Bureaucratic Control

A balance sheet shows the financial health of a company at a specific time and reports

assets, liabilities, and stockholder's equity.

Two statements that summarize a company's financial condition are the profit and loss statement and

balance sheet.

The first step of the budgetary control process involves ______. (Check all that apply.)

budget approval and publication estimating sales the broad plan for the company

When activities are not proceeding as planned, what management tool will identify and correct significant variations?

bureaucratic control system

If an individual can push a button during the production process to stop and examine a defect, which type of control is being used?

concurrent

When supervisors monitor what employees are doing, they are exercising ______ control.

concurrent

Which of the following are approaches to bureaucratic control? (Check all that apply.)

concurrent control feedback control feedforward control

What is the most common liquidity ratio?

current ratio

Which leverage ratio shows how well the company can cover its long-term financial obligations?

debt-equity ratio

With the six sigma control process, the goal is zero ______.

defects

Which of the following are tactical behaviors intended to "beat the system"?

deliberately submitting a false estimate about future performance changing the numbers in reports about past performance

A tentative profit and loss statement can be used to

establish a performance goal.

The concept that control increases when managers focus on significant deviations from the standard is known as the principle of:

exception

When managers take corrective action because results have deviated from the organizational standard, they are using the principle of:

exception

A company has gathered and analyzed information about its performance. Supervisors use the results to help employees improve their work.. This is an example of ______ control.

feedback

When managers tell employees what they are doing wrong and help them improve their performance, they are using _____ control.

feedback

Human resources policies against workplace romances are a type of ______ control.

feedforward

Feedback control is used at the ______ stage of the process of transforming inputs into finished goods and services.

final

Feedforward control is __ oriented

future

The debt-equity ratio is an example of a _______ ratio.

leverage

The debt-equity ratio shows how well a company is positioned to cover its long-term financial obligations. What type of ratio is it?

leverage

Placing too much emphasis on short-term income and profits instead of pursuing a longer-term strategy is known as ______.

management myopia

According to the ______, control increases when managers concentrate on exceptions to (or significant deviations from) the performance standard or what was expected.

principle of exception

With the ______, only exceptional cases require corrective action.

principle of exception

An itemized financial statement of income and expenses is a(n) ______.

profit and loss statement

The balance sheet and the ______ are financial statements that help control overall organizational performance.

profit and loss statement

Return on investment (ROI) is an example of a(n) ______ ratio.

profitability

Performance standards are set with respect to which of the following? (Check all that apply.)

quality time used cost quantity

If managers use too much ______, they can discourage employee innovation.

rigid control

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

setting performance standards

Fixating on ______ and profits while neglecting long-term strategy is known as management myopia.

short-term earnings

In the last step of the control process, managers take steps to correct ______.

significant deviations from the standard

The ______ effort requires that a company measure performance at each stage and reduce errors to fewer than 3.4 per million.

six sigma

Control systems don't work very well if employees use ______ behavior to "beat the system."

tactical

The last step of the control process is ______.

to take action that will correct significant deviations

Compared to other methods of managerial control, budgetary control is

widely recognized. commonly used.

When organizations use the six sigma process, they are striving for a ______ environment.

zero-defect

______ control occurs at the input stage and allows managers to look ahead to anticipate problems before they arise.

Feedforward

______ control is based on performance data that has been gathered and analyzed.

Feedback

Which type of control gives managers information about results to correct problems after they arise?

Feedback control

True or false: Omega is the Greek letter used in statistics to represent the standard deviation in a process.

False

Rank the following steps of the control process in order from first (at the top) to last (at the bottom).

1. Establish the standards of performance, goals, or targets against which performance is to be evauluated. 2. Measure actual performance 3. Compare actual performance against chosen standards of performance 4. Initiate correctice action if the standard is not being achieved

At six sigma level, a process is producing fewer than ______ defects per million.

3.4

______ are equal to liabilities plus stockholder's equity.

Assets

Which documents contain the numbers that determine key financial ratios?

Balance sheet Profit and loss statement

During which stage of the process of transforming inputs into finished goods and services is feedforward control used?

Before operations begin

______ establishes relationships among feedforward control, concurrent control, and feedback control.

Budgetary control

______ control systems are designed to measure progress toward set performance goals, and if necessary, to apply corrective measures to ensure that the firm's performance meets objectives.

Bureaucratic

___ control includes directing, monitoring, and fine-tuning activities as they are performed.

Concurrent

______ control occurs while plans are being put into motion.

Concurrent

Which of the following is NOT a potential drawback of a bureaucratic control system?

Conformance

The six sigma approach is based on a statistical analysis of business processes that contribute to which goals?

Decreased production costs Customer satisfaction Decreased product defects

Which of the following is NOT a criteria for setting performance standards?

Education

True or false: At six sigma level, a process is producing at 96.6666% accuracy.

False

True or false: Implementing control systems eliminates dysfunctional employee behavior

False

Match the approach to bureaucratic control to its definition. Instructions

Feedforward -- used before operations begin used before operations begin concurrent -- used while plans are being carried out used while plans are being carried out feedback -- corrects deviations from the acceptable standard after they arise corrects deviations from the acceptable standard after they arise

______ takes place before operations begin and allows managers to ensure that planned activities are carried out properly.

Feedforward control

Why is time particularly important to feedback control?

In order to resolve problems, managers need to identify them quickly. Quick feedback control can prevent further problems.

______ ratios indicate how much of the company's money is coming from creditors versus how much is from shareholders.

Leverage

______ ratios reveal whether a business is able to cover short-term debts.

Liquidity

______ ratios show how well management is generating a financial return on sales or investment.

Profitability

______ occurs when control systems prompt employees to follow the rules to an extreme that stifles creativity.

Rigid bureaucratic control

Which of the following would be considered a measurable performance standard?

Shipping 95% of orders on time Reducing costs by 50% Responding to customer complaints within one day

Which Greek letter is used in statistics to represent the estimated standard deviation in a process?

Sigma

______ is designed to reduce defects in all organizational processes.

Six sigma

Which of the following are steps in the budgetary control process? (check all that apply)

Take action Establish expectancies Perform budgetary operations

Which statements are true of key financial ratios?

They reveal the company's strengths and weaknesses. They show the company's general performance. They predict the company's ability to meet its long-term obligations.

Concurrent control, through information technology, allows managers to react quickly when problems occur during business operations.

True

True or false: Performance standards are usually based on what the job requires.

True

When is concurrent control used?

While plans are being carried out

Which of the following are examples of issues in the workplace that can be avoided with feedforward controls in the form of policies? (Check all that apply.)

Workplace romance Tattoos and body art Public disclosure of corporate information

Six sigma is a quality control tool designed to resolve

any problems that might cause customers to feel unsatisfied.

The values of the items a firm owns are called ______.

assets

A balance sheet itemizes which of the following? (Check all that apply.)

assets stockholders' equity liabilities