In decentralized purchasing, if an order exceeds a pre-established cost limit, what happens?

In decentralized purchasing, if an order exceeds a pre-established cost limit, what happens?

• A. The order is canceled
• B. The order must be approved by the owner or a manager
• C. The order is automatically approved
• D. The order is sent to multiple vendors

Answer: (B)

In decentralized purchasing, spend limits are used to control costs at the point of purchase. When an order would exceed the established cost limit, it triggers a review by someone with higher authority. The owner or a manager must approve the request before it can proceed. This gate keeps purchases within budget and aligns them with policy, even though day-to-day buying happens at the department level. Automatic approval would bypass the control, cancellation would stop the purchase regardless of circumstance, and sending to multiple vendors is about sourcing options rather than the approval workflow.

In decentralized purchasing, spend limits are used to control costs at the point of purchase. When an order would exceed the established cost limit, it triggers a review by someone with higher authority. The owner or a manager must approve the request before it can proceed. This gate keeps purchases within budget and aligns them with policy, even though day-to-day buying happens at the department level. Automatic approval would bypass the control, cancellation would stop the purchase regardless of circumstance, and sending to multiple vendors is about sourcing options rather than the approval workflow.