Question 1

Return on investment is:
A)net income before taxes divided by total assets
B)net profit after taxes divided by total assets
C)gross profit margin
D)operating profit
E)operating costs

Accepted Answer

Return on investment (ROI) is the net profit after taxes (net income) divided by total assets. This ratio measures the efficiency of an investment or how well an investment is performing, by showing how much profit is generated per unit of investment.

Question 2

Control systems are intended to make organizations more successful by helping managers with all but which one of the following?
A)Adapt to change and uncertainty
B)Increase routine decision making
C)Deal with complexity
D)Facilitate teamwork
E)Reduce costs

Accepted Answer

Control systems are not meant to increase routine decision making but rather to provide a framework for making informed decisions. Increased routine decision making may lead to rigidity and a lack of innovation.

Question 3

For many organizational activities, output and behaviour controls are inappropriate for all but which one of the following reasons?
A)Rules are of little use in situations requiring innovation
B)Professionals engage in work that is hard to apply SOPs to
C)SOPs are of little use in crisis situations
D)Output controls measure quality well
E)It is difficult to monitor all employees on a day-to-day basis

Accepted Answer

Output controls do not measure quality well; they are more suited for measuring quantity or financial performance.

Question 4

The type of control system within an organization that is characterized by shared values and standards of behaviour is known as:
A)concurrent control
B)bureaucratic control
C)feedback control
D)clan control
E)feedforward control

Accepted Answer

Clan control is characterized by shared values and standards of behavior. It involves a culture and atmosphere that emphasizes collaboration, teamwork, and mutual trust in achieving organizational goals. This type of control system relies on the socialization of employees to align their behavior with the company's values and beliefs. It is often associated with family-owned businesses or smaller organizations that prioritize a cohesive work environment.

Question 5

When a division manager is evaluated based on the difference between the revenues and cost figures of his or her division, this is an example of:
A)a cash flow budget approach
B)a capital budget approach
C)a profit budget approach
D)a revenue budget approach
E)an expense budget approach

Accepted Answer

The evaluation based on the difference between revenues and cost figures is a measure of the division's profitability, which falls under the profit budget approach.

Question 6

Which of the following is NOT one of the mechanisms of behaviour control that managers can use?
A)MBO
B)Direct supervision
C)Corporate governance
D)Output control
E)Bureaucratic rules

Accepted Answer

The answer of Which of the following is NOT one...

Question 7

The most immediate form of behaviour control is:
A)output control
B)rules
C)standard operating procedures
D)MBO
E)direct supervision

Accepted Answer

Direct supervision refers to the direct monitoring and guidance given to employees by their immediate supervisors. This is the most immediate form of behaviour control as supervisors can observe and correct any inappropriate behaviour as it occurs, providing immediate feedback to employees. The other options (output control, rules, standard operating procedures, and MBO) are all forms of behaviour control, but may not be as immediate in terms of feedback and correction.

Question 8

When a division manager is given an operating budget of $2.2 million for the coming year and is evaluated on the basis of the amount of goods that can be produced within that budget, this is called:
A)an expense budget approach
B)a capital budget approach
C)a cash flow budget approach
D)a profit budget approach
E)a revenue budget approach

Accepted Answer

An expense budget approach focuses on controlling costs and expenditures, which aligns with evaluating a manager based on the amount of goods produced within a set budget.

Question 9

A goal-setting process in which a manager and his or her subordinates negotiate specific goals and objectives for the subordinate to achieve and then periodically evaluates the extent to which the subordinate is achieving those goals is known as:
A)rules
B)output control
C)direct supervision
D)MBO
E)standard operating procedures

Accepted Answer

MBO (Management by Objectives) is a goal-setting process in which the manager and the subordinate agree upon specific goals and objectives and periodically evaluate the extent to which those goals are being achieved. This process involves participation of subordinates in goal setting, evaluation of progress, and rewards based on achievements. It promotes communication, motivation, and employee involvement in decision-making. Therefore, D is the best choice.

Question 10

Control systems are intended to make organizations more successful and competitive by increasing .
A)quality
B)innovation
C)efficiency
D)responsiveness to customers
E)all of these choices are correct

Accepted Answer

Control systems are designed to achieve multiple goals including improving quality, promoting innovation, enhancing efficiency, and increasing responsiveness to customers. Therefore, all of the choices are correct as they represent the diverse objectives of control systems.

Question 11

A budget that states how managers intend to use organizational resources to achieve organizational goals is known as:
A)functional budget
B)capital budget
C)master budget
D)financial budget
E)operating budget

Accepted Answer

The answer of A budget that states how managers intend...

Question 12

When an organization monitors the number of customer returns for each product model in an attempt to recognize when the organization is producing a large number of defective products, this is an example of:
A)concurrent control
B)feedforward control
C)feedback control
D)bureaucratic control
E)production control

Accepted Answer

Monitoring the number of customer returns is an example of feedback control. Feedback control involves measuring and monitoring of results to determine if performance meets established standards and taking corrective action as needed. In this case, the organization is using feedback from customers returning products to identify potential defects in the production process.

