Question 1

Which of the following is a drawback of the BEP analysis?

Accepted Answer

The BEP analysis focuses solely on determining the minimum level of sales necessary to cover costs and does not consider potential profitability or long-term viability of a product or project. This can discourage future profitable activities if they initially don't seem profitable.

Question 2

In an automobile sales unit,the manager had given 6 out of 7 car salesmen a bonus for good performance.Despite this,the unit kept underperforming in comparison to its counterparts.Which of the following is the most probable cause for this?

Accepted Answer

The most probable cause for underperformance despite bonuses is that the goals set by the manager were not high enough, leading to a lack of motivation to exceed expectations.

Question 3

Some employers use software to track the key strokes of their employees involved in data entry.The software reflects the overall productivity of the employees by recording their pace of work.This software is an example of ________.

Accepted Answer

The software that tracks the key strokes of employees during data entry reflects concurrent control of operations because it is monitoring and measuring their productivity in real time, as the work is being done. Precontrol of operations refers to preventive measures taken before starting a task, proactive control of operations involves anticipating potential issues and taking actions to prevent them from occurring in the first place, and postcontrol of operations involves reviewing and analyzing performance after the task has been completed.

Question 4

________ represents a firm's ability to meet long-term financial obligations.

Accepted Answer

Leverage, calculated as total debt divided by total assets, indicates a firm's ability to meet its long-term financial obligations by showing how much of the company's assets are financed through debt.

Question 5

________ is a type of operational control that evaluates the conversion of inputs to outputs while it is happening.

Accepted Answer

Concurrent control is a type of operational control that evaluates the conversion of inputs to outputs while it is happening. This allows for adjustments to be made in real-time to ensure that the desired outcomes are being achieved. Precontrol involves identifying potential issues before they occur, while postcontrol involves evaluating the outputs after they have been produced. Strategic control focuses on overall organizational goals and objectives rather than operational processes.

Question 6

________ is a measure of how well a firm can meet its short-term cash requirements.

Accepted Answer

Liquidity is a measure of a firm's ability to meet its short-term cash obligations. It is calculated by dividing current assets by current liabilities. A higher ratio indicates better liquidity and a lower risk of defaulting on short-term obligations. Leverage is a measure of a firm's total debt to total assets, inventory turnover measures the speed of inventory turnover, and return on equity measures the return on shareholders' investment.

Question 7

What is the benefit of having precontrol of operations?

Accepted Answer

The answer of What is the benefit of having precontrol...

Question 8

Which of the following is true of rolling budgets?

Accepted Answer

Rolling budgets are continuously updated, so they reflect more current information, making them more accurate due to their recency. They require frequent revision and significant managerial time and effort, distinguishing them from traditional budgets.

Question 9

The ________ analysis allows managers to gauge the amount of a product that must be sold to cover a firm's fixed and variable costs.This analysis is difficult because ________.

Accepted Answer

The break-even point analysis allows managers to gauge the amount of a product that must be sold to cover a firm's fixed and variable costs. This analysis is difficult because it is difficult to project variable costs accurately.

Question 10

Which of the following is a type of control approach used under clan control?

Accepted Answer

Clan control is a type of control approach that emphasizes on creating a sense of family and community within the organization. In this approach, the focus is on fostering employee loyalty and commitment through shared values, beliefs, and goals. The approach emphasizes group consensus on goals, thereby promoting collaboration, participation, and involvement among employees. This makes option C the best choice as it is the only option that aligns with the characteristics of clan control. Option A emphasizes strict adherence to rules and regulations, which is more characteristic of bureaucratic control, while option B emphasizes a formal and impersonal approach, which is more characteristic of market control. Option D emphasizes detecting deviance, which is more characteristic of behavior control.

Question 11

At Meridian Inc.,employees are given general goals and basic budgets rather than policy manuals.Furthermore,it is expected that they will be strongly dedicated to the goals of the organization.Which control approach does Meridian Inc.use?

Accepted Answer

Meridian Inc. uses a commitment control approach as they give general goals and expect strong dedication from employees towards achieving those goals, instead of providing policy manuals and rules. This approach relies on employees' commitment to achieve organizational goals rather than strict rules and regulations.

Question 12

Which of the following is a drawback of the clan approach of organizational control?

Accepted Answer

The clan approach of organizational control requires considerable time and managerial effort to build relationships, communicate expectations, and encourage employee involvement which can be a drawback as it can be time-consuming and require significant resources. Control is not imposed on the members of the organization in this approach, as the emphasis is on creating a supportive culture that aligns with organizational goals. Detecting deviance is not a primary concern as the focus is on creating a positive work environment. Individual responsibility is not a source of stress in this approach, as accountability is shared by the group.

Question 13

Which of the following controls the quality,quantity,and characteristics of the inputs into the production process?

Accepted Answer

Precontrol refers to measures taken to control the quality, quantity, and characteristics of inputs into the production process before they are used. This helps to ensure that the input materials are of the required quality and specification, which ultimately leads to better product quality and reduces the likelihood of defects or problems in the production process.

Question 14

Which of the following defines a liquidity ratio?

Accepted Answer

Liquidity ratio measures a company's ability to pay off its short-term debt obligations. Current assets in relation to current liabilities is a widely used liquidity ratio known as the current ratio. This ratio helps lenders, investors, and creditors understand how easily a company can pay back its short-term obligations.

Question 15

The ________ is where the selling price of a unit of a product minus its variable costs exceeds the fixed costs for that unit.

Accepted Answer

The break-even point is where the selling price of a unit of a product minus its variable costs equals the fixed costs for that unit. Once the selling price of a unit exceeds its variable costs enough to cover the fixed costs, the business starts to make a profit. This point is called the break-even point.

Question 16

The ________ of an organization is probably the most widespread tactical control system that the typical employee encounters.

Accepted Answer

The answer of The ________ of an organization is probably...

Question 17

Which of the following is a type of control approach used under bureaucracy control?

Accepted Answer

Bureaucracy control emphasizes strict adherence to rules and procedures, and any deviation from them is treated as deviance. Therefore, a control approach used under bureaucracy control is to emphasize detecting any deviance from the established norms and taking corrective action to conform to the rules. This approach ensures that individuals follow established policies and procedures and maintain consistency in their behaviors. Options B, C, and D are not related to bureaucracy control.

Question 18

Which of the following statements is true of break-even point?

Accepted Answer

The break-even point is the point where the selling price minus variable cost equals the fixed costs of a unit. It is a crucial tool for control purposes in business organizations, as it helps managers make decisions about pricing, production, and sales volume to ensure profitability. The break-even point is not determined by the number of units sold, but rather by the unit contribution margin (selling price minus variable costs) and the fixed costs. It is calculated by dividing the total fixed costs by the contribution margin per unit.

Question 19

South West Trading controls the raw materials used to make its products at the point of origin.In addition,it uses the services of United Parcel Service (UPS)to combine orders from various factories into one container for shipment.What type of control system is being used by South West Trading?

Accepted Answer

Precontrol of operations involves managing and controlling the availability and quality of inputs (like raw materials) before the production process begins, which is what South West Trading is doing by controlling raw materials at the point of origin.

Question 20

The degree of stretch in a budget refers to the ________.

Accepted Answer

The degree of stretch in a budget refers to the tightness of the budget, meaning how much it restricts spending and how difficult it is to stay within the budget. A budget with a high degree of stretch would be very restrictive, while one with low stretch would be more flexible. Resilience, acceptability, and standardization are not related to the degree of stretch in a budget.

Quiz 14: Control