Ch 14 Q

Cheryl, an employee, received an e-mail from an angry client about a certain product. Although it was not Cheryl's fault, she hesitated to report it to her manager because she knew that she would be blamed and could even be fired. In this case, what seems to be true of Cheryl's company?

"Shoot the messenger" management exists, implying a lack of control.

__________are the values of the various items of corporation owns.

Assets

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

Feedback

"Well, no wonder our customers are leaving us!" Said the CEO performance sports. "For the past year, our control system has measured and reported the delays between order received an order shipped, rather than the days between order receipt and date requested by our customers. What we are measuring may make us look and feel good, but we are measuring the wrong thing!" Performance sports is committing the "deadly sin" of performance measurement known as

Vanity

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

absence of policies

In his new employee orientation training, Preston heard his new accounting supervisor, explain, "At Fitzgerald Industries, 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."

allocate

External audits are useful for preliminary control because they

can prevent problems from occurring.

"If top management wants us to produce a new line of lawn tractors over the next ten years, we will need to invest in another factory assembly line. And that's going to cost big bucks," said the factory manager for Home Oasis Inc. "Please start greasing the skids internally. I don't want the home-office executives to be surprised when they see high-dollar fixed assets in my __________ budget."

capital

Kristina 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. Kristina makes this budget after all other budget estimates have been completed. Kristina is working on a __________ budget.

cash

The________ budget is essential to every business.

cash

A _________is liquidity ratio that indicates extent to which short term assets can decline and still be adequate to pay short term liabilities.

current ratio

Traditional cost accounting may be inappropriate today because

it is based on rigid hierarchical organization structures.

"The amount of information in the accounting reports is so overwhelming that I cannot understand it," said Woody to his division manager, Sam. "Yes," said Sam, "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."

key financial ratios

"Are you telling me that we have to write off over $2 million in revenue because our eastern division manager did not accrue it properly?" Ask 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 projects progress." the CEO concluded." The _____has caused irreparable damage to our firm."

lack of controls

Northeastern Health is it regional medical center. They tie pricing of services and profits to specific services in the medical center. Northeastern Health uses a____________ control system.

market

Using market control mechanisms is criticized for

not adequately reflecting organizations' total value.

Requiring information for preparing a________ budget includes types and capabilities of machines and availability of materials.

production

The most effective standards are expressed in_____ terms ; they are objective more than subjective.

quantitative

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 and customers. This scenario is an example of

rigid bureaucratic behavior

Nigel said to his manager, "Tomas, I've received an unsolicited offer from a competitor. I've enjoyed my eight years here, and I'd like to stay. But the offered salary is 20 percent higher than my current salary. The other firm cited what I have learned this past year on the public works job as a particularly valuable skill." Nigel is a highly valued employee, and Tomas has been grooming him as his successor. If Tomas were to consider market rates as an important indicator of worth in responding to Nigel, Tomas would most likely

seek to retain Nigel by increasing his salary by 25 percent.

"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 Joseph to his boss. His boss replied, "It sounds as if you failed to first establish a(n) __________ by which to assess your data."

standard

Uri noticed a pattern at the annual budgeting session of his company. Mid-level managers were asked for unrealistic high budgets while top management was attempting to limit budgets under last year's actual expenditures. Management used___________ strategies.

tactical behaviors

The last step in a typical control system is

taking action to correct problems.

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

the plans were carried out."

Bureaucratic control refers to

the use of rules, standards, regulations, hierarchy, and legitimate authority to guide performance.

A(n) __________ price is internally charged by one organizational unit for a good or service that it supplies to another unit.

transfer

A(n) _________is internal change by one organizational unit for a good or service that it supplies to another unit.

transfer price

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

cost

_________ keep CEOs focused on the company's longer-term health.

Balanced scorecards

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

Clan

___________ratios shows the funds supplied by creditors and shareholders.

Leverage

__________refers to the situation when managers focus on short term earnings and profits at the expense of their long term strategic obligations.

Managment myopia

___________is the second stage of budgetary control.

Performing budgetary operations

___________is the amount accruing to the corporations owners.

Stockholders' equity

__________ budget sheet items over time uncovers important trends.

Summarizing

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

Tactical

"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 unit. 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."

compete

"Once per year, our CEO stations himself for an entire day on the production floor. Handing out safety gear and demonstrating its proper use of workers are failing to do so," said Norm. "Boy that really makes an impression. He "walks the talk "regarding our corporate values of safety." the bureaucratic control that the CEO is using is known as_______ control.

concurrent

Derby college shift supervisor at Hooster meatpacking, has the highest performing team. One reason for this is how she controls her team's activities. First, she ensures that her supporters are properly trained and properly equipped. 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 for the following week. When Darby is monitoring her workers actions, she is exercising___________ control.

concurrent

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

concurrent

"Why is the __________ budget for next year 30 percent higher than this year's actual expenses?" asked Pilar, CEO of Lyonnais Group. The CFO replied, "We need to hire two additional human resources professionals to oversee the new benefits program and an additional attorney to handle claims. Also, our new lease for Building A will go into effect, and that includes a 10 percent increase in the first year." Pilar replied, "Ouch. It's tough to absorb those kinds of increases from parts of our organization that generate no revenue."

cost

"The new phones are really high tech, but they're also very complicated to use," said Nadia, administrative manager for Baker enterprise. "I will schedule several training workshops that the staff can attend, and I will teach them how to use the phones." the bureaucratic control that Nadia will use is________ control.

feedforward

Policies restricting workplace romantic involvement, tattoos and body art, and public disclosure of corporate information are examples of __________ control.

feedforward

External audits are used for

identifying possible mergers or acquisitions.

Cole, an outside salesman for rainforest products, angrily told his supervisor. "I received a memo from our accounting department that, effective immediately comma all employees and their managers what receive a monthly report measuring each employees days in office statistics. And over the next 12 months, the days in office metric is expected to increase by 50% to reduce our firms travel costs. How can I do outside sales, when I'm expected to spend more days inside the office?" Cause of pressing a view that his firm is committing the "deadly sin" of ____________by measuring days in office for outside sales people.

inanity

Traditionally, boards try to control CEO performance mainly through

incentive pay.

Assessing the planning, organization, leading, and controlling efforts of one's own organization is the central function of

internal audit.