Deck 16: Managerial Control

Question 1

Control is defined as

A)the function that concentrates on the significant deviations from the expected result or standard.
B)an itemized financial statement of the income and expenses of a company's operations.
C)valid performance standards that are expressed in quantitative terms.
D)the manipulation of information or the reporting of false performance data to beat the system.
E)any process that directs the activities of individuals toward the achievement of organizational goals.

Answer 1

E

Question 2

A point-of-sale terminal that sends sales data from the store checkout line immediately to a retailer's headquarters is an example of how information technology has improved concurrent control.

Answer 2

True

Question 3

The use of 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.

Answer 3

C

Question 4

Dana's company relies on rules,as set forth in the employee handbook,the authority of managers,and regular employee reviews to guide performance.Dana's company uses ________ control.

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

Question 5

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

Question 6

Which of the following is not an element of bureaucratic control?

A)rules
B)exchange relationships
C)authority
D)budgets
E)performance appraisals

Question 7

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

Question 8

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methods of cost accounting tend to be inappropriate in today's business environment because they are based on outdated methods of rigid hierarchical organization.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 9

How does clan control differ from bureaucratic control and market control?

A)Clan control uses formal controls more often than market control and bureaucratic control do.
B)Clan control does not assume that the interests of the organization and individuals naturally diverge.
C)Clan control is based on past performance,whereas the other two try to influence future performance.
D)Clan control is based on a more negative view of human character than the other two are.
E)Clan control is more heavily based on economic factors than market control and bureaucratic control are.

Question 10

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

Question 11

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

Question 12

Setting performance standards is the final step in a control system.

Question 13

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

Question 14

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

Question 15

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 16

One of the fundamental forces that keep an organization heading in the right direction is

A)competition.
B)control.
C)accounting.
D)myopia.
E)bureaucracy.

Question 17

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

Question 18

The executives at Old-Fashioned Evening Inc. ,a chain of restaurants that feature wholesome activities for young couples,believe that the company's employees share the corporate goals of service,quality,value,and "good clean fun." Because of this,corporate leadership believes that employees are motivated to work for the common good without a lot of formal controls.This is an example of ________ control.

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

Question 19

The targeted level of performance for a particular goal is known as a(n)

A)standard.
B)organization.
C)bureaucracy.
D)directive.
E)empowerment.

Question 20

With market control,the activities of an organization are regulated through the use of

A)rules,regulations,and formal authority.
B)budgets,statistical reports,and performance appraisals.
C)shared values,expectations,and goals.
D)pricing mechanisms and economic information.
E)real-time monitoring and fine tuning.

Question 21

Laney uses the results of customer surveys to point out ways that her cashiers can improve their service.This is an example of ________ control.

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

Question 22

While doing an external audit of a potential distribution partner,Tyrone uncovered some serious legal problems that could cause trouble for his company if it goes through with the deal.Tyrone's external audit provided essential ________ control.

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

Question 23

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

A)Setting standards
B)Personal observation
C)Deviation analysis
D)Defining performance
E)Reinforcing success

Question 24

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 25

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

A)measuring performance
B)setting performance standards
C)developing values
D)comparing performance with standards
E)determining deviations

Question 26

Wilhelm oversees the shipping department in a warehouse for a major chain of stores.He knows some packages are being damaged,and he needs specific numbers so he can calculate the impact on departmental costs.What method will enable Wilhelm to efficiently collect accurate data so that he can make the calculations he needs in this situation?

A)asking his shift supervisors to tell him how many packages they estimate they lost each day
B)programming the machinery to count all shipped and damaged packages and generate a computerized report daily
C)observing the workers on the shipping conveyor as they process packages
D)interviewing a representative sample of workers in the shipping department to see how bad they think the damage is
E)contacting the shipping supply company to see if he has ordered significantly more supplies than last year

Question 27

Alvita works for a company that extracts minerals from the ground.Her new CEO wants to be sure the company can keep extracting minerals and continue to work with landowners to get mineral rights for many years.The CEO asks Alvita to audit how the likely the company will be able to sustain its operations long-term.What should Alvita keep in mind while conducting this audit?

A)She needs to realize she is subject to more regulation than if she were conducting a financial audit.
B)She will need to report her results in the same format as any other audit.
C)She should consider company profits,the local people,and the local environment.
D)She can ignore financial and profitability data for the purposes of this audit.
E)She should do what pleases the local landowners,even if it is not profitable.

