E-Man Chapter 9
28. The management function which sees to it that the right things happen, in the right way, and at the right time, is known as ________. A. controlling B. organizing C. planning D. leading E. staffing
A
34. Steering control takes place ________. A. during the work process B. reactively in an organization C. before work begins D. after the work is completed E. to correct mistakes already made
A
38. Feedback control takes place to: A. correct mistakes already made. B. solve problems as they occur. C. focus on activities before they begin. D. ensure the implementation of a proactive approach to problem solving. E. ensure direct supervision during the work process.
A
44. In which of the following systems of control do organizations use budgets for personnel, equipment, travel expenses, and so on to keep behavior targeted within set limits? A. Bureaucratic control B. Clan control C. Normative control D. Regulatory control E. Self-control
A
48. Which of the following is true of clan control? A. It influences behavior through norms and expectations set by the organizational culture. B. It uses budgets for personnel, equipment, travel expenses, and the like to keep behavior targeted within set limits. C. It flows through the organization's hierarchy of authority. D. It refers to the influence of customers and competition on the behavior of organizations and their members. E. It gives people the freedom to work on their own.
A
53. Which of the following statements is true about the first step of the control process? A. It involves the identification of key results that one wants to accomplish, by the performance objectives. B. It first involves the identification of the standards of measuring performance and then the identification of key results. C. It identifies the point where output standards and input standards are used to carefully document results. D. It involves relative comparisons that benchmark performance against that being achieved by other people, work units, or organizations. E. It focuses attention on substantial differences between actual and desired performance.
A
58. Which of the following is the control equation? A. Need for Action = Desired Performance - Actual Performance B. Breakeven Point = Fixed Costs - (Price - Variable Costs) C. Acid Test = Current Assets - Inventories/Current Liabilities D. Debt Ratio = Total Debts/Total Assets E. Net Income = Sales - Expenses
A
67. Which of the following is the formula for calculating breakeven point? A. Fixed Costs/(Price - Variable Costs) B. Fixed Costs - Variable Cost/Price C. (Fixed Costs/Variable Costs) - Price D. (Fixed Costs/Price) - Variable Costs E. Fixed Cost - (Price + Variable Costs)
A
71. According to financial controls, liquidity measures ________. A. the ability to meet short-term obligations B. the use of debt C. asset and inventory efficiency D. the ability to earn revenues greater than costs E. the ability to operate at minimum cost
A
73. In the context of financial controls, asset management refers to the ability to ________. A. use resources efficiently and operate at minimum cost B. earn more in returns than the cost of debt C. earn revenues greater than costs D. meet short-term obligations E. generate cash to pay bills
A
78. Calculate the quick ratio from the following information of a manufacturing firm. Cash in hand = $200,000 Cash at bank = $100,000 Total current assets = $450,000 Accrued expenses = $100,000 Taxes payable = $100,000 A. 3:2 B. 1:2 C. 3:1 D. 4:1 E. 2:2
A
83. CarZ Ltd., a car manufacturing company, calculated its debt ratio to be 2:5. Calculate the total debt for CarZ Ltd., from the following information: Cash in hand = $120,000 Cash at bank = $180,000 Bills receivable = $200,000 Bills payable = $180,000 Land and building = $250,000 Inventories = $50,000 Machinery = $100,000 A. $360,000 B. $240,000 C. $280,000 D. $300,000 E. $270,000
A
90. Calculate the net income if the net margin is 75% and expenses incurred is $160,000. A. $480,000 B. $640,000 C. $360,000 D. $570,000 E. $600,000
A
95. ________ = Net Income/Owner's Equity A. Return on Equity B. Return on Assets C. Net Margin D. Inventory Turnover E. Acid Test
A
96. Calculate owner's equity from the following information: Expenses $700,000 Return on equity 40% Total Assets $2,050,000 Sales $1,500,000 A. $2,000,000 B. $800,000 C. $375,000 D. $1,250,000 E. $820,000
A
100. Cycle times, engineering efficiency, and new product time are sample measures of ________. A. learning B. internal process improvement C. innovation D. financial performance E. customer satisfaction
B
31. Which of the following is true of feedforward control? A. It focuses on what happens during the work process. B. It is preventive in nature. C. It is largely reactive. D. It solves problems as they occur. E. It focuses on the quality of end results rather than on inputs.
