MGMT CH. 20
Which of the following statements does NOT describe a weakness associated with budgeting?
Budgets link planning and controlling
Which of the following is NOT a characteristic of effective controls?
accountability
The last step in the control process is to
determine the need for corrective action
_______ ratios assess the ease with which the assets of the organization can be converted into cash
liquidity
To what part of a system are preliminary controls applied?
resources
The University of Michigan develops a budget that shows its projected income form sources such as the state of Michigan, tuition and fees, alumni contributions, and research grants. This is an example of a(n) ______ budget
revenue
Which of the following would NOT be included in the typical balance sheet?
revenues
Some investment firms require traders to take 2 consecutive weeks of vacation, so the traders books be reviewed. This is an example of
verification procedures
The local, state and federal response to hurricane Katrina highlighted problems at each level. In the end, more than 1000 people died. This illustrates
why control is necessary to reduce the accumulation of errors
One barrier to effective communication is the filtering of upward communication. Which characteristic of effective control systems would this affect?
accuracy
The credit crisis and the Federal Reserve's response to it faced criticism from Congress. The treasury department requested a review of the central bank's structure and governance. There is now broad support for auditing the Fed using the Government Accounting Office. This example illustrates how a control system can be used to
adapt to environmental change
A properly designed control system is important to an organization because it can be used to
anticipate, monitor, and respond to changing circumstances
The term objective as it relates to control means that the controls
are quantifiable
According to the text, what are the two broad schemes by which controls can be classified?
area and level
The purpose of control is to
assess organizational performance relative to some desired goal
A(n) ______ is a financial statement that lists all of the organization's assets and liabilities at a given point in time
balance sheet
Where would you expect to find the following information: "XYZ Corp has $45 million dollars worth of debt"
balance sheet
Which of the following is a type of financial budget that deals with forecasting the organizations assets and liabilities in the event all other budgets are met?
balance sheet
If a manager has a directive leadership style and works in an organization in which performance expectations are minimal, which control structure is most appropriate?
bureaucratic
______ control is a form of organizational control characterized by formal and mechanistic structural arrangements
bureaucratic
Deirdre has made out a financial budget that shows her personal income from all sources and how it will be spent, invested, and saved for the next year. This is an example of a(n) ________ budget
cash flow or cash
A production manager argues that the increase in absenteeism is caused by decreased recruiting and placement standards. The argument is supported by personnel documents. This is an example of
checks and balances
Your management information system provides managers with weekly data concerning deviations from standards in each department. Which steps in the control process does this represent?
comparing performance to standards
Which of the following is NOT one of the areas on which strategic control should focus?
competitive advantage
The ______ at McDonald's fast food restaurants is to fill each order within 90 seconds and to have no customer wait longer than 3.5 minutes
control standard
Businesses that use H-form or M-form organizational design may have several ________ who are responsible for helping line managers with their control functions, for coordinating the organization's overall control system, and for gathering and assimilating relevant information.
controllers
GE is highly leveraged. Financial analysts look at its ______ ratio to determine if it can make interest payments
coverage
A(n) ______ ratio is a measure of the firm's ability to meet its long-term financial obligations
debt
You are a banker reviewing a loan application from a local business. Which of the following ratios would you look at to get a quick measure of the business's ability to meet its long term financial obligations?
debt ratio
John Hamann began his company making herb vinegars from a recipe his grandmother had given him. As demand grew, he had to buy a large commercial kitchen. Which of the following ratios would a banker have been most interested in before allowing Hamann to borrow $500,000?
debt ratios
If a manager has a participative style, works in a participative organization, and has subordinates who wish to participate, which control structure is most appropriate?
decentralized
MTV has a _________ perspective toward internal strategic control. It does not require its various divisions to report in frequently. It believes in letting each manager have the authority to respond quickly to environmental changes. These changes do not have to be approved by MTV before they are implemented
decentralized
______ control is an approach to organizational control characterized by informal and organic structural arrangements
decentralized
The best way to integrate planning and control is to
develop controls as plans develop set goals and standards for control during planning link control with planning make integration explicit and precise
Which of the following is NOT one of the characteristics of an effective control system?
