Deck 16: Managerial Control

Question 1

With bureaucratic control,business units are treated as profit centers,and their managers are evaluated based on profit and loss.

Answer 1

False
Explanation: Market control involves the use of pricing mechanisms to regulate activities in organizations as though they were economic transactions.Business units may be treated as profit centers and trade resources (services or goods)with one another via such mechanisms.Managers who run these units may be evaluated on the basis of profit and loss.

Question 2

Control is defined as any process that directs the activities of individuals toward the achievement of organizational goals.

Answer 2

True
Explanation: Control is defined as any process that directs the activities of individuals toward the achievement of organizational goals.It is how effective managers make sure that activities are going as planned.

Question 3

The second step in a typical control process is comparing performance with the standard.

Answer 3

False
Explanation: The second step in the control process is to measure performance levels.Performance data commonly are obtained from three sources: written reports,oral reports,and personal observations.

Question 4

Control is one of the forces that keeps an organization heading in the right direction.

Question 5

Clan control is control based on the norms,values,shared goals,and trust among group members.

Question 6

Concurrent control takes place while plans are being carried out.

Question 7

The first step in the control process is to set performance standards.

Question 8

An example of feedforward control is managers monitoring their distributors.

Question 9

Personal observation involves going to the area where activities take place and watching what is occurring.

Question 10

One of the reasons standards are established is to set performance expectations.

Question 11

Market control is the use of rules,regulations,and formal authority to guide performance.

Question 12

As long as supervisors monitor behavior constantly,the feedback may be given at any point in time without consequence.

Question 13

When supervisors monitor employee behavior,they are exercising feedback control.

Question 14

Performance standards can only be set with respect to quantity or quality.

Question 15

The last step in the control process is to compare performance with standards.

Question 16

Market control is control based on the use of pricing mechanisms and economic information to regulate activities within organizations.

Question 17

According to the principle of exception,even the smallest of deviations from the standard require corrective action.

Question 18

Point-of-sale terminals in store checkout lines sending sales data back immediately to a retailer's headquarters is an example of how information technology has improved concurrent control.

Question 19

Clan control assumes that the interests of organizations and individuals naturally diverge.

Question 20

Authority and organizing are called the Siamese twins of management.

Question 21

A balanced scorecard is a control system combining four sets of performance measures: technological,customer feedback,productivity,and strategy.

Question 22

Three key categories of financial ratios are liquidity,leverage,and profitability.

Question 23

Return on investment is a profitability ratio.

Question 24

Using the six sigma approach to quality does not always lead to improvements in the bottom line.

Question 25

The most effective performance standards tend to be subjective rather than objective.

Question 26

The profit and loss statement is an itemized financial statement of the income and expenses of a company's operations.

Question 27

A master budget includes every major activity of a business.

Question 28

Traditional methods of cost accounting tend to be inappropriate in today's business environment because they are based on outdated methods of rigid hierarchical organization.

Question 29

If an employee believes his or her control system is overly controlling,that employee is likely to exhibit dysfunctional behavior.

Question 30

The most common type of tactical behavior in control systems is to manipulate information or report false performance data.

Question 31

The balance sheet shows the financial picture of a company over time.

Question 32

External audits are often used for feedback control but can also be useful to prevent problems.

Question 33

Because financial ratios usually are expressed in compressed time horizons,they often cause management myopia.

Question 34

Liquidity ratios indicate a company's ability to meet its long-term financial obligations.

Question 35

Budgeting information is confined to finances.

Question 36

By definition,management audits are internal,not external.

Question 37

Liabilities are the amounts accruing to the corporation's owners.

Question 38

In today's complex organizations,the budget process is much more likely to be top-down.

Question 39

A control system cannot be effective without consideration of how people will react to it.

Question 40

Activity-based costing is a method of cost accounting designed to allocate costs across particular business processes according to the amount of time employees devote to particular activities.

Question 41

In large diversified companies,market controls are often used to regulate independent business units.

