Full Test Bank Control Processes And Systems Chapter 9

CHAPTER 9

CONTROL PROCESSES AND SYSTEMS

Question type: True/False

1) The purpose of controlling is to make sure plans are achieved and that actual performance meets or surpasses objectives.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

2) Controlling makes sure that individual and group performance is consistent with plans and employees comply with organizational policies and procedures.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Comprehension

Difficulty: Easy

AACSB: Analytic

3) Control can still be effective without organizing or leadership, however it is ineffective without adequate planning.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Analysis

Difficulty: Medium

AACSB: Analytic

4) Planning ensures that performance is consistent with plans, and that accomplishments throughout an organization are coordinated in a means–ends fashion.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

5) An after-action review is a structured review of lessons learned and results accomplished on a completed project.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

6) Feedforward, concurrent, and feedback controls are relevant to different phases of the organization’s input-throughput-output cycle.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

7) Feedforward control focuses on what happens during the work process.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

8) Feedforward controls, also known as preliminary controls, are intended to ensure that objectives are clear, that proper directions are established, and that the right resources are available to accomplish objectives.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

9) The central question of feedforward control is: “What can be done to improve things going forward?”

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Comprehension

Difficulty: Easy

AACSB: Analytic

10) Concurrent controls, or steering controls, focus on the end results of an activity rather than the inputs or the activities.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

11) Concurrent control focuses on what happens during the work process.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

12) The central question of concurrent control is: “What needs to be done before we initiate a new process?”

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

13) Feedback controls, or post-action controls, monitor ongoing operations and activities to make sure things are being done according to plan.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

14) The central question of feedback control is: “Now that we have completed our process, how did we do?”

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

15) Any internal control strategy requires a high degree of trust.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Analysis

Difficulty: Medium

AACSB: Analytic

16) Internal control occurs when motivated individuals and groups exercise self-discipline in fulfilling job requirements.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

17) External control occurs when managers use personal supervision or formal administrative systems.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

18) Effective control typically involves some combination of internal and external control.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

19) The potential for self-control is increased when people have a clear sense of organizational mission, know their performance goals, have the necessary resources to do their jobs well, treat each other with respect and consideration, and work in a participative organizational culture.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Analysis

Difficulty: Medium

AACSB: Analytic

20) Bureaucratic control influences behaviour through authority, policies, procedures, job descriptions, budgets, and day-to-day supervision.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

21) Control that flows through the organizations hierarchy of authority is called clan control.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

22) The bureaucratic control system influences behaviour through norms and expectations that are set by the organizational culture.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

23) The goal of the policies and procedures regarding sexual harassment is to make sure that members behave toward one another respectfully and in ways that offer no suggestion of sexual pressures or improprieties in the workplace.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

24) Bill C-198, that establishes procedures to regulate financial reporting and governance in publicly traded companies was passed in response to major corporate failures such as WorldCom and Enron.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

25) C-SOX establishes procedures to regulate financial reporting and governance in publicly traded corporations.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

26) The Sarbanes-Oxley Act was passed in response to major corporate failures regarding the accuracy of reported financial information, such as with Enron and WorldCom, that raised serious questions regarding top management behaviour and the accuracy of financial reports provided by the firms.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

27) Under Bill C-198, chief executives and chief financial officers must sign off on financial reports and certify their accuracy under penalty of jail and/or personal fines.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Medium

AACSB: Analytic

28) Clan control influences behaviour through norms and expectations set by the organizational culture.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Medium

AACSB: Analytic

29) Normative control represents the power of collective identity.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Comprehension

Difficulty: Medium

AACSB: Analytic

30) Strategic control evaluates if the original organizational or departmental strategy has been implemented as planned.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Comprehension

Difficulty: Easy

AACSB: Analytic

31) Strategic control considers if the results of the organizational plan are deliberate, unrealized or evolving.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Comprehension

Difficulty: Easy

AACSB: Analytic

32) Market control is essentially the influence of market competition on the behaviour or organizations and their members.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

33) “Keeping up with the competition” is another way of expressing the dynamics of market controls in operation.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Medium

AACSB: Analytic

34) Controlling is a four-step process that includes establishing objectives, measuring actual performance, comparing results with objectives, and taking corrective action as needed.

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

35) Planning is the first step of the control process where performance objectives and the standards for measurement are set.

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Comprehension

Difficulty: Easy

AACSB: Analytic

36) The second step in the control process is to set the performance objectives and standards.

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

37) The Pareto Principle is a method for organizations, managers and employees to stay on task to achieve an objective or goal.

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Comprehension

Difficulty: Easy

AACSB: Analytic

38) The Pareto Principle states that 20% of consequences come from 80% of work that is accomplished.

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

39) Output standards measure effort in terms of the amount work expended in task performance.

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

40) Earnings per share, sales growth, and market share are the input standards used by businesses.

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

41) Quality of production and error rates are output standards used by businesses.

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

42) Input standards measure performance results in terms of quantity, quality, cost, or time of accomplished work.

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

43) Without some form of measurement of results, effective control is not possible.

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

44) In the control process, measurement must be accurate enough to identify significant differences between what is really taking place and what was originally planned.

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Knowledge

Difficulty: Medium

AACSB: Analytic

45) Historical comparisons benchmark performance against what is being achieved by other people, work units, or organizations.

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

46) The control equation is Need for Action = Desired Performance – Actual Performance

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

47) The control equation can be written as Desired Performance = Need for Action + Actual Performance

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Analysis

Difficulty: Medium

AACSB: Analytic

48) Desired performance and actual performance can be compared from historical, relative, or engineering perspectives.

