14 Samson Fo M 5e EV PDF

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CHAPTER 14 – Managerial and quality control TRUE/FALSE 1. The systematic process of making activities consistent with standards and goals is called control. ANS: T TOP:

PTS: 1 Control

DIF: Easy

NAT: AACSB Analytic

2. The systematic process which manages regulate organisation activities to make consistent with expectations established implants, targets and standards of performance are known as organisational controls. ANS: T TOP:

PTS: 1 Control

DIF: Easy

NAT: AACSB Analytic

3. Feed-forward control is sometimes called preliminary or preventive quality control. ANS: T TOP:

PTS: 1 DIF: Easy Feedforward control

NAT: AACSB Analytic

4. Concurrent control focuses on the organisation’s outputs. ANS: F TOP:

PTS: 1 Concurrent control

DIF: Moderate

NAT: AACSB Analytic

5. The final step of the feedback control model is either to do nothing if performance is adequate or to take corrective action if performance is inadequate. ANS: T TOP:

PTS: 1 Feedback control

DIF: Easy

NAT: AACSB Analytic

6. An example of a concurrent control would be to analyse sales per employee per day. ANS: T TOP:

PTS: 1 Feedback control

DIF: Moderate

NAT: AACSB Analytic

7. An example of a feedforward control would be to survey customers regarding product quality. ANS: F TOP:

PTS: 1 Feedback control

DIF: Moderate

NAT: AACSB Analytic

8. An example of a feedback control would be to hire only college graduates because of their previous success in your organisation. ANS: F TOP:

PTS: 1 DIF: Moderate Feed-forward control

NAT: AACSB Analytic

9. According to the feedback control model, feedback can be used to either establish strategic goals, or measure actual performance. ANS: F

PTS: 1

DIF: Moderate

NAT: AACSB Analytic

TOP:

Feedback control model

10. Corrective action when performance is inadequate may be to simply adjust standards. ANS: T TOP:

PTS: 1 Feedback control

DIF: Moderate

NAT: AACSB Analytic

11. A liquidity ratio shows the company’s ability to meet its current debt obligations and is a measurement of the organisation’s margin of safety. ANS: T TOP:

PTS: 1 Financial controls

DIF: Moderate

NAT: AACSB Analytic

12. The fundamental unit of analysis for a budget control system is called a responsibility centre. ANS: T TOP:

PTS: 1 Financial controls

DIF: Easy

NAT: AACSB Analytic

13. An expense budget lists forecasted and actual revenues of the organisation. ANS: F TOP:

PTS: 1 Financial controls

DIF: Easy

NAT: AACSB Analytic

14. The revenue budget shows the level of funds flowing through the organisation and the nature of cash disbursements. ANS: F TOP:

PTS: 1 Financial controls

DIF: Moderate

NAT: AACSB Analytic

15. A budget that plans and reports investments in major assets to be depreciated over several years is called a balance sheet budget. ANS: F TOP:

PTS: 1 Financial controls

DIF: Moderate

NAT: AACSB Analytic

16. A financial statement that summarises the organisation’s financial performance for a given time intervals is known as a balance sheet. ANS: F TOP:

PTS: 1 Financial controls

DIF: Moderate

NAT: AACSB Analytic

17. A ratio that measures the organisation's internal performance with respect to key activities defined by management is known as the activity ratio. ANS: T TOP:

PTS: 1 Financial controls

DIF: Moderate

NAT: AACSB Analytic

18. The use of cultural values, traditions, shared beliefs and trust to increase compliance with goals is called decentralised control. ANS: T TOP:

PTS: 1 DIF: Moderate Decentralised control

NAT: AACSB Analytic

19. Decentralised control represents the absence of control because visible rules, supervision and procedures are absent. ANS: F TOP:

PTS: 1 DIF: Moderate Hierarchical control

NAT: AACSB Analytic

20. Total quality management engages the participation of all employees and has a defect target of 1.0 per cent or less. ANS: F TOP:

PTS: 1 TQM

DIF: Moderate

NAT: AACSB Analytic

21. A quality circle is a group of six to 12 onto employees who meet regularly to discuss and solve problems affecting the quality of their work. ANS: T TOP:

PTS: 1 Quality Circle

DIF: Easy

NAT: AACSB Analytic

22. Benchmarking is a continuous process of measuring products, services and practices against major competitors or industry leaders. ANS: T TOP:

PTS: 1 TQM

DIF: Easy

NAT: AACSB Analytic

23. Continuous improvement is the implementation of a large number of small, incremental improvements in all areas of the organisation on an ongoing basis. ANS: T TOP:

PTS: 1 DIF: Easy Continuous improvement

NAT: AACSB Analytic

24. A quality controlled approach that emphasises a relentless pursuit of high quality and lower costs has been termed Six Sigma. ANS: T TOP:

PTS: 1 Six Sigma

DIF: Easy

NAT: AACSB Analytic

25. Reduced cycle time is one of the common techniques of TQM, and refers to the ability of TQM to shorten the time required to receive inventory after placing an order for it. ANS: F TOP:

PTS: 1 Reduced cycle time

DIF: Moderate

NAT: AACSB Analytic

26. The ISO9000 standards are internationally recognised as the benchmark for quality production. ANS: T TOP:

PTS: 1 ISO 9000

DIF: Moderate

NAT: AACSB Analytic

27. Open-book management ties employee rewards to the company’s overall success. ANS: T TOP:

PTS: 1 DIF: Moderate Open-book management

NAT: AACSB Analytic

28. Benchmarking refers to the process of identifying the minimum standards required by an organisation in order for it to compete against its most efficient and effective competitors.