developed and implemented by top management
Anu is comparing the performance of her small landscaping business against the standards she established. When she has finished her comparisons, any of the following actions may be appropriate EXCEPT
eliminate the control if things went as planned
Implementing the control process includes which of the following steps?
establish standards determine the need for corrective action compare performance against standards measure performance
When classifying controls on the basis of the resources involved, we find that one class of resources is related to the control of all other resource classes as well. Which resource class overlaps all other classes?
financial
Which of the following is an example of a financial control that allows managers to compare different elements of a balance sheet and income statement to one another?
financial ratios
Income statements, balance sheets, and audits are examples of the control of
financial resources
Oshkosh Corp hired hundreds of workers to meet an order deadline. The employee training process had to adapt. Which of the characteristics of an effective control system did the training system need?
flexibility
Which of the following is NOT a major form of operations control discussed in the text?
functional
The purpose of bureaucratic control is to
get employee compliance
Standards used in organizational control are most like
goals
Budgets
help managers coordinate resources help define standards for control provide guidelines about resources enable the evaluation of the performance managers
Overcontrol is most problematic in areas dealing with ______ resources
human
What is the problem with a university rewards system that encourages faculty members to publish numerous research articles but fails to consider the quality of the articles
inappropriate focus
What is wrong with a compensation system that rewards members of the sales force for the number of sales calls made without also looking at the average dollar sales per call?
inappropriate focus
A(n) _______ is a financial statement that presents a picture of the organizations financial performance over a period of time as opposed to a single point in time
income statement
The _______ shows an organization's bottom line (profit or loss) and summarizes activities over a period of time
income statement
You are looking at a document that has entries for such items as revenues, expenses and profit. You are looking at a(n)
income statement
Managers can improve the effectiveness of the control system by
integrating control with planning
When Boeing bought the aviation parts and services company Availl, it stated that it expected to have no initial changes in earnings and the following year a modest gain. It was
integrating planning with control
Participation in a control system
is a technique for overcoming resistance to controls
Stephanie makes hand crafted jewelry. She knows the amount of inventory she brings to a show and how long it takes her to make each piece. She is calculating what she needs to buy to get ready for her next show. She is making a ______ budget
labor
Which of the following statements is TRUE, concerning what happens to control as the level of uncertainty increases?
measurements need to be taken more frequently
Internal audits tend to be
more expensive than external
A plant manager is told that she has 8000 labor hours to allocate in a week. This is an example of a(n) _______ budget
nonmonetary
The _________ budgets are organizational budgets that outline quantities of product/service to be produced and what resources will be used
nonmonetary
On the end of the year report for Yoplait yogurt, the division manager noted that "the gross margin for the product was lower than expected" this statement indicates that the control system used by Yoplait might lack
objectivity
What characteristic of effective control systems is lacking when a control system reports production output as being better than average, satisfactory, marginal, or unsatisfactory?
objectivity
If Suzlon Energy Ltd. wants to focus on the strength of its wind turbine division, it will use _______ ratios
operating
_______ ratios indicate the effectiveness of specific functional areas rather than that of the total organization
operating
Facebook partnered with Nielsen Co. to poll users about ads on Facebook. Nielsen then packaged the information for advertisers. This was a response to advertiser complaints about the effectiveness of ads on the social network. This indicates that Facebook is placing an emphasis on _______ controls
operations
The Sarbanes-Oxley Act, passed after the fall of Enron and Arthur Anderson, requires accounting firms to separate the auditing function from the consulting function. This example illustrates
organizational complexity how changing conditions are influenced by innovation why control is necessary to reduce the accumulation of errors how control helps organizations respond to changing standards
The control standard at McDonalds fast-food restaurant is to fill each order within 90 seconds and to have no customer wait longer than 3.5 minutes. As with most control standards, these are derived from the company's
organizational goals
To the extent possible, standards used for control purposes should be derived from
organizational goals
Booz Allen Hamilton requires employees to use a key that keeps track of how many copies they make on copy machines. Some employees resent the lack of trust. This is an example of
overcontrol
Some managers at J.P. Morgan Chase viewed the CEO monitoring all of their expenses as too much involvement. They saw it as
overcontrol
At the beginning of the planning-controlling process, planning
plays a major role in shaping the control process
Lands' End prides itself on quality control. If a garment is not the right color or the stitching has flaws, Lands' End sells it at a reduced price in the Not Quite Perfect section of its website. This is an example of a _____ control
postaction
Marmot Mountain produces high-quality outerwear and sleeping bags. When distribution problems arose, it talked to its retailers to learn how its performance could equal the standards the retailers wanted. Getting feedback from retailers who sell its product is an example of _________ control
postaction
What kind of control is a year-end sales report?