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

49) In utilizing a historical approach for comparing desired and actual performance, a manager will use past performance as a benchmark.

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

50) In utilizing a relative approach to compare desired and actual performance, a manager will use the organization’s objectives to set the standard.

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

51) Management by exception is the technique of focusing managerial attention on situations where the difference between actual and desired performance is the greatest.

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

52) Management by exception means that whenever there is problem situation or an opportunity situation, action must be taken.

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Analysis

Difficulty: Medium

AACSB: Analytic

53) When performance results compared to objectives are better than desired, a performance opportunity exists.

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

54) When performance results compared to objectives are less than desired, a performance opportunity exists.

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

55) The goal of an opportunity situation is to increase or to continue the high level of accomplishment in the future.

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

56) Projects are unique one-time events that occur within a defined time period.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

57) A project manager’s job is to ensure that a project is completed on time, within budget, and consistent with the project’s objectives.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

58) A graphic display of task scheduling required to complete a complex or simple project that has either a short- or long-term timeline, is called a Gantt chart.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Comprehension

Difficulty: Easy

AACSB: Analytic

59) Based on the following Gantt chart it will take approximately 6 hours to complete task E.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

60) A CPM/PERT is a combination of the critical path method and the program evaluation and review technique, and it displays the scheduling of tasks required to complete a project.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Comprehension

Difficulty: Easy

AACSB: Analytic

61) The beginning and end points, known as nodes, in a series of sub-activities on a CPM/PERT often have arrows between them to indicate in which order tasks must be completed.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

62) Based on the following CPM/PERT map task G cannot be completed until both tasks E and F have been successfully completed.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

63) The critical path is the longest distance between the start and the finish of a project that must be completed on time in order for the project to be completed by the due date

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Comprehension

Difficulty: Medium

AACSB: Analytic

64) Inventory control by economic order quantity orders new inventory whenever inventory levels fall to a predetermined point.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

65) Just-in-time (JIT) scheduling automatically orders a fixed number of items every time an inventory level falls to a predetermined level.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

66) Application of just-in-time (JIT) inventory management requires a strong relationship with an organization’s key suppliers.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

67) Breakeven analysis calculates the point at which revenues cover costs under different “what-if” conditions.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

68) The breakeven point can be thought of as the point where losses end and profits begin.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

69) BBE Enterprises has total fixed costs of $100,000. Each unit of their product sells for $425 with variable costs of $195 per unit. The breakeven point for BBE Enterprises is approximately 435 units.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

70) In exercising financial control over organizations, managers should consider liquidity, leverage, asset management, and profitability.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

71) Liquidity ratios use information about current assets and current liabilities.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

72) Liquidity ratios measure a firm’s ability to meet short-term obligations.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

73) Leverage measures the ability of a firm to meet short-term obligations.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

74) Profitability ratios measure a company’s ability to earn costs greater than revenues.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

75) Asset management ratios measure a company’s asset and inventory efficiency.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Medium

AACSB: Analytic

76) Inventory turnover is one method for determining the company’s financial liquidity.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

77) Inventory turnover is calculated as Net Income ÷ Inventory.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

78) A firm’s analysis of financial performance is an important aspect of managerial control.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

79) Developing a balanced scorecard for any organization begins with a clarification of the organization’s mission and vision.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

80) When balanced scorecard measures are taken into consideration, critical management reviews have stronger links to performance.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Medium

AACSB: Analytic

81) The four categories of a balance scorecard are financial performance, customer satisfaction, operational performance and innovation and learning.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: EAsy

AACSB: Analytic

Question type: Multiple Choice

82) 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

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

83) 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

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

84) Controlling does all of the following except

a) makes sure that performance by individuals and groups is consistent with plans.

b) ensures that objectives and accomplishments of various subgroups of the organization are consistent with each other in a means–ends fashion.

c) secures adequate financing for the enterprise.

d) makes sure employees comply with organizational policies and procedures.

e) ensures that the right things happen, in the right way, at the right time.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Comprehension

Difficulty: Easy

AACSB: Analytic

85) Which of the following is true about controlling within the management process?

a) The function of controlling occurs outside of the management process.

b) Controlling comes after planning and leadership, and before organizing.

c) The function of control is the first step in the management process as sets the foundation for planning, leadership and organizing.

d) Controlling is the final stage of the management process.

e) Within the management process control comes planning and organizing and before leadership.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Analysis

Difficulty: Medium

AACSB: Analytic

86) A(n) ___ is a structured review of lessons learned and results accomplished on a completed project.

a) post-dated assessment

b) after-action review

c) learning organization critique

d) structured project analysis

e) action planning assessment

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

87) 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.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Comprehension

Difficulty: Medium

AACSB: Analytic

88) Which of the following statements is accurate?

a) Feedforward controls, or preliminary controls are preventive in nature.

b) Feedforward controls, or steering controls occur before a work activity begins.

c) Concurrent controls, or preliminary controls are designed to make sure that the work process occurs according to the plan.

d) Feedforward controls, or preliminary controls are designed to fit within the input-throughput-output cycle of the work process.

e) Concurrent controls, or steering controls are designed to fit within the input-throughput-output cycle of the work process..

