Deck 14: Managerial Control

Question 1

A company is said to lack control when there is a(n) ________, that is the firm's expectations are not established in writing.

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 1

D

Question 2

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

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

Answer 2

A

Question 3

Clan control is necessary when members of an organization lack common values, goals, and trust.

Answer 3

False

Question 4

Bureaucratic control

A) does not assume that the interests of the organization and individuals naturally diverge.
B) is based on the idea that employees may share the values, expectations, and goals of the organization and act in accordance with them.
C) involves the use of pricing mechanisms and exchange relationships to regulate activities within organizations.
D) is based on interpersonal processes of organization culture, leadership, and groups and teams.
E) is the use of rules, standards, regulations, hierarchy, and legitimate authority to guide performance.

Question 5

Market control

A) does not assume that the interests of the organization and individuals naturally diverge.
B) is based on the idea that employees may share the values, expectations, and goals of the organization and act in accordance with them.
C) includes such items as budgets, statistical reports, and performance appraisals.
D) uses prices, competition, and exchange relationships to regulate activities.
E) is the use of rules, standards, regulations, hierarchy and legitimate authority to guide performance.

Question 6

Glynnis, an employee, received an e-mail from an angry client about a certain product. Although it was not Glynnis'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 Glynnis'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 7

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

Question 8

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 9

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

Question 10

During challenging times when resources are limited and budgets need to be stretched, ________ control becomes crucial for survival.

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

Question 11

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

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

Question 12

________ lay(s) out a framework for the future and provide(s) a blueprint for control.

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

Question 13

Marv thought, "I'm not surprised that the corporate office canceled our funding. Costs had spiraled upward, and unanticipated technical problems had cropped up. We just didn't keep our eye on the ball, even though we had a great plan and sound strategies. Fundamentally, we lacked an effective means of control to ensure that

A) our marketing strategies were reflective of the old product."
B) employees took steps to solve problems."
C) the plans were carried out."
D) management was creative."
E) communication was clear."

Question 14

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

Question 15

"Are you telling me that we have to write off over $1 million in revenue because our eastern division manager did not accrue it properly?" asked the CEO. His CFO replied, "Yes. I know that we are a start-up, still working on developing policies, rules, and procedures, but, in this case, the division manager had no processes in place to monitor the project's progress." The CEO concluded, "The ________ has caused irreparable damage to our firm."

A) firm's expectations
B) lack of controls
C) agreed-upon standards
D) market control approach
E) bureaucratic control approach

Question 16

Empowering employees to make decisions implies giving up control.

Question 17

________ 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 18

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

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

Question 19

The chief financial officer (CFO) upholds conflicting interests and provides unofficial sanction to the final budget.

Question 20

Select the definition of control.

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

Question 21

External audits are used for

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

Question 22

A(n) ________ 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 23

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 24

A division manager whispered to his peer as they left the monthly executive meeting, "Our new CEO is going to play hardball. Any of us whose division is performing with significant negative deviation from the established budget is going to get a lot of her concentrated attention." "What do you expect?" countered Randy. "She told us in our meeting that she would be using ________ as part of her control system."

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

Question 25

________ control is future oriented and aims to prevent problems before they arise.

A) Feedback
B) Specialist
C) Feedforward
D) Operator
E) Concurrent

Question 26

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 27

A(n) ________ 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 28

The first step in a typical control system is

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

Question 29

Select the correct statement regarding 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 30

________ detect and correct significant variations, or discrepancies, in the results of plans and activities.

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

Question 31

While plans are being carried out, ________ control is taking place.

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

Question 32

"In implementing the control process for our new operation, I first established performance standards," said Kelly. "Next, I measured performance. But I'm not sure that my measurement of performance is accurate." His boss replied, "In measuring performance, you can gather performance data from three sources: ________. Furthermore, the data need to be timely."

A) written reports, oral reports, and personal observation
B) client satisfaction surveys, oral reports, and personal observation
C) written reports, the grapevine, and personal observation
D) competitors' performance data, oral reports, and personal observation
E) written reports, oral reports, and analysts' statements

Question 33

A(n) ________ is an evaluation of the effectiveness and efficiency of various systems within an organization.

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

Question 34

Sandi, shift supervisor at Johnson Meatpacking, has the highest performing team. One reason for this is how she controls her team's activities. First, she ensures that her subordinates are properly trained and properly equipped with the necessary protective equipment and work tools. Then, during the shift, she carefully monitors her workers' actions, taking notes and even measurements as needed. Finally, at the end of each work week, she analyzes her notes and measurement data, and she uses the results of her analysis to make needed production changes the following week. When Sandi is monitoring her workers' actions, she is exercising ________ control.

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

Question 35

The six sigma approach is based on a(n) ________ that contribute(s) to customer satisfaction.

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

Question 36

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 37

"After a long and costly two weeks, I have lots of data, that I don't know how to analyze. I don't know what constitutes good performance as opposed to bad performance," said Mickey to his boss. His boss replied, "Mickey, it sounds as if you failed to first establish a(n) ________ by which to assess your data."