Question 42

In contrast to market controls,bureaucratic controls involve the use of economic forces to regulate performance.

Question 43

A transfer price is the price charged by one unit for a good or service provided to another unit within the organization.

Question 44

Control based on the norms,values,shared goals,and trust among group members is referred to as _____ control.

A) clan
B) feedback
C) concurrent
D) feedforward
E) market

Question 45

A managerial principle stating that control is enhanced by concentrating on the significant deviations from the expected result or standard is referred to as the principle of ____.

A) control
B) concentration
C) progression
D) exception
E) standardization

Question 46

Jeremy is in charge of production at Tech Farm Equipment.His job responsibilities include eliminating defects in the equipment parts the factory produces.However,he has advised his crew to alert him only when defects exceed 200 per million,which he considers a serious deviation from standards.In this case,Jeremy is using:

A) a management audit.
B) the principle of deviation.
C) clan control.
D) the principle of exception.
E) behavioral standards.

Question 47

Control has been called one of the Siamese twins of management.The other twin is ____.

A) planning
B) organizing
C) leading
D) directing
E) empowerment

Question 48

If managers create a strong culture of correct behavior,then clan control can be a very effective control tool.

Question 49

Which of the following is the first major step in the formal control process?

A) Comparing performance with standards
B) Setting standards
C) Taking corrective action
D) Developing values
E) Measuring performance

Question 50

The final step in the control process is:

A) taking corrective action.
B) setting performance standards.
C) measuring performance.
D) comparing performance with standards.
E) determining deviations.

Question 51

Which of the following is a symptom of an out-of-control company?

A) Flexible work hours for employees
B) Highly challenging organizational goals
C) Lack of periodic reviews
D) Highly rigid work culture
E) Lack of new employees

Question 52

Ideally,a transfer price should be less than the price that the receiving business unit would have to pay for that product or service in the marketplace.

Question 53

Formal bureaucratic control systems continue to be the most effective in organizations.

Question 54

Which of the following is one of the factors based on which performance standards can be set?

A) Efficiency
B) Knowledge
C) Market share
D) Employee satisfaction
E) Time used

Question 55

Control based on the use of pricing mechanisms and economic information to regulate activities within organizations is referred to as _____ control.

A) clan
B) feedback
C) market
D) feedforward
E) bureaucratic

Question 56

If bureaucratic and market mechanisms are insufficient for directing a company's workforce in today's environment,it can turn to structural control.

Question 57

Using budgeting,statistical reports,and performance appraisals to regulate behavior and results is considered a component of ____.

A) clan control
B) market control
C) bureaucratic control
D) financial audits
E) management audits

Question 58

The use of rules,regulations,and authority to guide performance is referred to as _____ control.

A) clan
B) bureaucratic
C) market
D) authentic
E) autonomous

Question 59

A(n)_____ is the level of expected performance for a given goal;it is a target that establishes a desired performance level,motivates performance,and serves as a benchmark against which actual performance is assessed.

A) goal
B) objective
C) standard
D) control process
E) audit

Question 60

Which of the following is a commonly used source for obtaining performance data?

A) Competitors
B) Human resource department
C) Personal observation
D) Upper management
E) Technical analysts from outside the company

Question 61

The _____ budget is used for areas of an organization that incur expenses but no revenue,such as human resources and other support departments.

A) sales
B) production
C) cost
D) cash
E) capital

Question 62

Which of the following statements about six sigma is true?

A) The system was developed at Ford during the 1970s.
B) The lower the sigma number,the lower the level of defects.
C) It is designed merely to reduce product defects.
D) It indicates how often defects in a process are likely to occur.
E) Six sigma always improves the bottom linE.

Question 63

Core Rentals has begun a new system of allocating costs according to the tasks their employees perform and the amount of time they spend on the particular tasks.This practice adopted by Core Rentals is referred to as ____.