B
36. A manager spots and corrects problems in the manufacturing cycle. Which of the following types of control does the manager practice? A. Output control B. Concurrent control C. Preliminary control D. Feedback control E. Post-action control
B
40. Through ________ control, managers can manage in ways that allow and expect people to control their own behavior. A. normative B. internal C. regulatory D. clan E. bureaucratic
B
42. Which of the following increases the potential for self-control? A. Enforcing authority, policies, procedures, job descriptions, budgets, and day-to-day supervision to make sure that people act in harmony with organizational interests B. Ensuring participative organizational cultures in which everyone treats each other with respect and consideration C. Preparing budgets for personnel, equipment, travel expenses, and the like to keep behavior targeted within set limits D. Influencing behavior through norms and expectations set by the organizational culture E. Harnessing the power of group cohesiveness and collective identity
B
46. Bureaucratic control differs from clan control in that bureaucratic control: A. influences behavior through norms and expectations set by the organizational culture. B. emphasizes hierarchy and authority. C. harnesses the power of group cohesiveness and collective identity. D. gives people the freedom to work on their own. E. encourages participation, empowerment, and involvement.
B
50. ________ is essentially the influence of customers and competition on the behavior of organizations and their members. A. Normative control B. Market control C. Clan control D. Bureaucratic control E. Administrative control
B
54. Output standards differ from input standards in that output standards measure ________. A. work efforts B. actual outcomes C. efficiency in the use of resources D. conformance with rules E. work attendance
B
60. Calculate the need for action from the following information: Desired performance = 800 work units Actual performance = 580 work units A. 1380 B. 220 C. 800 D. 1600 E. 510
B
63. ________ is a combination of the critical path method and the program evaluation and review technique. A. Gantt chart B. CPM/PERT C. Pie chart D. Bar diagram E. Run chart
B
68. Oodle shoes launches baby shoes at a price of $10 per unit. The fixed costs are $15,000 and variable costs are $5 per unit. What sales volume is required to break even? A. 7500 units B. 3000 units C. 4000 units D. 6500 units E. 3500 units
B
79. ________ = Current Assets/Current Liabilities A. Acid Test B. Current Ratio C. Debt Ratio D. Assets Turnover ratio E. Net Current Margin
B
80. Calculate the current ratio from the following information: Sales = $14,000 Bills receivable = $100,000 Cash in hand = $40,000 Current liabilities = $50,000 Inventories = $40,000 Net Income = $5,600 A. 8:5 B. 3.6:1 C. 0.4:1 D. 3:5 E. 2:3
B
82. Calculate the debt ratio from the following information. Land and building = $500,000 Machinery = $300,000 Cash in hand = $400,000 Total debts = $300,000 A. 3:4 B. 1:4 C. 2:3 D. 2:2 E. 1:3
B
85. Calculate assets turnover for a car manufacturing company from the following information: Net income = $480,000 Expenses = $120,000 Land and building = $110,000 Cash at bank = $50,000 Inventories = $40,000 A. 2 times B. 3 times C. 5 times D. 4 times E. 6 times
B
87. Calculate average inventory if sales is $400,000 and the inventory turnover is 1.6. A. $280,000 B. $250,000 C. $150,000 D. $180,000 E. $140,000
B
88. With reference to profitability, Net margin = ________. A. Net Income/Owner's Equity B. Net Income/Sales C. Net Income/Total Assets D. Net Income/Inventories E. Net Income/Debts
B
89. Calculate net margin from the following information. Sales $250,000 Expenses $100,000 A. 50% B. 60% C. 40% D. 30% E. 80%
B
91. Calculate sales if the expenses incurred is $160,000 and the net margin is 75%. A. $480,000 B. $640,000 C. $360,000 D. $570,000 E. $600,000
B
94. Calculate net income from the following information: ROA =35% Sales = $250,000 Current assets = $30,000 Fixed assets = $70,000 A. $87,500 B. $35,000 C. $10,500 D. $24,500 E. $15,000
B
26. ________ is a function of the controlling process. A. Creating structures B. Setting directions C. Measuring performances D. Allocating resources E. Inspiring efforts
C
29. Which of the following is true of controlling? A. It is all about setting goals and making plans. B. It is primarily involved in creating structures. C. It sees to it that the right things happen, in the right way, and at the right time. D. It sets the directions and allocates resources. E. It brings people and material resources together in working combinations.
