Deck 14: Managerial Control

Question 1

Empowering employees to make decisions implies giving up control.

Answer 1

False

Question 2

A company is said to lack control when there is an) _____, that is the firm's expectations are not established.

A) inadequacy of ethics in the culture
B) "shoot the messenger" management
C) lax top management
D) absence of policies
E) lack of periodic reviews

Answer 2

D

Question 3

Controlling by profit and loss is most commonly used for the entire enterprise and, in the case of a diversified corporation, its divisions.

Answer 3

True

Question 4

Which of the following is a definition of control?

A) It refers to the expected performance for a given goal.
B) It is any process that directs the activities of individuals toward the achievement of organizational goals.
C) It is people's perceived likelihood that their efforts will enable them to attain their performance goals.
D) It is the process of giving people additional tasks at the same time to alleviate boredom.
E) It is the process of applying a consequence that increases the likelihood of a person repeating the behavior that led to it.

Question 5

Budgetary control is the process of finding out what's being done and comparing the results with the corresponding budget data to verify accomplishments or remedy differences.

Question 6

Six sigma companies have a high level of product or service defects.

Question 7

Allowing people to initiate their own corrective action encourages self-control and reduces the need for outside supervision.

Question 8

With the principle of exception, the manager is concerned with performance that equals or closely approximates the expected results.

Question 9

Which of the following statements is true of market control?

A) It does not assume that the interests of the organization and individuals naturally diverge.
B) It is based on the idea that employees may share the values, expectations, and goals of the organization and act in accordance with them.
C) It includes such items as budgets, statistical reports, and performance appraisals.
D) It is most effective where tangible output can be identified.
E) It works best where tasks are certain and workers are independent.

Question 10

At a town hall meeting, the CEO of a company spoke energetically about adopting cost-cutting measures due to the recent economic slump. However, a few days later, the employees found out that the CEO had gone on an exotic vacation using funds from the company. Which of the following is true about this company?

A) Key data are not measured and reported in a timely manner.
B) Reviews are not held periodically.
C) Employees are unclear about what needs to be achieved.
D) Senior managers set a bad example, implying a lack of control.
E) The firm's expectations are not established in writing.

Question 11

Control and _____ have been called the Siamese twins of management.

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

Question 12

_____ control includes items such as budgets, statistical reports, and performance appraisals to regulate behavior and results.

A) Clan
B) Market
C) Bureaucratic
D) Concurrent
E) Feedforward

Question 13

Clan control works best where tasks are certain and workers are independent.

Question 14

Effective managers make sure that activities are going as planned with the help of control.

Question 15

Matilda, an employee, received an e-mail from an angry client about a certain product. Although it was not Matilda's fault, she hesitated to report it to her manager because she knew that she would be blamed for it and could even be fired. In this case, which of the following is true of Matilda's company?

A) The firm's expectations are not established in writing.
B) Employees are unclear about what needs to be achieved.
C) "Shoot the messenger" management exists, implying a lack of control.
D) Reviews are not held periodically.
E) Key data are not measured and reported in a timely manner.

Question 16

The chief financial officer CFO) needs to be more concerned with details than with recommending adjustments when needed.

Question 17

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

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

Question 18

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

A) Clan
B) Feedback
C) Concurrent
D) Feedforward
E) Market

Question 19

Relying exclusively on financial ratios is effective because they provide performance standards and indicators of what has occurred.

Question 20

Which of the following statements is true of bureaucratic control?

A) It does not assume that the interests of the organization and individuals naturally diverge.
B) It is based on the idea that employees may share the values, expectations, and goals of the organization and act in accordance with them.
C) It involves the use of pricing mechanisms and exchange relationships to regulate activities within organizations.
D) It is based on interpersonal processes of organization culture, leadership, and groups and teams.
E) It works best where tasks are certain and workers are independent.

Question 21

Which type of control is future oriented and aims to prevent problems before they arise?

A) feedback control
B) specialist control
C) feedforward control
D) operator control
E) concurrent control

Question 22

Which of the following statements is true of Six Sigma?