Question 28

Which of the following statements about the six-sigma approach to quality is true?

A)It is an excellent method for delivering business results.
B)It usually improves the bottom line.
C)It focuses on eliminating defects in a process.
D)It looks at whether a process is the best one available.
E)It has little practical use in the business world.

Question 29

Wayne oversees a small chain of restaurants.He has noticed that he seems to be working harder and spending more time managing than his peers.In order to save himself time and effort,Wayne should

A)check every detail to make sure everything is configured perfectly.
B)focus his attention on situations that sharply deviate from what is expected.
C)work to ensure that the restaurants do not deviate even a little from expected results.
D)ignore results that are exceptions to what is expected and write them off as flukes.
E)remove specific expectations from his employees and see if his job gets easier.

Question 30

Motivating employees and setting benchmarks are two of the reasons to

A)detect performance deviations.
B)analyze market forces.
C)correct problems.
D)increase bureaucracy.
E)establish performance standards.

Question 31

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

A)the principle of exception
B)knowledge
C)market share
D)employee satisfaction
E)quality

Question 32

After Denise's restaurant opened,she spent the first two weeks closely correcting any flaws she found in the way the business operated.This is an example of ________ control.

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

Question 33

Before you can measure performance,what must you do?

A)evaluate employees
B)improve performance
C)set performance standards
D)analyze market conditions
E)experiment with methods

Question 34

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 35

What is the last step in the control process?

A)measuring performance based on standards
B)defining what constitutes performance
C)setting performance standards
D)taking action to correct problems and reinforce successes
E)comparing performance to the standards and determining deviations

Question 36

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

A)comparing performance with standards
B)setting standards
C)taking corrective action
D)developing values
E)measuring performance

Question 37

According to the principle of exception,which deviations from the expected standard require corrective action?

A)the most common deviations
B)most of the deviations
C)the most significant deviations
D)any and all deviations
E)no type of deviation

Question 38

Which of the following would be a likely target of an internal audit?

A)a corporation's charitable-giving program
B)a corporation's potential merger partner
C)a corporation's possible acquisition
D)a corporation's current competitor
E)a corporation's potential supplier

Question 39

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 40

Kartik's company is about to start manufacturing a new product.Before beginning operations,Kartik and several other managers develop procedures to ensure that the planned activities are carried out properly.This is an example of ________ control.

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

Question 41

An important purpose of external audits is to

A)assess what a company has done for itself.
B)evaluate production efficiency.
C)evaluate sales effectiveness.
D)investigate possible targets for mergers or acquisitions.
E)assess what a company has done for its customers.

Question 42

Xena has been put in charge of a group of young employees who were recently hired by her company.In her new role as a supervisor,she is careful to keep an eye on the new employees to ensure that they work efficiently and avoid making serious mistakes.Which of the following types of control is Xena using?

A)organizational modification
B)concurrent control
C)management adjustment
D)feedback control
E)feedforward control

Question 43

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 44

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 45

Jason is in charge of production at Pulleys Galore Inc.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,Jason is using

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

Question 46

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

Question 47

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

A)competitors
B)the human resource department
C)written reports
D)upper management
E)technical analysts from outside the company

Question 48

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 49

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 50

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

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

Question 51

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)budgetary control.
D)financial audits.
E)budget planning.

Question 52

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 53

At Key Agricultural Supply Co. ,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 54

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 55

Which of the following statements about six sigma is true?

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

Question 56

The ________ budget is thought of as a "budget of budgets."

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

Question 57

Stevie is preparing a budget that shows the company's expected sales receipts and expenditures for the year,a projection of how much cash will be available each month,and the extent of outside financing the company might need.This is a ________ budget.

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

Question 58

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)budgeting.
B)concentration.
C)progression.
D)exception.
E)standardization.

Question 59

Which of the following is not periodically assessed as an essential part of a company's internal audits?

A)planning
B)organizing
C)leading
D)controlling efforts
E)competing against rivals

Question 60

In today's complex organizations,the budget process is most likely to be

A)top-down.
B)bottom-up.
C)horizontal.
D)circular.
E)compartmentalized.