ANS: T TOP:

PTS: 1 Benchmarking

DIF: Moderate

NAT: AACSB Analytic

29. The balanced scorecard is a comprehensive management control system that balances traditional financial measures with operational measures relating to a company’s critical success factors. ANS: T TOP:

PTS: 1 Balanced scorecard

DIF: Easy

NAT: AACSB Analytic

30. Decentralised control is associated with rewarding individual performance standards, while hierarchical control is associated with rewarding individuals and teams and an emphasis on equity across employees. ANS: F TOP:

PTS: 1 DIF: Moderate Decentralised control

NAT: AACSB Analytic

31. The implementation of total quality management is similar to that of other centralised control methods. ANS: F TOP:

PTS: 1 TQM

DIF: Moderate

NAT: AACSB Analytic

32. Hierarchical control involves monitoring and influencing employee behaviour through extensive use of rules, policies, hierarchy of authority, written documentation, reward systems and other formal mechanisms. ANS: T TOP:

PTS: 1 DIF: Easy Hierarchical control

NAT: AACSB Analytic

33. An organisation-wide commitment to infusing quality into every organisational activity is known as a quality circle. ANS: F TOP:

PTS: 1 Six Sigma

DIF: Easy

NAT: AACSB Analytic

34. Activity-based costing is the control system that identifies various activities needed to provide a product and determines the cost of those activities. ANS: T TOP:

PTS: 1 DIF: Easy Activity-based costing

NAT: AACSB Analytic

35. The system of reviewing the operations within an organisation and aligning them with shareholder interests is referred to as corporate governance. ANS: T TOP:

PTS: 1 DIF: Easy Corporate governance

NAT: AACSB Analytic

36. A control system that produces a report concerning the organisation’s impact upon its environment as well as its profitability is known as a balanced scorecard. ANS: T TOP:

PTS: 1 Balanced scorecard

DIF: Moderate

NAT: AACSB Analytic

37.

A zero-based budgeting system is a process that requires a complete justification for every item in the budget. ANS: T TOP:

PTS: 1 Financial controls

DIF: Easy

NAT: AACSB Analytic

38. The basic assumption of hierarchical control is that people work best when they are fully committed to the organisation. ANS: F TOP:

PTS: 1 DIF: Moderate Decentralise control

NAT: AACSB Analytic

39. When an organisation shares its financial information and results with all employees in the organisation it is said to have an open-book management style approach to control. ANS: T TOP:

PTS: 1 DIF: Moderate Open-book management

NAT: AACSB Analytic

40. The implementation of a large number of small, incremental improvements in all areas of an organisation on an ongoing basis is known as quality partnering. ANS: F TOP:

PTS: 1 DIF: Moderate Continuous improvement

NAT: AACSB Analytic

MULTIPLE CHOICE 1. The systematic process through which managers regulate organisational activities is known as: A. strategic planning B. strategic regulation C. organisational goal setting D. organisational control E. organisational leading. ANS: D TOP:

PTS: 1 DIF: Easy Organisational control

NAT: AACSB Analytic

2. According to the feedback control model, after establishing standards of performance, the manager should: A. compare performance to standards B. get the standards approved by the supervisors and subordinates C. measure actual performance D. take corrective action E. provide feedback. ANS: C TOP:

PTS: 1 DIF: Easy Feedback control model

NAT: AACSB Analytic

3. Helena is a manager at Oi-Oi-Oi! Corporation. On a regular basis she and her subordinates set individual and organisational goals. This process is similar to which component of the control model? A. Establishing performance standards B. An information system C. Taking corrective action when necessary D. Engaging strategic analysis E. None of these choices. ANS: A TOP:

PTS: 1 DIF: Moderate Feedback control model

NAT: AACSB Analytic

4. The first step in the feedback control model is to: A. establish strategic objectives B. measure previous performance. C. take corrective action D. compare performance to standard E. establish standards of performance . ANS: E TOP:

PTS: 1 DIF: Easy Feedback control model

NAT: AACSB Analytic

5. Clancy-of-the-Overflow Corporation has a detailed set of organisational goals and a management information system that delivers timely and accurate information. However, Clancy-of-the-Overflow still has control problems because its managers refuse to act on the information they receive. Clancyof-the-Overflow’s control process has flaws in which of the following areas? A. Performance standards B. Management information systems C. Ability to take corrective action when necessary D. Measurement systems E. None of these choices. ANS: C