A) The system was developed by General Electric.
B) It is designed to choose the correct organizational process for a job.
C) The lower the sigma number, the lower is the level of defects.
D) It indicates how often defects in a process are likely to occur.
E) It always improves the bottom line.

Question 23

Assessing the planning, organizing, leading, and controlling efforts of one's own organization is the essential function of

A) strategic audit.
B) feedforward control.
C) feedback control.
D) external audit.
E) internal audit.

Question 24

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

A) feedback
B) concurrent
C) accounting
D) budget
E) feedforward

Question 25

Some means of control are necessary because once managers form plans and strategies,

A) they must ensure that the marketing strategies are reflective of the old product.
B) they must ensure that employees take steps to solve problems.
C) they must ensure that the plans are carried out.
D) they must ensure that management is creative.
E) they must ensure that communication is clear.

Question 26

Kylie, a manager, is in charge of production at Iris Inc. Part of her job is to ensure that the components for surgical devices are extremely accurate. In fact, it is important that they are perfectly produced. When Kylie concentrates on the significant deviations from established standards, she is using the

A) balance sheet.
B) management myopia.
C) employment relationship.
D) principle of exception.
E) balance scorecard.

Question 27

At Wodehouse Corp., a rule has been made instructing all assembly workers to arrive early for their shift in order to wear specialized gear because the products are very sensitive to external particles. These products are assembled in a controlled environment. This requirement reflects _____ control.

A) feedback
B) specialist
C) feedforward
D) operator
E) concurrent

Question 28

_____ is the process of comparing a firm's practices and technologies with those of other organizations.

A) Benchmarking
B) Budgeting
C) Six Sigma
D) Management audit
E) Feedforward control

Question 29

The Six Sigma approach is based on an) _____ that contributes) to customer satisfaction.

A) statistical analysis
B) budgetary control
C) strategic vision
D) management audits
E) increased customer base

Question 30

Which type of bureaucratic control takes place while plans are being carried out?

A) feedback control
B) specialist control
C) preliminary control
D) feedforward control
E) concurrent control

Question 31

________ is an evaluation of the effectiveness and efficiency of various systems within an organization.

A) A standard
B) A management audit
C) An innovation catalyst
D) A budget
E) A profit and loss statement

Question 32

The last step in a typical control system is

A) taking action to correct problems.
B) setting performance standards.
C) measuring performance.
D) comparing performance against the standards.
E) revising standards.

Question 33

Which of the following is the first step in a typical control system?

A) setting performance standards
B) comparing performance against the standards
C) taking action to correct problems
D) revising standards
E) measuring performance

Question 34

The _____ can frequently cause irreparable damage to organizations.

A) firm's expectations
B) lack of controls
C) agreed-upon standards
D) commitment to integrity
E) grapevine

Question 35

_____ lays) out a framework for the future, and, in this sense, provide a blueprint for control.

A) Planning
B) Control systems
C) Creativity
D) Enhancing quality
E) Communication strategies

Question 36

Which of the following is a use of external audits?

A) evaluating financial stability
B) evaluating production efficiency
C) evaluating sales effectiveness
D) identifying possible mergers or acquisitions
E) identifying earnings potential

Question 37

An) _______ is an evaluation conducted by one organization of another organization.

A) external audit
B) market control
C) clan control
D) budget
E) activity-based costing

Question 38

_______ is the level of expected performance for a given goal: a target that establishes a desired performance level, motivates performance, and serves as a benchmark against which actual performance is assessed.

A) Liability
B) Balance sheet
C) Standard
D) Asset
E) Audit

Question 39

During challenging times when resources are limited and budgets need to be stretched, _____ control becomes even more important for survival.

A) individual
B) managerial
C) consumer
D) customer
E) stakeholder

Question 40

External audits are useful for preliminary control because they

A) can assess what a company has done for itself.
B) review a company's past, present, and future.
C) can evaluate how a company has served its customers of its goods or services.
D) can prevent problems from occurring.
E) are more satisfying as operators benefit by having a more enriched job.

Question 41

_____ are targets that establish desired performance levels, motivate performance, and serve as benchmarks against which to assess actual performance.