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Analysis

Difficulty: Medium

AACSB: Analytic

89) The central question of ___ control is: “What needs to be done before we begin?”

a) damage

b) feedforward

c) concurrent

d) feedback

e) post-action

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Medium

AACSB: Analytic

90) Feedforward control differs from feedback control, in that feedforward controls

a) correct mistakes that have already been made.

b) focus on the quality of the output rather than the inputs of a work process.

c) solve problems as they occur.

d) focus on what happens during the work process.

e) take place before a work activity begins.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Comprehension

Difficulty: Easy

AACSB: Analytic

91) Steering controls take place ___.

a) during the work process in order to solve problems as they occur

b) to ensure a proactive and forward-thinking approach to problem solving

c) focus on activities before the work process begins

d) after the work is completed in order to correct any mistakes that have been made

e) in the input-throughput-output cycle

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Analysis

Difficulty: Medium

AACSB: Analytic

92) The central question of ___ control is: “What can be done to improve things right now?”

a) damage

b) preliminary

c) concurrent

d) feedback

e) post-action

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Medium

AACSB: Analytic

93) Drelex manufactures jute bags and takes great pride in the overall quality of their product. Drelex is known for jute bags that are strong and durable. Part of their control strategy includes checking the consistency and quality of all raw materials received before sending them to the production department. And materials that do not meet Drelex’s strict standards are promptly returned to the supplier. Which of the following types of control is being implemented by Drelex?

a) feedback control

b) output control

c) throughput control

d) concurrent control

e) feedforward control

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

94) The Pittsburgh Penguins organization has been outspoken about the need to clean up professional hockey, even applauding a decision made against one of their own players in 2011, when Matt Cooke was banned for the rest of the regular season and the first round of the playoffs after he elbowed Rangers defenceman Ryan McDonagh in the head. “The suspension is warranted because that's exactly the kind of hit we're trying to get out of the game,” Pittsburgh General Manager Ray Shero said in a statement. “We've told Matt in no uncertain terms that this kind of action on the ice is unacceptable and cannot happen.” This action represents what type of control?

a) concurrent control

b) steering control

c) feedback control

d) feedforward control

e) preliminary control

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

95) Armani is the supervises the manufacture of a key component of a product that Soltice Ltd. manufactures. Part of Armani’s day is spent walking through the plant floor to ensure that quality controls are being met and the area is kept free of debris. Recently Armani noticed that one area of the manufacturing line was sending units through too quickly and Armani was worried that quality inspections were not occurring as they should. Armani immediately spoke to the employees at that station to review the quality procedures and told them that there would be more frequent walk throughs to ensure they were following the protocols. Which of the following types of control is Armani practicing?

a) output control

b) concurrent control

c) preliminary control

d) feedback control

e) post-action control

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

96) 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.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

97) Controls that focus on end results and provide information that can be used for future planning are called ___ controls.

a) concurrent

b) steering

c) posterior

d) feedback

e) end-result

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

98) The central question of ___ control is: “Now that we are finished, how did we do?”

a) damage

b) preliminary

c) concurrent

d) feedback

e) feedforward

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

99) ABC Construction prepares various reports on their numerous construction projects. The report presented here was prepared for a project in Flin Flon, Manitoba.

This report is an example of which type of control?

a) cost control

b) preliminary control

c) feedback control

d) steering control

e) managerial control

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

100) Bake-It, a Spanish bread and biscuits producer, gave a free batch of cookies to a few customers. The customers were then asked for suggestions to improve the cookies in terms of quality, taste, and variety. Which of the following types of control was implemented by Bake-It?

a) feedback control

b) steering control

c) feedforward control

d) concurrent control

e) preliminary control

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

101) Internal control occurs when ___.

a) motivated individuals and groups are supervised directly

b) computers are used to monitor performance inside the organization

c) motivated individuals and groups exercise self-discipline in fulfilling job requirements

d) managers take responsibility for the activities in their own departments

e) motivated managers defend the organization against outside competitive attacks

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Comprehension

Difficulty: Easy

AACSB: Analytic

102) Through ___ control, managers can manage in ways that allow and expect people to control their own behaviour.

a) normative

b) internal

c) regulatory

d) clan

e) bureaucratic

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

103) 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) internal control

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

104) Which of the following statements about internal and external control is/are accurate?

a) Effective control typically involves some combination of internal and external control.

b) Organizations are increasingly relying on external control because of the emphasis on participation, empowerment, and involvement in the new workplace.

c) An internal control strategy requires a high degree of trust.

d) a and c

e) a, b, and c

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Analysis

Difficulty: Medium

AACSB: Analytic

105) 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 behaviour targeted within set limits

d) influencing behaviour through norms and expectations set by the organizational culture

e) harnessing the power of group cohesiveness and collective identity

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Comprehension

Difficulty: Easy

AACSB: Analytic

106) The potential for self-control is increased under all of the following conditions except:

a) when people have a clear sense of organizational mission.

b) when people know their performance goals.

c) when people have the necessary resources to do their jobs well.

d) when people work in an organization with a culture that restricts participation in decision making.

e) when people treat each other with respect and consideration.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Comprehension

Difficulty: Easy

AACSB: Analytic

107) Control that flows through the organization’s hierarchy of authority is called

a) self-control.

b) bureaucratic control.

c) market value added control.

d) economic value added.

e) financial control.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

108) Which of the following best describes bureaucratic control?

a) It refers to the controls that influence behaviour through norms and expectations set by the organizational culture.

b) Bureaucratic control refers to the influence of market competition on the behaviour of organizations and their members.

c) 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 are key components of bureaucratic control.

d) Bureaucratic control 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) The existence of participative organizational cultures in which everyone treats each other with respect and consideration is representative of bureaucratic control.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

109) In which of the following control systems do organizations use budgets for personnel, equipment, travel expenses, and so on to keep behaviour targeted within set limits?

a) bureaucratic control

b) clan control

c) normative control

d) regulatory control

e) self-control

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

110) Which of the following is true of a bureaucratic control system?