C
33. ________ control is also known as steering control. A. Feedback B. Post-action C. Concurrent D. Feedforward E. Preliminary
C
39. When a hair stylist at a salon asks a customer if she liked their services after a hair cut, the hair stylist is engaging in ________ control. A. feedforward B. steering C. feedback D. concurrent E. throughput
C
43. Which of the following best describes bureaucratic control? A. It refers to the controls that influence behavior through norms and expectations set by the organizational culture. B. It refers to the influence of market competition on the behavior of organizations and their members. C. It involves the use of authority, policies, procedures, job descriptions, budgets, and day-to-day supervision to make sure that people act in harmony with organizational interests. D. It refers to the control that is implemented when capable people have a clear sense of the organizational mission, know their goals, and have the resources necessary to do their jobs well. E. It refers to the existence of participative organizational cultures in which everyone treats each other with respect and consideration.
C
52. The first step to the control process is to ________. A. measure actual performance B. compare results with objectives C. set performance objectives and standards D. take corrective actions E. compare results with standards
C
57. In the context of the control process, which of the following statements is true about measuring actual performance? A. It is the point where performance objectives identify key results that one wants to accomplish. B. It involves a situation where outputs are difficult or expensive to measure. C. It is the point where output standards and input standards are used to carefully document results. D. It is the point where past experience becomes the baseline for evaluating current performance. E. It is the practice of giving attention to situations that show the greatest need for action.
C
62. A Gantt chart differs from a PERT chart in that a Gantt chart: A. uses charts to break a project into a series of small sub-activities that each has clear beginning and end points. B. represents the quickest time in which the entire project can be finished. C. helps with event or activity sequencing to make sure that things get accomplished in time for later work to build upon them. D. shows all the interrelationships that must be coordinated for the entire project to be successfully completed. E. combines critical path method and the program evaluation and review technique.
C
69. Pary's doughnuts can produce only 100 doughnuts a day. The variable cost incurred per unit is $2 and fixed costs incurred per day is $500. At what price should a doughnut be sold to break even? A. $10 B. $5 C. $7 D. $4 E. $8
C
72. In the context of financial controls, which of the following best describes leverage? A. It is the ability to operate at minimum cost. B. It is the ability to earn revenues greater than costs. C. It is the ability to earn more in returns than the cost of debt. D. It is the ability to meet short-term obligations. E. It is the ability to generate cash to pay bills.
C
74. Liquidity differs from leverage in that liquidity is the: A. ability to operate at minimum cost. B. ability to use resources efficiently. C. ability to generate cash to pay bills. D. ability to earn more in returns than the cost of debt. E. ability to earn revenues greater than costs.
C
84. Which of the following is the formula for measuring asset turnover? A. Current Assets/Current Liabilities B. Current Assets - Inventories/Current Liabilities C. Sales/Total Assets D. Net Income/Total Assets E. Total Debts/Total Assets
C
98. Calculate return on equity from the following information: Sales = $400,000 Expenses = $100,000 Debts incurred = $120,000 Owner's equity = $180,000 A. 2:3 B. 3:2 C. 5:3 D. 4:5 E. 5:1
C
99. What is a balanced scorecard? A. It shows profits or losses at a point in time, which is displayed in a Sales - Expenses = Net Income format. B. It shows assets and liabilities at a point in time. C. It tallies organizational performance in financial, customer service, internal process, and innovation and learning areas. D. It occurs when revenues are equal to costs. E. It reduces costs and improves workflow by scheduling materials to arrive at a workstation or facility just in time for use.