A) Skunkworks
B) Liabilities
C) Management audits
D) Gatekeepers
E) Standards

Question 42

Which of the following is the second stage of budgetary control?

A) responding appropriately
B) performing budgetary operations
C) comparing Six Sigma data
D) establishing expectancies
E) taking action

Question 43

In _____, instead of waiting for results and comparing them with goals, a manager or employees can exert control by limiting activities in advance.

A) feedforward control
B) concurrent control
C) feedback control
D) forward control
E) internal control

Question 44

Ingrid is the financial manager at Glynne Inc., a candy manufacturer. One of her duties is to make a budget that shows the forecasted receipts and expenditures of the company, the amount of working capital available, and the degree to which it should obtain funds from outside of the firm. Ingrid makes this budget after all other budget estimates have been completed. Which of the following types of budget is Ingrid currently working on?

A) master budget
B) cash budget
C) cost budget
D) production budget
E) sales budget

Question 45

Palin Inc. has started a new system of allocating costs according to what their employees do, rather than what the company spends. For example, labor expenses are allocated to employee tasks rather than salary and benefits. This practice is referred to as

A) cost accounting.
B) accounting auditing.
C) task accounting.
D) activity-based costing.
E) allocation costing.

Question 46

The _____ costing method allocates costs across business processes, and provides a more accurate picture of how costs should be charged to products and services.

A) sales
B) production
C) activity-based
D) capital
E) operational

Question 47

Required information for preparing a _____ budget includes types and capabilities of machines and availability of materials.

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

Question 48

_____ are the amounts the corporation owes to various creditors.

A) Liabilities
B) Equities
C) Dividends
D) Profits
E) Assets

Question 49

Policies restricting workplace romance, tattoos and body art, and public disclosure of corporate information are examples of _____ control.

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

Question 50

Traditional methods of cost accounting

A) are still appropriate in today's business environment.
B) may be inappropriate in today's business environment.
C) are based on updated methods.
D) may not be appropriate for rigid hierarchical organizations.
E) are reflective in accounting ledgers.

Question 51

An) _______ is a report that shows the financial picture of a company at a given time and itemizes assets, liabilities, and stockholders' equity.

A) profit and loss statement
B) balance sheet
C) expense report
D) income statement
E) budget report

Question 52

The _____ of establishing performance targets and standards is that they may not be supported by other elements of the control system.

A) upside
B) advantage
C) benefit
D) downside
E) strength

Question 53

When supervisors monitor behavior, they are exercising

A) feedforward control.
B) concurrent control.
C) forward control.
D) feedback control.
E) external control.

Question 54

Which of the following budgets is used for areas of the organization that incur expenses but no revenue?

A) sales budget
B) production budget
C) cost budget
D) cash budget
E) master budget

Question 55

_____ provide essential feedback control when they identify legal and ethical lapses that could harm the organization and its reputation.

A) Internal audits
B) Internal evaluations
C) External audits
D) Financial questions
E) Legal briefs

Question 56

The _____ budget is essential to every business.

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

Question 57

_____ are the values of the various items the corporation owns.

A) Liabilities
B) Assets
C) Profits
D) Audits
E) Equities

Question 58

_____ detect and correct significant variations, or discrepancies, in the results of planned activities.

A) Quality standards
B) Quantity standards
C) Control systems
D) Performance systems
E) Communication strategies

Question 59

_____ control focuses on the use of information about results to correct deviations from the acceptable standard after they arise.

A) Reactionary
B) Concurrent
C) Corrective
D) Outback
E) Feedback

Question 60

Budgeting information

A) is confined to managerial decisions.
B) is not confined to finances.
C) is restricted to dollars.
D) is inclusive of forecasting.
E) is found in accounting ledgers.

Question 61

A _______ is a liquidity ratio that indicates the extent to which short-term assets can decline and still be adequate to pay short-term liabilities.

A) current ratio
B) return on investment
C) debt-equity ratio
D) leverage ratio
E) profitability ratio

Question 62

An) _______ is an itemized financial document of the income and the expenses of a company's operations.