a) A bureaucratic control system influences employees and members to display common behaviour patterns.

b) Harnessing the power of group cohesiveness and collective identity is characteristic of a bureaucratic control system.

c) The expectation of a bureaucratic control system is that people will work on their own and exercise self-discipline in performing their jobs as they are given the freedom to do so.

d) It provides laws and regulations that govern the behaviour of an organization’s top executives.

e) A bureaucratic control system is the only system that links all feedforward and feedback controls with the input-throughput-output cycles.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Comprehension

Difficulty: Medium

AACSB: Analytic

111) The federal act which requires corporate executives like the CEO and CFO to sign off on reported financial information is

a) Fair Labour Standards Act.

b) Credit Control and Reporting Act.

c) Bill C-198

d) Landrum-Griffin Act.

e) Financial Administration Act.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

112) The penalties for violating the provisions of Bill C-198 are

a) nothing, this is an act which favours management.

b) jail time and personal fines.

c) forgoing a yearly bonus.

d) loss of perks usually offered to management.

e) not as strict as they initially were.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Medium

AACSB: Analytic

113) Bureaucratic control differs from clan control in that bureaucratic control

a) influences behaviour 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 freedom to work on their own.

e) encourages participation, empowerment, and involvement.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Analysis

Difficulty: Medium

AACSB: Analytic

114) Which of the following is not a form of bureaucratic control?

a) Normative control

b) Strategic control

c) Regulatory control

d) Clan control

e) Administrative control

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

115) Which of the following is true of clan control?

a) It influences behaviour through norms and expectations set by the organizational culture.

b) It uses budgets for personnel, equipment, travel expenses, and the like to keep behaviour 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 behaviour of organizations and their members.

e) It gives people freedom to work on their own.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Comprehension

Difficulty: Easy

AACSB: Analytic

116) An example of clan control is when

a) individuals in an organization act, talk, behave and dress in similar manners.

b) the organization downsizes people of similar gender and background.

c) the organization begins to look like the federal government.

d) all the members of upper management vacation together.

e) hiring practices start to suggest that nepotism is at play.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Comprehension

Difficulty: Easy

AACSB: Analytic

117) ________ control tracks the activities of a project or work process with the goal of discovering unintended consequences, both positive and negative.

a) Clan

b) Market

c) Bureaucratic

d) Strategic

e) Administrative

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

118) 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 behaviour 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 behaviour 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.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Comprehension

Difficulty: Medium

AACSB: Analytic

119) Abstract Design Ltd., a local graphic design firm, has had a Facebook presence for a number of years. Recently they have noticed a number of negative comments from customers related to their lack of community involvement. At the same time Abstract Design has noticed that a few orders had been cancelled from new customers. In order to mitigate any further downturns Abstract Design launched a new community initiative where they will donate a certain percentage of gross revenues to the local foodbank. This is an example of which control mechanism?

a) self

b) market

c) clan

d) strategic

e) concurrent

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

120) The four steps of the control process are: establish performance objectives and standards; measure actual performance; compare actual performance with objectives and standards; and ___.

a) take corrective action as needed

b) reap the profits

c) pay for the losses

d) redefine the objectives

e) continue as before

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

121) The first step to the control process is to ___.

a) measure actual performance

b) compare results with objectives

c) establish performance objectives and standards

d) take corrective actions

e) compare results with standards

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

122) Which of the following statements is true about the first step of the control process?

a) Effective planning which will help to identify the key results that one wants to accomplish, by the performance objectives.

b) This step 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) The first step 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.

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Comprehension

Difficulty: Easy

AACSB: Analytic

123) ___ measure performance results in terms of quantity, quality, cost, or time of accomplished work.

a) Input standards

b) Output standards

c) Annual reports

d) Customer service reports

e) Throughput standards

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

124) Output standards differ from input standards in that output standards measure ___ and input standards measure __________.

a) work efforts; actual outcomes

b) actual outcomes; work efforts

c) efficient use of resources; quality of work produced

d) conformance with rules; error rates

e) work attendance; conformance with rules

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Analysis

Difficulty: Medium

AACSB: Analytic

125) Once standards of performance have been established, the next step in the control process is _________________.

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

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

126) In the context of the control process, which of the following statements is true about actual performance measurement?

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.

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Comprehension

Difficulty: Easy

AACSB: Analytic

127) In the control process, ___ must be accurate enough to identify significant difference between what is really taking place and what was originally planned.

a) goals

b) exceptions

c) output standards

d) input standards

e) measurement

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

128) Which of the following is the correct control equation?

a) Need for action = desired performance + actual performance.

b) Need for action = performance expectations + performance deviations.

c) Need for action = desired performance – actual performance.

d) Need for action = performance expectations – performance deviations.

e) None of these is an accurate description of the control equation.

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

129) 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, what was the desired performance value?

a) 650,000

b) 150,000

c) 250,000

d) 450,000

e) 750,000

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Application

Difficulty: Medium

AACSB: Reflective Thinking

130) Calculate the need for action from the following information:

Desired performance = 800 work units

Actual performance = 580 work units.

a) 1,380

b) 220

c) 800

d) 1,600

e) 510

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Application

Difficulty: Medium

AACSB: Reflective Thinking

131) In utilizing an engineering approach to compare desired and actual performance, a manager will ___.

a) use the organization’s objectives as a benchmark

b) use standards set scientifically through such methods as time and motion studies

c) use present performance as a benchmark

d) use performance achievements of other organizations as a benchmark

e) use previous performance as a benchmark

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

132) In utilizing a historical approach for comparing desired and actual performance, a manager will ___.

a) use the organization’s objectives as a benchmark

b) use standards set scientifically through such methods as time and motion studies

c) use present performance as a benchmark

d) use performance achievements of other organizations as a benchmark

e) use previous performance as a benchmark

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

133) In utilizing a relative approach to compare desired and actual performance, a manager will ___.

a) use the organization’s objectives as a benchmark

b) use standards set scientifically through such methods as time and motion studies

c) use present performance as a benchmark

d) use performance achievements of other organizations as a benchmark

e) use previous performance as a benchmark

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

134) Which of the following best describes management by exception?

a) 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) Management by exception 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.

