting their transfer prices, including different income tax rates in various countries and promotion of goal congruence.