A) balanced scorecard
B) appropriation account
C) surplus
D) fiscal policy
E) profit and loss statement

Question 63

_____ indicate management's ability to generate a financial return on sales or investment.

A) Liquidity ratios
B) Leverage ratios
C) Net working capital ratios
D) Profitability ratios
E) Current ratios

Question 64

Which of the following relationships is true?

A) assets + liabilities + stockholders' equity = 0
B) assets + liabilities = stockholders' equity
C) assets = liabilities + stockholders' equity
D) assets + stockholders' equity = liabilities
E) assets = liabilities - stockholders' equity

Question 65

A company enforced a rule that employees were required to submit their cell phones for safekeeping before entering their work bay. Employees followed the rule in order to avoid getting into trouble with the management. As a result, many of them missed important phone calls from their clients/customers. This scenario is an example of

A) market control.
B) management myopia.
C) dysfunctional behavior.
D) rigid bureaucratic behavior.
E) resistance to control.

Question 66

Olivia has recently reviewed a number of indicators of financial control. The ones that troubled her indicated that the company could have trouble meeting its short-term financial obligations. Which of the following was she concerned about?

A) profit and loss statement
B) profitability ratio
C) leverage ratio
D) current ratio
E) return on investment

Question 67

_____ show the relative amount of funds in the business supplied by creditors and shareholders.

A) Liquidity ratios
B) Current ratios
C) Net working capital ratios
D) Leverage ratios
E) Profitability ratios

Question 68

_________ behavior occurs when employees feel forced to attempt to "beat the system."

A) Rigidly bureaucratic
B) Tactical
C) Resisting
D) Defensive
E) Myopic

Question 69

_____ refers to the situation when managers focus on short-term earnings and profits at the expense of their longer-term strategic obligations.

A) Return on investment
B) Management audit
C) Balanced scorecard
D) Management myopia
E) Provincialism

Question 70

When a control system prompts employees to do only tasks required in their formal job descriptions, it causes

A) excessive subordination.
B) tactical behaviors.
C) rigid bureaucratic behaviors.
D) resistance to supervision.
E) resistance to change.

Question 71

Dave noticed a pattern at the annual budgeting session of his company. Mid-level managers were asking for unrealistically high budgets while top management was attempting to limit budgets under last year's actual expenditures. The management's strategies are referred to as

A) budget breakdowns.
B) bureaucratic budgeting.
C) budget resistance.
D) tactical behaviors.
E) rigid behaviors.

Question 72

Which of the following is a reason why employees resist control systems?

A) Control systems can change the power structure of the organization.
B) Control systems make employees less accountable for their performance.
C) Control systems decrease the accuracy of performance data.
D) Control systems ensure the security of employees.
E) Control systems require cooperation between employees.

Question 73

_____ is the amount accruing to the corporation's owners.

A) Stockholders' equity
B) Liability
C) Dividend
D) Audit
E) Asset

Question 74

An effective approach for checking an enterprise's overall performance is to use

A) profit and loss statements.
B) key financial ratios.
C) assets.
D) liabilities.

Question 75

________ is the name of the most common liquidity ratio, current assets to current liabilities.

A) Debt-equity ratio
B) Current ratio
C) Profit and loss ratio
D) Return on investment ratio
E) Stockholders' equity ratio

Question 76

_____ increase the accuracy of performance data and make employees more accountable for their actions.

A) Profitability ratios
B) Bureaucratic controls
C) Tactical behaviors
D) Comprehensive control systems
E) Expense reports

Question 77

_____ budget sheet items over a long period of time uncovers important trends.

A) Expanding
B) Summarizing
C) Enlarging
D) Condensing
E) Merging

Question 78

Controlling by _____ is most commonly used for the entire enterprise.

A) profit and loss
B) assets
C) liabilities
D) financial ratios
E) expenses

Question 79

_____ indicates the company's ability to meet its long-term financial obligations.

A) Profitability ratio
B) Liquidity ratio
C) Debt-equity ratio
D) Current ratio
E) Net working capital ratio

Question 80

_____ indicate a company's ability to pay short-term debts.

A) Liabilities
B) Stockholders' equities
C) Assets
D) Liquidity ratios
E) Audits