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Comprehension

Difficulty: Easy

AACSB: Analytic

135) ___ is the technique of focusing managerial attention on situations where the difference between actual and desired performance is greatest.

a) High control management

b) Management by exception

c) Progressive exception management

d) Critical incident management

e) Exception progression management

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

136) When the control equation identifies a situation in which actual performance is less than desired performance, the situation is called ___.

a) substandard performance

b) a performance downfall

c) a problem situation

d) a losing situation

e) a managerial problem

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

137) A management exception known as the ___ occurs when actual performance is above the standard.

a) original assumption

b) expected end result

c) predicted end result

d) opportunity situation

e) intended course of action

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

138) Suppose that, in reviewing a quarterly report of a department’s achievements, the manager compares desired performance with actual performance and the manager finds no deviation (that is, actual performance is equal to the standard). The manager should then ___.

a) take no corrective action

b) take corrective action because the standard was too easy

c) take action to understand why the standard was not exceeded

d) seek more resources for the department

e) keep the information private

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

139) Suppose that in reviewing a quarterly report of a department’s sales achievements, the manager compared desired performance with actual performance. The manager found that actual sales was greater than the targeted sales performance. The manager should then ___.

a) take no corrective action

b) take corrective action to bring performance results in line with the standard

c) take action to understand why actual results exceeded the standard

d) defer action until the next quarter’s reports are in and a trend is established

e) keep the information private

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

140) Suppose that in reviewing a quarterly report of a department’s achievements, the manager compared target cost performance with actual costs incurred. If the manager found that actual costs was less than the standard, the manager should ___.

a) take no corrective action

b) take corrective action

c) seek more resources for the department

d) defer action until the next quarter’s reports are in and a trend is established

e) keep the information to himself/herself

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

141) Avery is the senior operations manager and was assigned the task of implementing the control process for a particular production process. Avery first identified the performance objectives and in doing so identified the key results that were to be accomplished. Next the standards were set and put into place followed by measuring the actual performance. After comparing the results with the objectives and standards Avery implemented ___, a practice that involved focusing attention on substantial differences between the actual and desired performances.

a) economic order quantity

b) just-in-time scheduling

c) management by exception

d) breakeven analysis

e) critical path method

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

142) A project has all of the following components except

a) it is a relatively complex task.

b) there are multiple components to a project.

c) all project components must be completed in a certain sequence.

d) the date of completion is fairly flexible.

e) all project components must be completed according to budget.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

143) ___ refer to one-time activities that have clear beginning and end points.

a) Procedures

b) Rules

c) Projects

d) Budgets

e) Goals

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

144) A project manager’s job is to ensure all of the following except

a) completion of the project on time.

b) completion of the project within budget.

c) completion of the project consistent with the project’s objectives.

d) completion of the project within a fairly flexible time frame.

e) completion of the project through disciplined scheduling and control.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Comprehension

Difficulty: Medium

AACSB: Analytic

145) ___ involves making sure that the activities required to complete a project are done on time, within budget, and fulfill objectives.

a) Strategic goal setting

b) Management by objectives

c) Project management

d) Zero-based budgeting

e) Self-control

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

146) When working on a project, which technique can be used to control the activities of what needs to be done, what order they can be done, how long each will take, and how long the whole project is expected to take?

a) financial control

b) progressive discipline

c) market value

d) Gantt charts

e) project management

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

147) 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.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Comprehension

Difficulty: Easy

AACSB: Analytic

148) ___ 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

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

149) Based on the following Gantt chart which activities must be completed before Activity E can begin?

a) A, B, C and D

b) A, B and C

c) C

d) C and D

e) D

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

150) Based on the following Gantt chart what is the total expected time to complete this project?

a) 30 hours

b) 29 hours

c) 36 hours

d) between 25 and 30 hours

e) unable to determine from the information provided

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

151) Based on the following CPM/PERT map what is the critical path for this project?

a) A, B, E, G, I

b) A, B, E, G

c) A, B, D, H, I

d) A, C, F, G

e) A, C, F, G, I

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Evaluation

Difficulty: Hard

AACSB: Analytic

152) Based on the following CPM/PERT map what activities must be completed before Activity G can begin?

a) A, C, and F

b) A, B, C, E and F

c) A, B, and C

d) A, C, E and F

e) E and F

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

153) Which of the following is true of critical path?

a) The critical path represents what-if timelines under different projected cost and revenue conditions.

b) The critical path 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) The critical path provides management with a fast and comprehensive view of the business.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

154) 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 analysis

c) balanced scorecard

d) asset management

e) economic order quantity

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Medium

AACSB: Analytic

155) Scheduling materials to arrive on a timely basis at a workstation or facility in order to reduce costs and improve workflow is known as ___.

a) management by objectives (MBO)

b) just-in-time (JIT) scheduling

c) economic order quantity (EOQ)

d) efficient production planning (EPP)

e) timely inventory control (TIC)