A) parameter
B) locus
C) measurement
D) standard
E) index

Question 38

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

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

Question 39

"Listen up," said, Dave Thoreson, dive team leader, as his team finished suiting up. "This is a hazardous dive. We've been properly trained and properly equipped with the necessary gear and tools to rescue the trapped cavers. Stay in physical contact with the divers in front of and behind you. After we complete the rescue, meet me to debrief what we did well and what we can improve." In this case, the proper training and equipment is an example of ________ control.

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

Question 40

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

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

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

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 43

Policies restricting workplace romantic involvement, 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 44

The ________ budget is essential to every business.

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

Question 45

________ 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 46

________ are the amounts the corporation owes to various creditors.

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

Question 47

Select the relationship represented by the balance sheet.

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 48

________ is the second stage of budgetary control.

A) Responding appropriately
B) Performing budgetary operations
C) Comparing six sigma data
D) Establishing expectations
E) Taking action

Question 49

Budgeting information is

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

Question 50

A(n) ________ 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 51

A ________ budget is used for areas of the organization that incur expenses but produce no revenue.

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

Question 52

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

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

Question 53

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

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

Question 54

Greta is the financial manager at 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. Greta makes this budget after all other budget estimates have been completed. Greta is working on a ________ budget.

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

Question 55

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

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

Question 56

"I have to help my operations manager reduce expenses," said Oliver, "but my expense categories-salaries, fringes, supplies, and fixed costs-are too general to give me guidance." Candice, his accounting supervisor, said, "Let me show you a different approach, so that you can develop data that will identify areas for expense reduction. I suggest that you use ________. It will identify streams of activity to which you can then allocate costs across particular business processes according to the time employees devote to those activities."

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

Question 57

In his new employee orientation training, Fabian heard Meredith, his new accounting supervisor, explain, "At Williams Corporation, we do not use traditional cost accounting. Rather, we use activity-based costing, or ABC. According to ABC, we ________ costs according to what our employees do, rather than what the company spends."

A) audit
B) expend
C) trade
D) allocate
E) benchmark

Question 58

________ 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 59

A(n) ________ 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 60

Traditional cost accounting

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

Question 61

To be effective, control systems must

A) be based on subjective standards.
B) communicate needed information upward in the organization.
C) be acceptable to top stockholders.
D) use multiple approaches.
E) centralize decision making.

Question 62

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 63

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

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

Question 64

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 65

"Many of you management trainees do not have formal educations or degrees in accounting or finance. And that is OK," said the corporate trainer. "That's why this training module will cover control by ________, which is most commonly used for the entire enterprise and, in the case of a diversified corporation such as ours, its divisions."

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

Question 66

Select 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 67

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

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

Question 68

________ 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 69

"My business relationship with the Midwest sales rep has really deteriorated. We used to cooperate; now we ________," said the manager of the Southwest region. "And I blame our new control system. Every month, managers across the entire enterprise get profit and loss statements for all divisions and business units. We look at one another's performance and are less likely to help one another when we know that our business unit or division may suffer a loss in profitability as a result. After all, promotions, salary increases, and bonus pools are tied to our profitability."

A) compete
B) promote change
C) resist change
D) feel threatened
E) ignore one another

Question 70

________ budget sheet items over time uncovers important trends.

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

Question 71

________ motivates people and provides information that enables them to correct their own deviations from performance standards.

A) Strategic window
B) Groupthink
C) Management myopia
D) Feedback
E) Provincialism

Question 72

"With the rollout of this new ________, we will be able to get a much more accurate picture of how each division-and, in fact, each operations manager, each sales manager, and each sales professional-is performing. And we will be able to hold each manager and employee more accountable. As a result, do not be surprised when we receive a lot of resistance from across the organization," said Angie Summers, CFO of Blunt International.

A) profitability ratio
B) external audit
C) tactical behavior
D) comprehensive control system
E) expense report

Question 73

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

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

Question 74

"The amount of information in the accounting reports is so overwhelming that I cannot understand it," said Ron to his division manager, Stan. "Yes," said Stan, "The sheer volume of the numbers in the reports is daunting. That's why we have decided that an effective approach for checking our firm's overall performance is to use ________, which indicate strengths and weaknesses."

A) profit and loss statements
B) key financial ratios
C) assets
D) liabilities
E) balance sheets

Question 75

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

A) balanced scorecard
B) current ratio
C) return on investment
D) balance sheet
E) profit and loss statement

Question 76

Suzanne has recently reviewed a number of indicators of financial control. The one that troubled her, the ________, indicated that the company could have trouble meeting its short-term financial obligations.

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

Question 77

The ________ ratio indicates the company's ability to meet its long-term financial obligations.

A) profitability
B) liquidity
C) debt-equity
D) current
E) net working capital

Question 78

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 79

________ ratios show the funds supplied by creditors and shareholders.

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

Question 80

Pete 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. Management used ________ strategies.

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