postaction
A company that carefully evaluates its raw materials is using a _____ control
preliminary
Facebook partnered with Nielsen, Co. to poll users about ads on Facebook. Nielsen then packaged the information for advertisers. This was a response to advertiser complaints about the effectiveness of ads on the social network. Verifying ad effectiveness on Facebook is a _______ control for the advertisers
preliminary
Marion Laboratories run chemical analyses of materials to be used in the production process before those materials leave the receiving area of the warehouse. What kind of operations control is this?
preliminary
Secretary of defense, Robert Gates, wanted more cheaper aircraft. Acquisition officers began using price as a _____ control before entering contracts negotiations
preliminary
The Wal-mart greeter who offers customers a cart as they enter the store is part of the ______ control
preliminary
The college admissions board required students to have a certain GPA and SAT score to be accepted at the school. What form of operations control do these requirements represent?
preliminary
To find the right host for a game show, a television production company/network will spend hours of time and manpower trying to find just the right personality who will be interesting enough for the typical audience without distracting from the actual game. This is an example of ______ control.
preliminary
Postaction control is most appropriate when the
product being produced is simple and routine
Which of the following is NOT a type of operating budget?
production
Which of the following is NOT a type of financial budget?
profit
What is the MOST important factor in effectively integrating the planning and control functions?
provide for controls as plans are developed
After evaluation, an appropriate decision may be to
raise standards do nothing correct the deviation lower standards
Which of the following is NOT a characteristic of the bureaucratic approach to organizational control?
reliance on group norms
Brokerage firm on Wall Street are now closely monitoring research analyst's emails. If the analysts view this as inappropriate the control system will be characterized by
resistance control
Which of the following is NOT characteristic of decentralized control?
rewards focused on individual performance
A waitress who returns to check on you after you have tasted the food but before the bill is part of a ______ control
screening
As the product being produced becomes more complex, which of the following types of operations controls would logically become more important?
screening
American Greetings corporation reported that "its sales have been hurt by people increasingly using the internet to communicate" and by "lower priced competition including Hallmark's warm wishes like of 99 cent cards" as a result it decided to lay off 13 percent of its full time workforce. This need for cost cutting measures would have been detected by its _________ control system
strategic
The credit crisis and the federal reserve's response to it faced criticism from Congress. The treasury department requested a review of the central bank's structure and governance. There is now broad support for auditing the Fed using the Government Accounting Office. The change in the economic and political environment of the Fed means the Fed needs to adapt its ________ control
strategic
The level of control designed to ensure that the organization meets its goals is ______ control
strategic
When secretary of defense, Robert Gates, shifted defense acquisitions to cheaper weapon systems, the large defense contractors like Boeing and Lockheed had to shift their _______ control systems
strategic
Secretary of Defense, Gates, shifted the pentagon's budget from expensive, high tech weapon systems to timely, responsive systems. Small defense contractors were more responsive to the change and won more contracts. In this case _________ control helped the small companies
structural
Screening controls
take place during the transformation process
General Plastics corporation instituted a new absenteeism control policy that took effect the first day of june. It expects the new policy to result in a 25% reduction in absenteeism the first year. Like the previous policy, the new program counts vacation days as absenteeism. On the first of septemeber the personnel director evaluated the results of the program for the first 3 months and was disappoint to find that absenteeism had dropped only half of 1%. what is the likely problem?
the indicator of success was inappropriate
Organizational control is
the regulation of management activities to increase leadership
Which of the following statements about financial audits is TRUE
they are independent appraisals they may be internal or external to the organization they may be used to monitor accounting, financial and operating systems within an organization they may be conducted on a continual or intermittent basis
The basic purpose of control is
to cope with organizational complexity to adapt to environmental changes to minimize costs to limit the accumulation of error
