Deck 17: Management Control

Question 1

Actual performance always conforms exactly to standards.

Answer 1

False

Question 2

Control is accomplished by comparing actual performance to predetermined standards and correcting any deviations from the standard.

Answer 2

True

Question 3

To maintain stability,a manager must ensure that the organization is operating outside its established boundaries.

Answer 3

False

Question 4

Monitoring can be expensive if overdone,and it can result in adverse reactions from employees.

Question 5

The basic premise that all the activities of an organization will run smoothly gives rise to the need for control.

Question 6

Objective realization requires constant monitoring to ensure that enough progress is being made toward established objectives.

Question 7

Among the requirements for control,monitoring and correcting originate from the planning process.

Question 8

The area of deviation controls in the control pyramid deal with repetitive acts and require little thought.

Question 9

The effectiveness of any control system is solely a function of the quality of controls that are used.

Question 10

Managers should regularly attempt to evaluate the economic costs against the benefits of controls.

Question 11

Problems and services can be standardized in terms of quantity and quality through the use of good controls.

Question 12

The control pyramid provides a method for implementing controls in the organization.

Question 13

A standard is a value used as a point of reference for comparing other values.

Question 14

While establishing standards for control,objectives are never directly used as standards.

Question 15

In a feedback system,outputs from the system affect future activities of the system.

Question 16

A manager must balance two major concerns,change planning and intervention,while practicing control.

Question 17

Proper controls can provide the manager with objective information about employee performance.

Question 18

Managers take corrective actions when the outputs do not meet the standards.

Question 19

The area of supervisory control in the control pyramid controls the person or persons implementing the controls.

Question 20

The objective behind the monitoring process requirement for control is to gather data and detect problem areas.

Question 21

In the control pyramid,_____ controls deal with repetitive acts and require little thought.

A) foolproof
B) automatic
C) operator
D) supervisory
E) informational

Question 22

_____ is defined as the variation from the standard that is acceptable to the manager.

A) Control stock
B) Control tolerance
C) Control point
D) Control specification
E) Control ratio

Question 23

Variable costs include direct labor and materials.

Question 24

Objective realization requires constant monitoring to ensure that _____.

A) enough progress is being made toward established objectives
B) the organization is operating within its established boundaries of constraint
C) the day-to-day policies and rules are given more importance as compared to the long-term goals
D) the stability of an operation is maintained
E) control is practiced after problems occur

Question 25

Behavior control is based on direct,personal surveillance.

Question 26

In profitability budgeting,the burden of proof is on each manager to justify why any money should be spent.

Question 27

A feedback system is influenced by its own _____.

A) past behaviors
B) before-the-fact steps
C) future inputs
D) future activities
E) inputs per hour

Question 28

Analytical reports present only the facts.

Question 29

In the control pyramid,the area of _____ controls is the layer that controls the person implementing the controls.

A) automatic
B) operator
C) foolproof
D) informational
E) supervisory

Question 30

Reactions to controls differ according to personality and prior experiences.

Question 31

Most people prefer working in an environment where there is no control.

Question 32

Organizations must make sure that the _____ controls get results and do not become redundant.

A) automatic
B) foolproof
C) informational
D) supervisory
E) operator

Question 33

In the control pyramid,_____ control requires a human response.

A) operator
B) informational
C) foolproof
D) automatic
E) feedback

Question 34

How do management controls help managers in updating plans?

A) They allow comparing what is happening with what was planned.
B) They provide with objective information about employee performance.
C) They standardize problems and services in terms of quantity and quality.
D) They help avoid solvable problems turning into crises.
E) They protect assets from inefficiency, waste, and pilferage.

Question 35

Many managers tend to decrease controls whenever things are not going according to plan.

Question 36

A feedback loop can exist without much human interaction in the _____ controls area of the control pyramid.

A) foolproof
B) supervisory
C) automatic
D) informational
E) operator

Question 37

Problems resulting from resistance to controls arise when people adhere to the prescribed behavior.

Question 38

Higher-level managers get too involved in details when controls are placed far down in the organization.

Question 39

Organizations operating in an industry with rapid change and high competition should have a rigid budget.

Question 40

When practicing control,a manager must ensure that _____.

