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Exam 16: Managerial Control

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Question 31

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The targeted level of performance for a particular goal is known as a(n)

A) standard.
B) organization.
C) bureaucracy.
D) directive.
E) empowerment.

F) A) and B)
G) B) and E)

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Question 32

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"My business relationship with the Southwest sales rep has really deteriorated. We used to cooperate; now we ________," said the manager of the Midwest region. "And I blame our new control system. Every month, managers across the entire enterprise get profit and loss statements for all divisions and business units. We look at one another's performance and are less likely to help one another when we know that our business unit or division may suffer a loss in profitability as a result. After all, promotions, salary increases, and bonus pools are tied to our profitability."

A) compete
B) promote change
C) resist change
D) feel threatened
E) ignore one another

F) A) and B)
G) B) and E)

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Question 33

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

Leverage ratios indicate

On the balance sheet, the amount accruing to a corporation's owners is referred to as

Ronaldo is doing some management consulting for three companies. Safety Solutions Inc. is a large corporation that was established in the 1960s. It produces safety mechanisms for industrial machinery. The organization uses a strict set of rules and regulations with its workforce and tracks a large amount of data using statistical techniques. Eastern Plains Employment Associates is a network of regional employment centers that was started eight years ago. Its management uses a control system that ties salaries to prevailing salary standards, and the center directors are evaluated on the basis of the profitability of their centers. Resources are moved between centers on the basis of transfer prices. Ocean Innovations Inc. is a software company. Its control process is very future oriented. It likes to prevent problems before they arise, using policies, procedures, and rules. Which control system does Eastern Plains Employment Associates utilize?

Because financial ratios usually are expressed in compressed time horizons, they often cause management myopia.

Which of the following is the second major step in a typical control system?

Evelyn had to buy a lot of equipment to open her beauty salon. She bought most of it on credit. The amounts of money that she owes her creditors are called

Which of the following are the basic elements of a balance sheet?

"After a long and costly two weeks, I have lots of data, that I don't know how to analyze. I don't know what constitutes good performance as opposed to bad performance," said Malcolm to his boss. His boss replied, "Malcolm, it sounds as if you failed to first establish a(n) ________ by which to assess your data."

Which of the following is an outcome of bureaucratic controls?

A managerial principle stating that control is enhanced by concentrating on the significant deviations from the expected result or standard is referred to as the principle of

The process of investigating what is being done and comparing the results with the corresponding budget data to verify accomplishments or remedy differences is referred to as

Xena has been put in charge of a group of young employees who were recently hired by her company. In her new role as a supervisor, she is careful to keep an eye on the new employees to ensure that they work efficiently and avoid making serious mistakes. Which of the following types of control is Xena using?

Describe feedforward, feedback, and concurrent control. Give an example of each.

Angus interviews and observes his employees as part of his managerial duties at Shipko, a large packing supplies manufacturer. During the interviews, Angus receives a wide array of facts, figures, and predictions, and his observations reveal a variety of behaviors. He suspects some of the employees are telling him things and doing things that are designed to outsmart management rather than to give him an honest report. What type of behavior might be a clue for Angus that an employee is trying to beat management's control system?

Liquidity ratios indicate a company's

Bella is a financial manager at Fiber Fundamentals Inc., a producer of fiber optics for use in high speed communication devices. She makes a budget that shows the anticipated receipts and expenses of the company. As the last budget that she creates for the upcoming year, it also shows the amount of working capital available and whether the company will need loans. Which of the following types of budgets has Bella created?

Adirondack Accounting Associates is an organization that has undergone a dramatic transformation over the last few years. Earlier, employees were managed using a wide array of rules, regulations, and procedures. Offending employees were punished for their violations. Today, under the leadership of the new CEO, Agatha, employees are encouraged to make decisions and come up with innovative solutions to problems they encounter. Most employees are much more satisfied under the new arrangement. The group is much more cohesive and is committed not only to the overall success of the organization but also to its standards and reputation. Despite the improved employee morale under Agatha, the other top managers have expressed a strong desire to reign in what they see as excessive employee freedoms and institute more formalized rules. Meanwhile, the middle managers have expressed their desire to base operations on costs and prices, and outsource certain tasks if it is more profitable. Agatha discusses the issue with an outside consultant, who recommends that the company focus on creating a strong culture with values that all employees accept and understand. On which control system do the top managers want to focus?