A) unit-based accounting
B) time-based auditing
C) task accounting
D) activity-based costing
E) allocation costing

Question 64

Procedures used to verify accounting reports and statements are referred to as ____.

A) lean accounting
B) accounting audits
C) activity-based costing
D) accounting reforms
E) budget audits

Question 65

The control process used while plans are being carried out,including directing,monitoring,and fine-tuning activities as they are performed,is referred to as _____ control.

A) feedforward
B) concurrent
C) feedback
D) preliminary
E) market

Question 66

External audits are generally used for:

A) assessing what the company has done for itself.
B) evaluating production efficiency.
C) evaluating sales effectiveness.
D) investigating possible targets for mergers or acquisitions.
E) assessing what the company has done for its customers.

Question 67

_____ budget is commonly expressed in physical units,and it can be prepared with information including types and capacities of machines,economic quantity,and availability of materials.

A) Master
B) Cash
C) Capital
D) Production
E) Sales

Question 68

_____ budget is used for the cost of fixed assets,such as plants and equipment,that are usually treated not as regular expenses but as investments.

A) Master
B) Cash
C) Capital
D) Production
E) Sales

Question 69

An evaluation of the effectiveness and efficiency of various systems within an organization is called a(n)_____ audit.

A) human resource
B) management
C) activity-based
D) budget
E) six-sigma

Question 70

Kate is a financial manager at Nature Feeds,a manufacturer of cattle feed.She makes a budget that shows the anticipated receipts and expenses of the company.The budget also shows her the amount of working capital available and whether the company will need loans.This is the last budget that Kate creates for the upcoming year.Which of the following types of budget is exemplified in this scenario?

A) Master budget
B) Cash budget
C) Cost production budget
D) Production budget
E) Sales budget

Question 71

The activity-based costing system:

A) is more appropriate method of cost accounting for rigid hierarchical organizations.
B) effectively departmentalizes an organization based on its core functions such as human resources,purchasing,and maintenance.
C) provides a more accurate picture of how costs should be charged to products and services.
D) assumes that organizations are bureaucratic "machines" that can be separated into component functions.
E) fails to allocate costs across business processes and is less effective than traditional methods of cost accounting.

Question 72

Which of the following controls is future oriented and aims to prevent problems before they arise?

A) Feedback control
B) Proactive control
C) Feedforward control
D) Reactive control
E) Concurrent control

Question 73

The process of investigating what is being done and comparing the results with the corresponding budget data to verify accomplishments or remedy differences is referred to as ____.

A) activity-based costing
B) budgetary auditing
C) budgeting
D) financial audits
E) budget planning

Question 74

Electronic monitoring of telemarketers' conversations with potential clients is an example of _____ control.

A) feedback
B) concurrent
C) preliminary
D) clan
E) feedforward

Question 75

Periodically assessing a company's own planning,organizing,leading,and controlling efforts is the essential function of ____.

A) strategic audits
B) feedforward control
C) feedback control
D) competitive audits
E) internal audits

Question 76

Which of the following controls takes place before operations begin?

A) Feedback control
B) Clan control
C) Initial control
D) Feedforward control
E) Concurrent control

Question 77

An evaluation conducted by one organization on another organization is referred to as a(n)_____ audit.

A) external
B) competitive
C) comparative
D) intrinsic
E) parallel

Question 78

_____ is in effect when supervisors watch employees to ensure they work efficiently and avoid mistakes.

A) Organizational modification
B) Concurrent control
C) Management adjustment
D) Feedback control
E) Feedforward control

Question 79

At Performance Instruments,all assembly workers must wear specialized gear to reduce possible injuries from minute particles in the manufacturing environment.This requirement best reflects _____ control.

A) feedback
B) proactive
C) feedforward
D) reactive
E) concurrent

Question 80

Control that focuses on the use of information about previous results to correct deviations from the acceptable standard is referred to as _____ control.

A) feedforward
B) preliminary
C) feedback
D) audit
E) performance