Question 61

Bella is a financial manager at Fiber Fundamentals Inc. ,a producer of fiber optics for use in high speed communication devices.She makes a budget that shows the anticipated receipts and expenses of the company.As the last budget that she creates for the upcoming year,it also shows the amount of working capital available and whether the company will need loans.Which of the following types of budgets has Bella created?

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

Question 62

Gina developed a revised balance sheet for her company.She used the balance sheet to show her company's ________,or the amounts the company owes to various creditors.

A)liabilities
B)assets
C)budgets
D)diseconomies
E)expenses

Question 63

An itemized financial statement of the income and expenses of a company's operations is called the

A)statement of financial ratios.
B)balance sheet.
C)cash flow statement.
D)assets and liabilities statement.
E)profit and loss statement.

Question 64

A report that shows the financial picture of a company at a given time and itemizes assets,liabilities,and stockholders' equity is referred to as a(n)

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

Question 65

On the balance sheet,the values of the various items a corporation owns are referred to as

A)liabilities.
B)debts.
C)budgets.
D)assets.
E)savings.

Question 66

Leverage ratios indicate

A)the relative amount of funds in the business supplied by shareholders.
B)a company's ability to pay its short-term debts.
C)management's ability to generate a financial return on sales or investment.
D)a company's profit margins for the last six months.
E)the future profits the company can expect from its current customer base.

Question 67

The activity-based costing system

A)is the most appropriate method of cost accounting for rigid hierarchical organizations.
B)effectively departmentalizes an organization based on its core functions,such as human resources 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 68

A ________ budget is used for the cost of fixed assets,such as plants and equipment,that are usually treated as investments instead of as regular expenses.

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

Question 69

On the balance sheet,the amount accruing to a corporation's owners is referred to as

A)a liability.
B)transfer price.
C)an asset.
D)stockholders' equity.
E)return on investment.

Question 70

Liquidity ratios indicate a company's

A)ability to pay short-term debts.
B)ability to generate a financial return on sales.
C)relative amounts of funds supplied by creditors.
D)ability to meet its long-term financial obligations.
E)profitability and leverage ratios.

Question 71

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 72

Which of the following are the basic elements of a balance sheet?

A)income,expenses,and outcome
B)operations,sales,and growth
C)assets,liabilities,and stockholders' equity
D)receipts,deductions,and taxes
E)budgets,controls,and corrective actions

Question 73

Evelyn had to buy a lot of equipment to open her beauty salon.She bought most of it on credit.The amounts of money that she owes her creditors are called

A)assets.
B)capital.
C)investments.
D)liabilities.
E)equity.

Question 74

A ________ 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 75

The Southern Educational Technology Alliance 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 is referred to as

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

Question 76

________ ratio 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)Debt-equity
B)Current
C)Profitability
D)Return on investment
E)Stockholders' equity

Question 77

Anna has just reviewed a number of indicators of financial control for her firm.One that worries her indicates that the company may soon have trouble making loan payments and clearing its current accounts receivables.In this case,Anna is concerned about the ________ ratio.

A)profit and loss
B)profitability
C)leverage
D)net working capital
E)return on investment

Question 78

A company's balance sheet shows its

A)areas of improvement.
B)projected profit.
C)strengths,weaknesses,and threats.
D)financial picture at a given time.
E)performance over time.

Question 79

Angus interviews and observes his employees as part of his managerial duties at Shipko,a large packing supplies manufacturer.During the interviews,Angus receives a wide array of facts,figures,and predictions,and his observations reveal a variety of behaviors.He suspects some of the employees are telling him things and doing things that are designed to outsmart management rather than to give him an honest report.What type of behavior might be a clue for Angus that an employee is trying to beat management's control system?

A)purposefully estimating that they can produce 20,000 feet of cardboard in a day when they can actually produce 50,000 feet
B)following Shipko rules regarding safety without question,even if they seem counterproductive or inefficient
C)sorting and packaging only the minimal number of boxes per day that company expectations require
D)focusing on required behaviors,such as ensuring machines remain unclogged,instead of building relationships with managers
E)emphasizing sticking with the tried and true shipping container designs instead of experimenting with models that use fewer materials

Question 80

Which of the following can be drawn tentatively and used as a goal against which actual performance can be measured?

A)statements of cash flow
B)profit and loss statements
C)balance sheets
D)external audits
E)capital budgets