C
30. ________ control is also known as preliminary control. A. Concurrent B. Steering C. Feedback D. Feedforward E. Throughput
D
35. The function of steering control is to ________. A. focus on the quality of end results rather than throughputs B. focus on activities before they begin C. ensure a proactive and forward-thinking approach to problem solving D. solve problems as they occur E. correct mistakes already made
D
37. ________ controls are largely reactive. A. Input B. Concurrent C. Steering D. Post-action E. Feedforward
D
47. ________ is also known as normative control. A. Self control B. Bureaucratic control C. Regulatory control D. Clan control E. Administrative control
D
51. Which of the following is true of market control? A. It is the way business firms use budgets for personnel, equipment, travel expenses, and the like to keep behavior targeted within set limits. B. It is the way business firms emphasize hierarchy and authority. C. It is the way business firms influence employees and members to display common behavior patterns. D. It is the way business firms adjust products, pricing, promotions, and other practices in response to customer feedback and what competitors are doing. E. It is the way business firms harness the power of group cohesiveness and collective identity.
D
55. Input standards differ from output standards in that input standards measure ________. A. actual outcomes B. earnings per share C. work results D. work efforts E. error rates
D
59. A shoe manufacturing company produced 300,000 pairs of shoes at the end of a certain month. If the need for action was 150,000 pairs of shoes, calculate the desired performance using the control equation. A. 650,000 B. 150,000 C. 250,000 D. 450,000 E. 750,000
D
64. Which of the following is true of critical path? A. It is essential to perform what-if calculations under different projected cost and revenue conditions. B. It acts as the foundation for analysis using financial controls by using the firm's balance sheet and income statement. C. It automatically orders a fixed number of items every time an inventory level falls to a predetermined point. D. It represents the quickest time in which the entire project can be finished, assuming everything goes according to schedule and plans. E. It gives top managers, a fast, but comprehensive view of the business.
D
66. Managers rely on ________ to perform what-if calculations under different projected cost and revenue conditions. A. CPM/PERT B. Gantt charts C. critical path method D. breakeven analysis E. just-in-time scheduling
D
70. A bag manufacturing company proposed a selling price of $80 per bag for their new range of bags. Fixed costs are $10,000 and variable costs are $40 per bag. At this point their break even point was 250 units. What will be the breakeven point if the variable costs can be brought down to $30? A. 150 units B. 350 units C. 300 units D. 200 units E. 100 units
D
75. Leverage differs from profitability in that leverage measures: A. the ability to operate at minimum cost. B. the ability to meet short-term obligations. C. the ability to earn revenues greater than costs. D. the use of debt. E. asset and inventory efficiency.
D
81. Which of the following is the formula to measure debt ratio? A. Average Inventory/Total Debts B. Sales/Average Inventory C. Net Income/Owner's Equity D. Total Debts/Total Assets E. Current Assets/Current Liabilities
D
92. Return on assets = ________ A. Current Assets/Current Liabilities B. Sales/Total Assets C. Total Debts/Total Assets D. Net Income/Total Assets E. Current Assets - Inventories/Current Liabilities
D
27. Which of the following best describes controlling? A. The process of deciding where an individual should go and how to best go about it B. The process of inspiring people to best utilize the resources C. The process of bringing people and material resources together in working combinations D. The process of setting directions and allocating resources E. The process of measuring performance and taking action to ensure desired results
E
32. Feedforward control differs from feedback control, in that feedforward control: A. corrects mistakes already made. B. focuses on the quality of end results rather than inputs. C. solves problems as they occur. D. focuses on what happens during the work process. E. takes place before a work activity begins.
E
41. The potential for ________ is enhanced when capable people have a clear sense of organizational mission, know their goals, and have the resources necessary to do their jobs well. A. bureaucratic control B. normative control C. regulatory control D. clan control E. self-control
E
45. Which of the following is true of a bureaucratic control system? A. It influences employees and members to display common behavior patterns. B. It harnesses the power of group cohesiveness and collective identity. C. It expects people to work on their own as they are given the freedom to do so. D. It allows and encourages people to exercise self-discipline in performing their jobs. E. It provides laws and regulations that govern the behavior of an organization's top executives.