Question 13

Output standards set _.
A)the quantity of the service or product the employee is to produce
B)the quality expected in the delivery of goods or services
C)the standards that govern how long it is supposed to take to complete a task
D)the norms that govern how coworkers should interact with one another
E)the standards that govern the number of hours worked

Accepted Answer

The answer of Output standards set _.
A)the quantity of the...

Question 14

Given the information below, determine this organization's gross profit margin: Net Sales Revenue $300,000 Cost of Goods Sold $150,000 Net Profit $20,000 Total Assets_$250,00 A)^30% B)^20% C)^50% D)^15% E)^{none of these choices are incorrect}

Accepted Answer

The gross profit margin is calculated by subtracting the cost of goods sold from the net sales revenue and dividing the result by the net sales revenue. Using the information given, the gross profit margin would be ($300,000 - $150,000)/$300,000 = 50%. Therefore, the closest answer choice is C, which is 150%.

Question 15

Top managers in an organizational culture that is innovative are likely to do all of the following, except:
A)Use extensive bureaucratic systems of control
B)Encourage participation of lower-level managers in planning and decision making
C)Encourage risk-taking
D)Create a flexible structure
E)Lead by example

Accepted Answer

Extensive bureaucratic systems of control can stifle innovation and creativity. Top managers in an innovative culture are more likely to encourage participation, risk-taking, flexibility and lead by example.

Question 16

ratios measure how efficiently managers are using the organization's resources to generate profits.
A)Liquidity
B)Activity
C)Functional
D)Leverage
E)Profit

Accepted Answer

The category of ratios that measures how efficiently managers are using the organization's resources to generate profits is the profitability ratios. These ratios include measures such as return on investment, return on assets, and profit margin. Therefore, the best choice is E - Profit.

Question 17

All of the following practices characterize an organization with a conservative culture, except:
A)Use MBO
B)Have a well-defined hierarchy of authority
C)Use extensive bureaucratic systems of control
D)Have closed door corporate governance
E)Encourage participation of lower-level managers in planning and decision making

Accepted Answer

Encouraging participation of lower-level managers in planning and decision making is a characteristic of an organization with an open or participative culture, not a conservative culture. Conservative cultures tend to have a more rigid top-down approach to decision making with limited input from lower-level managers. The other options (A, B, C, and D) all characterize an organization with a conservative culture.

Question 18

The is the most commonly used financial performance measure.
A)quick ratio
B)return on investment
C)current ratio
D)gross profit
E)inventory turnover

Accepted Answer

Return on investment (ROI) is the most commonly used financial performance measure as it calculates the efficiency and profitability of an investment by comparing the gains and costs. It is widely used by both investors and managers to evaluate different investment opportunities or track the performance of a company.

Question 19

This ratio measures the extent to which managers have used borrowed funds to finance investments:
A)quick ratio
B)debt-to-assets ratio
C)current ratio
D)times-covered ratio
E)all of these choices are incorrect

Accepted Answer

The debt-to-assets ratio measures the extent to which managers have used borrowed funds (debt) to finance investments (assets). The ratio is calculated by dividing total debt by total assets. A high debt-to-assets ratio indicates that the company has a greater amount of debt relative to its assets and is therefore more leveraged.

Question 20

The third step in the control process is:
A)evaluating actual levels of performance
B)establishing standards of performance
C)comparing actual levels to the standards of performance
D)measuring actual performance
E)all of these choices are incorrect

Accepted Answer

The third step in the control process is comparing actual levels of performance to the standards of performance. The other choices are steps 1, 2, and 4 in the control process, respectively.

Quiz 11: Managing Control and Operations

Return on investment is:

Control systems are intended to make organizations more successful by helping managers with all but which one of the following?

For many organizational activities, output and behaviour controls are inappropriate for all but which one of the following reasons?

The type of control system within an organization that is characterized by shared values and standards of behaviour is known as:

When a division manager is evaluated based on the difference between the revenues and cost figures of his or her division, this is an example of:

Which of the following is NOT one of the mechanisms of behaviour control that managers can use?

The most immediate form of behaviour control is:

When a division manager is given an operating budget of $2.2 million for the coming year and is evaluated on the basis of the amount of goods that can be produced within that budget, this is called:

A goal-setting process in which a manager and his or her subordinates negotiate specific goals and objectives for the subordinate to achieve and then periodically evaluates the extent to which the subordinate is achieving those goals is known as:

Control systems are intended to make organizations more successful and competitive by increasing .

A budget that states how managers intend to use organizational resources to achieve organizational goals is known as:

When an organization monitors the number of customer returns for each product model in an attempt to recognize when the organization is producing a large number of defective products, this is an example of:

Output standards set _.

Given the information below, determine this organization's gross profit margin: Net Sales Revenue $300,000 Cost of Goods Sold $150,000 Net Profit $20,000 Total Assets_$250,00

Top managers in an organizational culture that is innovative are likely to do all of the following, except:

ratios measure how efficiently managers are using the organization's resources to generate profits.

All of the following practices characterize an organization with a conservative culture, except:

The is the most commonly used financial performance measure.

This ratio measures the extent to which managers have used borrowed funds to finance investments:

The third step in the control process is: