Chapter 16 – Managerial Control MGMT 325

question

Control is one of the forces that keeps an organization heading in the right direction
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TRUE
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Control is defined as any process that directs the activities of individuals toward the achievement of organizational goals
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TRUE
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Authority and organizing are called the Siamese twins of management
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FASLE
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Market control is the use of rules, regulations, and formal authority to guide performance
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FALSE
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Market control is control based on the use of pricing mechanisms and economic information to regulate activities within organizations
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TRUE
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With bureaucratic control, business units are treated as profit centers, and their managers are evaluated based on profit and loss
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FALSE
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Clan control is control based on the norms, values, shared goals, and trust among group members
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TRUE
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Clan control assumes that the interests of organizations and individuals naturally diverge
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FALSE
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The first step in the control process is to set performance standards
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TRUE
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The last step in the control process is to compare performance with standards
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FASLE
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One of the reasons standards are established is to set performance expectations
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TRUE
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Performance standards can only be set with respect to quantity or quality
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FALSE
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The second step in a typical control process is comparing performance with the standard
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FALSE
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Personal observation involves going to the area where activities take place and watching what is occurring
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TRUE
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According to the principle of exception, even the smallest of deviations from the standard require corrective action
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FALSE
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An example of feedforward control is managers monitoring their distributors
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FALSE
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Concurrent control takes place while plans are being carried out
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TRUE
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Point-of-sale terminals in store checkout lines sending sales data back immediately to a retailer’s headquarters is an example of how information technology has improved concurrent control
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TRUE
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When supervisors monitor employee behavior, they are exercising feedback control
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FALSE
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As long as supervisors monitor behavior constantly, the feedback may be given at any point in time without consequence
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FALSE
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Using the six sigma approach to quality does not always lead to improvements in the bottom line
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TRUE
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By definition, management audits are internal, not external
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FALSE
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External audits are often used for feedback control but can also be useful to prevent problems
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TRUE
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Budgeting information is confined to finances
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FALSE
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A master budget includes every major activity of a business
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TRUE
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In today’s complex organizations, the budget process is much more likely to be top-down
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FALSE
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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
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TRUE
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Activity-based costing is a method of cost accounting designed to allocate costs across particular business processes according to the amount of time employees devote to particular activities
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TRUE
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The balance sheet shows the financial picture of a company over time
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FALSE
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Liabilities are the amounts accruing to the corporation’s owners
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FALSE
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The profit and loss statement is an itemized financial statement of the income and expenses of a company’s operations
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TRUE
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Three key categories of financial ratios are liquidity, leverage, and profitability
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TRUE
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Liquidity ratios indicate a company’s ability to meet its long-term financial obligations
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FASLE
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Return on investment is a profitability ratio
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TRUE
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Because financial ratios usually are expressed in compressed time horizons, they often cause management myopia
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TRUE
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A control system cannot be effective without consideration of how people will react to it
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TRUE
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The most common type of tactical behavior in control systems is to manipulate information or report false performance data
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TRUE
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The most effective performance standards tend to be subjective rather than objective
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FALSE
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If an employee believes his or her control system is overly controlling, that employee is likely to exhibit dysfunctional behavior
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TRUE
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A balanced scorecard is a control system combining four sets of performance measures: technological, customer feedback, productivity, and strategy
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FALSE
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Formal bureaucratic control systems continue to be the most effective in organizations
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FALSE
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In contrast to market controls, bureaucratic controls involve the use of economic forces to regulate performance
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FALSE
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In large diversified companies, market controls are often used to regulate independent business units
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TRUE
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A transfer price is the price charged by one unit for a good or service provided to another unit within the organization
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TRUE
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Ideally, a transfer price should be less than the price that the receiving business unit would have to pay for that product or service in the marketplace
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FALSE
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If bureaucratic and market mechanisms are insufficient for directing a company’s workforce in today’s environment, it can turn to structural control
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FALSE
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If managers create a strong culture of correct behavior, then clan control can be a very effective control tool
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TRUE
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Which of the following is a symptom of an out-of-control company?
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Lack of periodic reviews
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Control has been called one of the Siamese twins of management The other twin is ____.
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planning
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The use of rules, regulations, and authority to guide performance is referred to as _____ control
answer

bureaucratic
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Using budgeting, statistical reports, and performance appraisals to regulate behavior and results is considered a component of ____
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bureaucratic control
question

Control based on the use of pricing mechanisms and economic information to regulate activities within organizations is referred to as _____ control
answer

market
question

Control based on the norms, values, shared goals, and trust among group members is referred to as _____ control
answer

clan
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Which of the following is the first major step in the formal control process?
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Setting standards
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The final step in the control process is:
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taking corrective action.
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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
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standard
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Which of the following is one of the factors based on which performance standards can be set?
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Time used
question

Which of the following is a commonly used source for obtaining performance data?
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Personal observation
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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 ____
answer

exception
question

Jeremy is in charge of production at Tech Farm Equipment 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, Jeremy is using:
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the principle of exception.
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Which of the following controls takes place before operations begin?
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Feedforward control
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Which of the following controls is future oriented and aims to prevent problems before they arise?
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Feedforward control
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At Performance Instruments, all assembly workers must wear specialized gear to reduce possible injuries from minute particles in the manufacturing environment This requirement best reflects _____ control.
answer

feedforward
question

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
answer

concurrent
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Electronic monitoring of telemarketers’ conversations with potential clients is an example of _____ control
answer

concurrent

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