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Comprehension

Difficulty: Easy

AACSB: Analytic

156) Shaun, a production manager at Taxener Inc., receives a complaint from the company’s employees that raw materials were being used in an unorganized manner leading to production delays. Which of the following techniques will help Shaun to organize the flow of raw materials for production?

a) breakeven point analysis

b) just-in-time scheduling

c) business process reengineering

d) pareto principle

e) external control

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

157) 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

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

158) Breakeven analysis can be used to ___.

a) improve control

b) examine the impact of cost control measures

c) experiment with different “what-if” scenarios

d) a and c

e) a, b, and c

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Comprehension

Difficulty: Easy

AACSB: Analytic

159) Which of the following is the correct formula for calculating the 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)

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

160) Traxer Shoes plans to sell their new line of baby shoes for $10 per pair. Traxer’s total fixed costs are $15,000 with variable costs of $5 per pair. What sales volume is required to break even?

a) 7500 units

b) 3000 units

c) 4000 units

d) 6500 units

e) 3500 units

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

161) Rex’s doughnuts can produce a maximum of 100 doughnuts a day. The variable cost incurred per unit is $2 and fixed costs incurred per day are $500. Assuming Rex’s will produce the maximum number of doughnuts each day, what should the selling price be in order to break even?

a) $10

b) $5

c) $7

d) $4

e) $8

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

162) Management at a bag manufacturing company is proposing a selling price of $80 per bag for their bags. Currently fixed costs are $10,000, variable costs are $40 per bag and the breakeven point is 250 units. If variable costs can be reduced to $30 per bag and the new selling price is implemented, what will be the new breakeven point?

a) 150 units

b) 350 units

c) 300 units

d) 200 units

e) 100 units

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

163) Which of the following actions would cause a firm’s breakeven point to increase, assuming all else remains equal?

a) fixed costs decrease

b) selling price increases

c) selling price and variable costs each increase by 5%

d) fixed costs increase

e) variable costs decrease

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

164) The CFO of a company wanted to analyze the financial strength of the company and has asked for information on the company’s assets and liabilities. Which of the following would best provide that necessary information?

a) income statement

b) balance sheet

c) balanced scorecard

d) Gantt chart

e) breakeven analysis account

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

165) Which of the following statements provides an accurate description of financial ratios?

a) Liquidity ratios use information about current assets and current liabilities.

b) Asset management ratios focus on the relationship between profits and either average inventory or total assets.

c) Profit margin and return on investment are useful leverage ratios.

d) Total asset turnover is one method for determining the company’s financial liquidity.

e) Leverage ratios are helpful in assessing how well assets are employed in generating sales.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Comprehension

Difficulty: Easy

AACSB: Analytic

166) All of the following are financial performance measures that managers should know except:

a) liquidity.

b) leverage.

c) asset management.

d) projected inventory levels.

e) profitability.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Comprehension

Difficulty: Easy

AACSB: Analytic

167) For control purposes, which of the following in not an important financial aspect of organizational performance?

a) the ability to generate cash to pay bills

b) the ability to earn more in returns than the cost of the debt

c) the ability to sell shares in the company

d) the ability to use resources efficiently and operate at minimum cost

e) the ability to earn revenues greater than costs

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Analysis

Difficulty: Medium

AACSB: Analytic

168) Financial ratios provide all of the following except:

a) a framework for historical comparisons.

b) a framework for external benchmarking.

c) a means to set financial targets.

d) a means to track financial goals.

e) a calculation of the point at which sales revenues are sufficient to cover costs.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Comprehension

Difficulty: Medium

AACSB: Analytic

169) The finance manager at Iridium Inc., wants to understand why the company’s profitability fell in the past 6 months. Which of the following will help the finance manager understand this issue?

a) a balance sheet

b) a balanced scorecard

c) a CPM/PERT map

d) a breakeven analysis

e) an income statement

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

170) Liquidity ratios measure an organization’s ___.

a) ability to meet short-term obligations

b) use of debt

c) asset and inventory efficiency

d) ability to earn revenues greater than costs

e) ability to operate at minimum cost

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Comprehension

Difficulty: Easy

AACSB: Analytic

171) The finance manager at FinTel Inc., needs to understand the current financial position of the company in terms of meeting its short-term financial obligations. To accomplish this task which of the following ratios should be used?

a) debt ratio

b) asset turnover

c) return on assets

d) inventory turnover

e) acid test ratio

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Application

Difficulty: Medium

AACSB: Reflective Thinking

172) In the context of financial controls, which of the following best describes leverage?

a) The ability to operate at minimum cost.

b) An organization’s ability to earn revenues greater than costs.

c) The capacity to earn more in returns than the cost of debt.

d) The ability to meet short-term obligations.

e) The capability to generate cash to pay bills.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Comprehension

Difficulty: Easy

AACSB: Analytic

173) 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

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Comprehension

Difficulty: Easy

AACSB: Analytic

174) Liquidity differs from leverage in that liquidity is the ability to ____________ while leverage is ability to ______________.

a) use debt effectively; operate at minimum cost.

b) use resources efficiently; acquire more debt.

c) meet short-term debt; use debt effectively.

d) meet short-term debt; earn more in returns than the cost of debt.

e) use debt effectively; meet short-term debt.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Analysis

Difficulty: Medium

AACSB: Analytic

175) ___ = Current Assets ÷ Current Liabilities.

a) Acid Test

b) Current Ratio

c) Debt Ratio

d) Assets Turnover ratio

e) Net Current Margin

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

176) Calculate the current ratio from the following information:

Sales = $14,000

Accounts Receivable = $100,000

Cash in hand = $40,000

Current liabilities = $50,000

Inventory = $40,000

Net Income = $5,600.

a) 8:5

b) 3.6:1

c) 0.4:1

d) 3:5

e) 2:3

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

177) The Acid Test ratio = ___.

