MAN 3022 Chapter 8 Quiz
Calculate the return on investment (ROI) from the information given below. Net income = $18,000 Advertising Expenses = $220,000 Total Liabilities = $120,000 Total Assets = $160,000 Gross Margin = $80,000 Taxes Paid = $2,000
12.5 percent ROI = net profit before taxes + taxes paid/total assets = (18,000 + 2,000)/160,000 =.125 =12.5 percent
Which type of financial ratio measures how well the managers of the organization are creating value from the organization's assets?
Activity ratio Activity ratios provides measures of how well managers are creating value from organizational assets.
Management by objectives is a mechanism of control for which of the following types of organizational control systems?
Behavior control Management by objectives is a mechanism of control for behavior control
Which of the following types of control systems uses rules and SOPs to regulate the behavior of workers within the organization?
Bureaucratic control system Bureaucratic control is control by means of a comprehensive system of rules and standard operating procedures (SOPs) that shapes and regulates the behavior of divisions, functions, and individuals.
Which of the following types of financial ratios indicates how efficiently the managers of the organization are collecting the revenue due to the organization from the sale of its products or services?
Days sales outstanding ratio Days sales outstanding provides information on how efficiently managers are collecting revenue from customers to pay expenses.
The final step in the control process is to:
Evaluate the results and initiate corrective action. The final step in the control process is to evaluate the results and bring about change as appropriate.
The managers of a division are given a fixed budget and are then evaluated on the basis of their ability to produce goods or services. Which of the following budget approaches is being implemented by the organization?
Expense budget approach Managers of a division may be given a fixed budget for resources and be evaluated on the amount of goods or services they can produce using those resources. This is a cost or expense budget approach.
During the input stage, the most common type of control procedure is concurrent control, which gives managers immediate feedback.
False At the conversion stage, concurrent control gives managers immediate feedback on how efficiently inputs are being transformed into outputs so managers can correct problems as they arise.
In inert cultures, employees often receive rewards directly linked to their performance.
False In adaptive cultures, employees often receive rewards linked directly to their performance and to the performance of the company as a whole.
Organizational control procedures can give managers feedback about the quantity, but not the quality, of products produced by the organization.
False Organizational control helps managers obtain superior, efficiency, quality, responsiveness to customers, and innovation-the four building blocks of competitive advantage.
Output control methods are effective in motivating employees, but behavior control methods are not.
False Output control and behavior control methods are both effective in motivating employees.
The control function is limited to reacting to events in a business, after the events have already occurred.
False The control function is not limited to just reacting to events after they have occurred. It also means keeping an organization on track, anticipating events that might occur, and then changing the organization to respond to whatever opportunities or threats have been identified.
Top-down change is more gradual and evolutionary than a bottom-up change.
False With top-down change, the emphasis is on making the changes quickly and dealing with problems as they arise; it is revolutionary in nature. Bottom-up change is typically more gradual or evolutionary.
Action Explosives gives specifications to its suppliers of raw materials in an attempt to improve the quality of those raw materials and to minimize and anticipate the problems they are likely to face in the conversion process. Which of the following control systems is being used by Action Explosives?
Feedforward control Feedforward control is used to anticipate problems before they arise so problems do not occur later during the conversion process.
Managers at Zeppel Construction Company set up a stringent job interview process by which management applicants are carefully screened at different levels of the organization before they are hired, attempting to increase the chance that newly hired managers will have the knowledge and skills they need to be successful within the organization. By using this process, Zeppel is using ________ control.
Feedforward control Managers can use feedforward control while screening job applicants, often by viewing their resumes electronically, and using several interviews to select the most highly skilled people, which can lessen the chance that they will hire people who lack the necessary skills or experience to perform effectively.
Hanover Insurance sets up a management information system (MIS) that gives its regional managers information about changes in the task environment that may affect the organization at some future time. Which of the following control systems is being used by Hanover Insurance?
Feedforward control Managers use feedforward control to anticipate problems before they arise so that problems do not occur later. The development of management information systems promotes feedforward control that gives managers timely information about changes in the task and general environments that may impact their organization later on.
Which of the following types of financial ratios indicates the degree to which the organization uses debt or equity to finance its ongoing operations?
Leverage ratios Leverage ratios, such as the debt-to-assets ratio and the times-covered ratio, measure the degree to which managers use debt (borrow money) or equity (issue new shares) to finance ongoing operations
Managers use feedforward control to anticipate problems.
Managers use feedforward control to anticipate problems before they arise so problems do not occur later during the conversion process.
The managers of Foodex, a fast food restaurant, record outputs on a daily basis by counting how many customers their employees serve, the time each transaction takes, and how much money each customer spends every day. With reference to the control process, the managers of Foodex are:
Measuring the actual level of performance of employees. Once managers have decided which standards or targets they will use to evaluate performance, the next step in the control process is to measure actual performance. In practice, managers can measure or evaluate two things: (1) the actual outputs that result from behavior of their members and (2) the behaviors themselves.
Which of the following types of performance ratios measures the efficiency of the organization in terms of how well the resources of the organization have been used to generate profit?
Profit ratios Profit ratios measure how efficiently managers are using the organization's resources to generate profits.
From the information given below, calculate the organization's return on investment (ROI). Total liabilities = $300,000 Total assets = $600,000 Gross Margin = $200,000 Net income Before Taxes = $30,000 Total expenses = $240,000
ROI = net profit before taxes/total assets =$30,000/$600,000 =.05 =5 percent
Which of the following is the MOST commonly used financial performance measure that allows managers of one organization to compare performance with that of other organizations?
Return on investment Return on investment (ROI) is the most commonly used financial performance measure because it allows managers of one organization to compare performance with that of other organizations. ROI lets managers assess and organization's competitive advantage.
in an adaptive culture, employees often receive rewards based on:
Their performance In adaptive cultures, employees often receive rewards liked directly to their performance and to the performance of the company as a whole.
Ben, the production manager of Pace Shoes, sets a production target of 220 shoes to be distributed among 20 employees in a week. In the context of the control process, Ben is:
establishing the standards of performance At step 1 in the control process, managers decide on the standards of performance, goals, or targets that they will use in the future to evaluate the performance of the entire organization or part of it.