A) the organization is operating outside its established boundaries of constraint
B) he or she takes complete care of one concern even if it is at the expense of the other
C) he or she is concerned more with the goal of the operation than its stability
D) he or she balances stability and objective realization
E) he or she is more concerned only with the day-to-day rules

Question 41

Which of the following is a consequence of an absence of control?

A) It increases the visibility of power.
B) It creates an environment in which people do not know what is expected of them.
C) It restricts the flexibility and innovation required to be competitive.
D) It shows employees the minimum acceptable behavior permitted in the organization.
E) It stifles the entrepreneurial spirit of employees.

Question 42

Which of the following is true of rigid controls?

A) They lead to increased performance.
B) They result in reduced interpersonal tension.
C) They make every behavior acceptable.
D) They increase the visibility of power.
E) They bring in a lenient enforcement of general and impersonal formal rules.

Question 43

Which of the following is a characteristic of foolproof controls?

A) They usually exist in an organization's normal course of business.
B) They are mostly machine or computer based.
C) They make the control meaningful for the controller.
D) They are at the risk of being redundant.
E) They deal with the synchronization of the control processes.

Question 44

Which of the following creates a problem when deciding on the proper amount of control to be placed?

A) Individuals reacting in the same way to similar controls
B) Individuals involving themselves in the control-setting process
C) Individuals providing assistance in the control process
D) Individuals volunteering to create the controls
E) Individuals attempting to sabotage the controls

Question 45

_____ controls attempt to prevent a problem from occurring.

A) Steering
B) Concurrent
C) Screening
D) Variable
E) Postaction

Question 46

_____ control methods are designed to detect existing problems after they occur but before they reach crisis proportions.

A) Screening
B) Preliminary
C) Postaction
D) Steering
E) Concurrent

Question 47

When financial information is used for control purposes,_____ indicate how well the organization is being managed.

A) liquidity ratios
B) profitability ratios
C) debt ratios
D) leverage ratios
E) activity ratios

Question 48

Rigid rules have the unintended effect of _____.

A) showing minimum acceptable behavior
B) creating an environment in which people do not know what is expected of them
C) decreasing visibility power
D) reducing interpersonal tension
E) increasing performance

Question 49

_____ control is based on direct,personal surveillance.

A) Impersonal
B) Output
C) Behavior
D) Budgetary
E) Zero-base

Question 50

Which of the following is a disadvantage of budgets?

A) They are not useful for planning and control.
B) They are inflexible.
C) They cannot be used in industries with rapid change and high competition.
D) They decrease the visibility of power in the organization.
E) They have no relation to customer satisfaction.

Question 51

_____ controls focus on things that happen as inputs are being transformed into outputs.

A) Preliminary
B) Steering
C) Postaction
D) Variable
E) Screening

Question 52

Which of the following statements best describes a budget?

A) It is a statement of expected results expressed in numerical terms.
B) It is document that describes the organizational goals and objectives.
C) It is a computerized system designed to produce information.
D) It is a graphical depiction of the relationship of volume of operations to profits.
E) It is the point at which sales revenues are the same as expenses.

Question 53

Which of the following is the reason behind designing zero-base budgeting as a control device?

A) To hide inefficiencies
B) To stop basing the present year's budget on the previous year's budget
C) To increase the rigidity in the budget
D) To distinguish between cash budgets and production budgets
E) To measure output

Question 54

Which of the following statements is true about the placement of control in an organization?

A) Control should rest only in the hands of the top management.
B) All organizations follow a highly centralized approach to decision making and controlling.
C) Pushing controls down in the organization permits higher-level managers to get totally involved in details.
D) Pushing controls down in the organization keeps the controllers away from the actual situations that require control.
E) Controls that are placed farther down the hierarchy elicit commitment from lower-level managers.

Question 55

Which of the following is true of the behavioral considerations for deciding how much control should be exercised in an organization?

A) Most people like to work in an environment where every move they take is being watched.
B) Most people do not like to work where no control exists.
C) In an absence of control people know exactly what is expected of them.
D) More the control, more the flexibility required to be competitive.
E) Overly restrictive control allows people to try creative options.

Question 56

Which of the following measures should be implemented to lessen negative reactions to controls?