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

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

178) Which of the following ratios is also known as the acid test ratio?

a) current ratio

b) debt ratio

c) asset turnover ratio

d) inventory turnover ratio

e) quick ratio

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

179) Calculate the quick ratio from the following information:

Cash = $200,000

Accounts Receivable = $100,000

Inventory = $100,000.

Current Liabilities = $100,000.

a) 2:1

b) 1:2

c) 3:1

d) 4:1

e) 2:2

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

180) Which of the following is the formula for the debt ratio?

a) Average Inventory ÷ Total Debts

b) Sales ÷ Average Inventory

c) Net Income ÷ Owner’s Equity

d) Total Debt ÷ Total Assets

e) Current Assets ÷ Current Liabilities

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

191) Calculate the debt ratio from the following information:

Land and building = $500,000

Machinery = $300,000

Cash = $400,000

Total debt = $300,000.

a) 75.0%

b) 25.0%

c) 67.0%

d) 100%

e) 33.0%

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

182) Karzon Ltd., a car manufacturing company, calculated its debt ratio to be 0.40. What is the total debt for Karzon Ltd., using the following information:

Cash at bank = $300,000

Accounts Receivable = $200,000

Accounts Payable = $80,000

Mortgage Payable = $100,000

Machinery, Land and Building = $350,000

Inventories = $50,000

a) $360,000

b) $240,000

c) $280,000

d) $300,000

e) $180,000

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

183) 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

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

184) 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

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

185) Calculate assets turnover from the following information:

Sales = $600,000

Average Land and building = $110,000

Average Cash = $50,000

Average Inventory = $40,000.

a) 2 times

b) 3 times

c) 5 times

d) 4 times

e) 6 times

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

186) Calculate average inventory if sales are $400,000 and the inventory turnover is 1.6.

a) $280,000

b) $250,000

c) $150,000

d) $180,000

e) $140,000

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

187) 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

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

188) Calculate net margin from the following information:

Sales = $250,000

Net Income = $100,000.

Total Asset = $675,000

Owner’s Equity = $310,000

a) 15%

b) 32%

c) 37%

d) 40%

e) 81%

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

189) Calculate the net income if the net margin is 75% and sales are $160,000.

a) $120,000

b) $240,000

c) $360,000

d) $570,000

e) $600,000

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

190) 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

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

191) Calculate return on assets from the following information:

Sales = $1,800,000

Net income = $375,000

Current Assets = $350,000

Land and building = $550,000.

a) 42%

b) 50%

c) 68%

d) 107%

e) 200%

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

192) Calculate net income from the following information:

ROA = 35%

Sales = $250,000

Current assets = $30,000

Capital assets = $70,000.

a) $87,500

b) $35,000

c) $10,500

d) $24,500

e) $15,000

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

193) ___ = Net Income ÷ Owner’s Equity

a) Return on Equity

b) Return on Assets

c) Net Margin

d) Inventory Turnover

e) Acid Test

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

194) 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

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

195) Calculate return on equity from the following information:

Sales = $400,000

Expenses = $100,000

Debts incurred = $120,000

Owner’s equity = $180,000.

a) 67%

b) 150%

c) 167%

d) 80%

e) 20%

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

106) Calculate the expenses incurred if the net income is $500,000 and sales are $1,500,000.

a) $800,000

b) $650,000

c) $500,000

d) $250,000

e) $1,000,000

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

197) In order to determine how efficiently and effectively management is using its assets to generate profits, the ___ ratios need to be calculated.

a) leverage

b) activity

c) profitability

d) liquidity

e) asset management

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

198) What is a balanced scorecard?

a) A balanced scorecard shows profits or losses at a point in time, which is displayed in a Sales – Expenses = Net Income format.

b) A report that displays assets and liabilities at a point in time.

c) A measurement tool that shows organizational performance in financial, customer service, internal process, and innovation and

Learning areas.

d) The point where revenues are equal to costs.

e) A control tool that reduces costs and improves workflow by scheduling materials to arrive at a workstation or facility just in time for use.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Comprehension

Difficulty: Easy

AACSB: Analytic

199) Ashley has been given the task of creating a balanced scorecard for the company. Which of the following would be placed in the internal process improvement area?

a) reducing staff turnover

b) increased sales growth

c) improved product time to market

d) improved production intervals

e) improved on-time deliveries

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

200) Cycle times, engineering efficiency, and new product time are sample measures of ___.

a) learning

b) internal process improvement

c) innovation

d) financial performance review

e) customer satisfaction

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

Question type: Essay

201) Briefly explain the two broad options managers have with respect to control system.

Self-control: Managers can take advantage of this human capacity for self-control by unlocking and setting up conditions that support it. This means trusting people to be good at self-management, allowing and encouraging them to exercise self-discipline in performing their jobs. Any workplace that emphasizes participation, empowerment, and involvement will rely heavily on self-control.
Bureaucratic control: This form of external control uses authority, policies, procedures, job descriptions, budgets, and day-to-day supervision to make sure that people act in harmony with organizational interests.
Clan control: This form influences behaviour through norms and expectations set by the organizational culture. Sometimes called normative control, it harnesses the power of group cohesiveness and collective identity.
Market control: This form is essentially the influence of customers and competition on the behaviour of organizations and their members. 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.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Comprehension

Difficulty: Easy

AACSB: Analytic

202) Identify and describe the three types of control and provide an example of each.