E
49. Clan control influences: A. behavior of organizations and the members through market competition. B. managers to give workers the freedom to work on their own. C. hierarchy of authority. D. budgets for personnel, equipment, and travel expenses. E. employees and members to display common behavior patterns.
E
56. After establishing standards of performance, which of the following is the next step in the control process? A. Identifying the key results B. Comparing results with standards C. Comparing results with objectives D. Implementing management by exception E. Measuring the actual performance
E
61. What is management by exception? A. It is the point where performance objectives identify key results that one wants to accomplish. B. It is the situation where outputs are difficult or expensive to measure. C. It is the point where output standards and input standards are used to carefully document results. D. It is the point where past experience becomes the baseline for evaluating current performance. E. It is the practice of giving attention to situations that show the greatest need for action.
E
65. The ________ form of inventory control automatically orders a fixed number of items every time an inventory level falls to a predetermined point. A. just-in-time scheduling B. breakeven C. balanced scorecard D. asset management E. economic order quantity
E
76. Acid Test = ________ A. Net Income/Total Assets B. Net Income/Owner's Equity C. Sales - Expenses D. Total Debts/Total Assets E. Current Assets - Inventories/Current Liabilities
E
77. Which of the following ratios is also known as acid test? A. Current Ratio B. Debt Ratio C. Asset Turnover Ratio D. Inventory Turnover Ratio E. Quick Ratio
E
86. Inventory turnover = ________ A. Current Assets - Inventories/Current Liabilities B. Net Income/Total Assets C. Total Debts/Total Inventories D. Net Income/Owner's Equity E. Sales/Average Inventory
E
93. Calculate return on assets from the following information: Net income $1,800,000 Return on equity 25% Current Assets $350,000 Land and building $250,000 Sales $1,500,000 A. 1:1 B. 3:2 C. 4:1 D. 2:2 E. 3:1
E
97. Calculate the expenses incurred if the net income is $500,000 and sales is $1,500,000. A. $800,000 B. $650,000 C. $500,000 D. $250,000 E. $1,000,000
E
1. Controlling is the process of setting directions and allocating resources in an organization.
False
10. The bureaucratic control system influences behaviour through norms and expectations set by the organizational culture.
False
13. Output standards measure work efforts that go into performing a task.
False
14. Earnings per share, sales growth, and market share are the input standards used by businesses.
False
16. The second step in the control process is to set the performance standards.
False
17. Historical comparisons benchmark performance against that being achieved by other people, work units, or organizations.
False
19. CPM/PERT graphically displays the scheduling of tasks required to complete a project.
False
2. Planning ensures that performance is consistent with plans, and that accomplishments throughout an organization are coordinated in a means-ends fashion.
False
21. Just-in-time scheduling automatically orders a fixed number of items every time an inventory level falls to a predetermined point.
False
22. A balance sheet shows profits or losses of a business at a point in time.
False
23. Leverage measures the ability of a firm to meet short-term obligations.
False
24. Inventory turnover is calculated as Sales/Total Assets.
False
3. Feedforward control focuses on what happens during the work process.
False
5. Preliminary control is also known as steering control.
False
6. Steering controls are largely reactive.
False
9. Normative control flows through an organization's hierarchy of authority.
False
11. The clan control influences employees and members to display common behavior patterns.
True
12. Business firms show the influence of market control in the way that they adjust products, pricing, promotions, and other practices in response to customer feedback and what competitors are doing.
True
15. Quality of production and error rates are output standards used by businesses.
True
18. Management by exception is the practice of giving attention to situations that show the greatest need for action.
True
20. The critical path is the pathway from project start to conclusion that involves activities with the longest completion times.
True
25. Developing a balanced scorecard for any organization begins with a clarification of the organization's mission and vision.
True
4. The goal of concurrent controls is to solve problems as they occur.
True
7. The feedback provided by the control process about mistakes already made may not be able to correct them, but it can help improve things in the future.
True
8. An internal control strategy requires a high degree of trust.
True