A) Set high standards to make them non-attainable.
B) Set extremely low standards so that all employees can easily attain them.
C) Prohibit employees from getting involved in the complex control-setting process.
D) Use controls for every situation.
E) Evaluate every control at least annually.

Question 57

_____ control is based on the measurement of outputs.

A) Qualitative
B) Impersonal
C) Distributed
D) Direct
E) Behavior

Question 58

What is the purpose of balance sheet budgets?

A) Providing details for revenue and expense plans
B) Forecasting cash receipts and disbursements
C) Outlining specific expenditures for plant, equipment, inventories, and other capital items
D) Expressing physical requirements of production or material for the budget period
E) Forecasting the status of assets, liabilities, and net worth at the end of the budget period

Question 59

What of the following statements is true about personal and impersonal control?

A) Personal control is also known as output control whereas impersonal control is also known as behavior control.
B) Personal control is based on direct surveillance whereas impersonal control is based on measurement of output.
C) Personal and impersonal controls are substitutes for each other.
D) Personal and impersonal controls serve the same organizational needs.
E) Personal control occurs in response to a manager's needs to provide an accurate measure of performance whereas impersonal control is exerted when performance requirements are well known.

Question 60

In the control pyramid,_____ controls is the area in which a manager must pull together all the information provided by the other controls.

A) operator
B) informational
C) foolproof
D) supervisory
E) automatic

Question 61

Describe the economic considerations that need to be kept in mind while deciding on the amount of control to be exercised in an organization.

Question 62

_____ ratios measure the magnitude of owners' and creditors' claims on the organization.

A) Profitability
B) Debt
C) Activity
D) Liquidity
E) Current

Question 63

_____ graphically depict the relationship of volume of operations to profits.

A) Break-even charts
B) Gantt charts
C) Program evaluation and review techniques
D) Management audits
E) Balanced scorecards

Question 64

_____ ratios evaluate how effectively an organization is managing some of its basic operations.

A) Profitability
B) Debt
C) Liquidity
D) Leverage
E) Activity

Question 65

Discuss the various types of budgets and their respective purposes.

Question 66

Outline some of the potential causes of performance deviations.

Question 67

What are the characteristics that the tools used to correct for deviations should possess?

Question 68

_____ system is a measurement and control system that is based on the idea that financial measures alone do not adequately indicate how an organization is performing.

A) Balanced scorecard
B) Electronic monitoring
C) Audit
D) Break-even chart
E) Accounting information

Question 69

What are the three requirements of control?

Question 70

When financial information is used for control purposes,_____ indicate how well an organization will be able to meet its short-term financial obligation.

A) liquidity ratios
B) profitability ratios
C) activity ratios
D) debt ratios
E) leverage ratios

Question 71

Return on investment and return on assets are examples of _____ ratios.

A) profitability
B) debt
C) liquidity
D) leverage
E) activity

Question 72

What is the difference between quick ratio and the debt-to-equity ratio?

Question 73

State some of the advantages of implementing tight controls that are placed far down the organizational hierarchy.

Question 74

What are management information systems?

Question 75

What is the function of leverage ratios?

A) They indicate an organization's operational efficiency.
B) They indicate how well an organization is being managed.
C) They measure the magnitude of owners' and creditors' claims on the organization.
D) They evaluate how effectively an organization is managing some of its basic operations.
E) They judge how well an organization will be able to meet its short-term financial goals.

Question 76

How can a manager lessen negative reactions to controls?

Question 77

_____ attempt to evaluate the overall management practices and policies of the organization.

A) Break-even charts
B) Electronic monitors
C) Balanced scorecards
D) Financial ratio analyses
E) Management audits

Question 78

What is a balanced scorecard system? What are its advantages?

Question 79

Average collection period and accounts receivable turnover represent some commonly used _____ ratios.

A) debt
B) profitability
C) activity
D) leverage
E) liquidity

Question 80

Which of the following is a characteristic of debt ratio?

A) It indicates an organization's operational efficiency.
B) It indicates how well an organization is being managed.
C) It indicates how well an organization will be able to meet its short-term financial obligations.
D) It indicates an organization's ability to meet long-term obligations.
E) It evaluates how well an organization is managing its basic operations.