1. Feedforward controls – also called preliminary controls, take place before a work activity begins. They ensure that objectives are clear, that proper directions are established, and that the right resources are available to accomplish them. Feedforward controls are preventive in nature. The goal is to solve problems before they occur by asking an important question: “What needs to be done before we begin?”
2. Concurrent controls – also called steering controls, focus on what happens during the work process. They make sure things are being done according to plan. The goal of concurrent controls is to solve problems as they are occurring. The key question is “What can be done to improve things right now?”
3. Feedback controls – also called post-action controls, take place after the work is completed. They focus on the quality of end results rather than on inputs and activities. Feedback controls are largely reactive; the goals are to solve problems after they occur and to prevent future ones. They ask the question “Now that we are finished, how well did we do?”

Note: student examples for each will vary, however they should fit within the category.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Application

Difficulty: Medium

AACSB: Analytic

203) External control is based on the use of three control systems. List and explain each of these three control systems.

Bureaucratic control influences behaviour through authority, policies, procedures, job descriptions, budgets, and day-to-day supervision. Another level of bureaucratic control comes from the organization’s external environment. Here, laws and regulations may govern behaviour of an organization’s top executives. The best example is the U.S. Sarbanes-Oxley (SOX) Act, which establishes procedures to regulate financial reporting and governance in corporations that publicly trade in the United States, including those in Canada listed on U.S. exchanges.
Clan control influences behaviour through norms and expectations set by the organizational culture. The shared informality and ebullient attitudes of WestJet flight crews, for example, show the power of clan control as a critical benchmark of the airline.
Market control is essentially the influence of market competition on the behaviour of organizations and their members. A good example is the growing emphasis on “green” products and practices. When a firm like Walmart starts to get positive publicity from its expressed commitment to eventually power all of its stores with renewable energy, for example, the effect is felt by its competitors. They have to adjust their practices in order to avoid giving up the public relations advantage to Walmart.

Learning Objective 9.1: Identify the types of controls used by managers and the reasons for them.

Section Reference 9.1: Why and How Managers Control

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

204) Briefly explain the four-step control process.

(1) Establish performance objectives and standards: The control process begins with planning, when performance objectives and standards for measuring them are set. Performance objectives identify key results that one wants to accomplish. Once these key results are identified, standards can be set to measure their accomplishment.
(2) Measure actual performance: The second step in the control process is to measure actual performance. It is the point where output standards and input standards are used to carefully document results.
(3) Compare actual performance with objectives and standards: Step 3 in the control process is to compare objectives with results. The control equation states:
Need for Action = Desired Performance – Actual Performance.
(4) Take corrective action: The final step in the control process is to take the action needed to correct problems or make improvements. Management by exception is the practice of giving attention to situations that show the greatest need for action. It saves time, energy, and other resources by focusing attention on high-priority areas.

Learning Objective 9.2: List and describe the steps in the control process.

Section Reference 9.2: The Control Process

Bloom’s: Knowledge

Difficulty: Easy

AACSB: Analytic

205)

a) What is a project and include in your answer two examples of a project.

b) What is project management?

c) Explain the two techniques of project management.

a) A project is a one-time event with unique, and sometimes complex components, that must be completed within a specified timeline. Examples (student examples will vary) include: a municipal project to build a bridge; a firm building a new manufacturing plant; a family building a new home

b) Project management makes sure that activities required to complete a project are planned well and accomplished on time. It is the responsibility for overall planning, supervision, and control of projects. A project manager’s job is to ensure that a project is well planned and then completed according to plan—on time, within budget, and consistent with objectives.

c) Two useful techniques for project management and control are Gantt charts and CPM/PERT.
A Gantt chart graphically displays the scheduling of tasks that go into completing a project. Use of the visual overview of what needs to be done on a project allows for progress checks to be made at different time intervals. It helps with event or activity sequencing to make sure that things get accomplished in time for later work to build upon them.
CPM/PERT is a combination of the critical path method and the program evaluation and review technique. Project planning based on CPM/PERT uses a network chart. Such charts break a project into a series of small sub-activities that each has clear beginning and end points. These points become “nodes” in the charts, and the arrows between nodes show in what order things must be done. Use of CPM/PERT techniques helps project managers track activities to make sure they happen in the right sequence and on time.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Analysis

Difficulty: Medium

AACSB: Analytic

Solution:

206) Based on the following three-year ration analysis for Ventura Enterprises Ltd. identify which ratios have improved, remained relatively constant, and which have worsened over the three-year period. Support your answer with a brief explanation.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Evaluation

Difficulty: Hard

AACSB: Analytic

207) Why would organizations wish to implement a balanced scorecard system ?

The balanced scorecard identifies the need to measure both outcomes and drivers of performance. For the customer, internal business process, and learning and growth perspectives, a series of outcome and performance driver measures are identified.
The balanced scorecard can be used in a manner that recognizes the objectives of a number of the different stakeholders of the organization. This increases the chance that the range of dimensions considered will be complete. The objectives of shareholders and customers can be recognized, with the establishment of performance measures under the financial and customer perspectives respectively. The objectives of employees can be recognized in the innovation and learning perspective. Other objectives might usefully be incorporated into the development of balanced scorecards for specific organizations in both the public and private sector. It should be noted that some stakeholders, such as suppliers, governments, local communities and the environment, are not explicitly recognized by the four perspectives.

Learning Objective 9.3: Explain the use of common control tools and techniques.

Section Reference 9.3: Control Tools and Techniques

Bloom’s: Analysis

Difficulty: Medium

AACSB: Analytic