PTS: 1

DIF: Moderate

NAT: AACSB Analytic

TOP:

Feedback control model

6. Which of the following is an example of a feedforward control? A. A manager observing a new employee to see how he/she is performing. B. The performance appraisal interview. C. An examination of an employee’s work records. D. Criteria used in the hiring process. E. None of these choices. ANS: D TOP:

PTS: 1 DIF: Moderate Feedforward control

NAT: AACSB Analytic

7. Which of the following types of control monitors ongoing employee activities? A. Feedforward B. Feedback C. Concurrent D. Strategic E. All of these choices. ANS: C TOP:

PTS: 1 Concurrent control

DIF: Easy

NAT: AACSB Analytic

8. Wallaby TV Corporation sends a post-purchase questionnaire to all consumers who buy their products. They are interested in gathering data on product quality, customer service orientation and customer satisfaction. This is an example of: A. a concurrent control B. a feedback control C. a feedforward control D. preliminary control E. preventive control. ANS: B TOP:

PTS: 1 Feedback control

DIF: Moderate

NAT: AACSB Analytic

9. Bianca recently discovered that the reject rate for her department has exceeded the standard for performance in this area. What should Bianca do to exercise effective control? A. She should order more training for her workforce. B. She should contact the maintenance department and have them fix her machinery. C. She should investigate and discover the cause of the problem. D. She should suspend the poorer workers in her department. E. None of these choices. ANS: C TOP:

PTS: 1 Feedback control

DIF: Moderate

NAT: AACSB Analytic

10. Your department has absenteeism standards, a way to measure absenteeism, and based on your investigation, you have concluded that your department has an excessive absenteeism rate. What should your next step be? A. Set new absenteeism standards. B. Develop new measures of absenteeism. C. Terminate three offending employees for excessive absenteeism. D. All of these choices would be good examples of taking corrective action. E. None of these choices. ANS: D

PTS: 1

DIF: Difficult

NAT: AACSB Analytic

TOP:

Feedback control

11. Associate Professor Knowsmore bought a new laptop for his upcoming conference in Japan. His Head of Department and the department’s financial manager alerted Knowsmore that this purchase fell well outside the reasonable range for his expenditure that quarter. What measure of actual performance is being used in this instance? A. Exception reporting B. Sales revenue C. Corrective action D. Financial accounting E. None of these choices. ANS: A TOP:

PTS: 1 Financial control

DIF: Moderate

NAT: AACSB Analytic

12. A pre-employment health check regime is an example of: A. a concurrent control B. a feedback control C. a feedforward control D. preliminary control E. preventive control. ANS: C TOP:

PTS: 1 Feedback control

DIF: Moderate

NAT: AACSB Analytic

13. The inspection of raw materials and the analysis of customer surveys are not examples of: A. preliminary control B. a feedback control C. a feedforward control D. a concurrent control E. preventive control. ANS: D TOP:

PTS: 1 Feedback control

DIF: Moderate

NAT: AACSB Analytic

14. A financial statement that shows the organisation’s financial position with respect to assets and liabilities at a specific point in time is called a: A. capital expenditure budget B. balance sheet C. cash budget D. revenue budget E. profit budget. ANS: B TOP:

PTS: 1 Financial control

DIF: Easy

NAT: AACSB Analytic

15. A financial statement that summarises the organisation’s financial performance at a given time interval is called a: A. capital expenditure budget B. balance sheet C. cash budget D. profit budget E. income statement. ANS: E

PTS: 1

DIF: Easy

NAT: AACSB Analytic

TOP:

Financial control

16. A(n) __________ ratio indicates the ability of the organisation to meet its current debt obligations. A. activity B. liquidity C. profitability D. conversion E. growth ANS: B TOP:

PTS: 1 Financial control

DIF: Moderate

NAT: AACSB Analytic

17. Net income divided by sales is the correct formula for calculating: A. profit margin on sale B. a current ratio C. a liquidity ratio D. return on total assets s E. a corporate evaluation. ANS: A TOP:

PTS: 1 Financial control

DIF: Moderate

NAT: AACSB Analytic

18. The process of setting specific financial plans, then managing them in real time to achieve those plans is called: A. a capital expenditure budget B. a balance sheet budget C. a cash budget D. a revenue budget E. a budgetary control. ANS: C TOP:

PTS: 1 Financial control

DIF: Moderate

NAT: AACSB Analytic

19. A budget that identifies the forecasted and actual revenues of the organisation is called a: A. capital expenditure budget B. revenue budget C. cash budget D. balance sheet budget E. profit budget. ANS: B TOP:

PTS: 1 Financial control

DIF: Moderate

NAT: AACSB Analytic

20. A budget that outlines the anticipated actual expenses for responsibility centre is called a(n): A. capital expenditure budget B. balance sheet budget C. cash budget D. revenue budget E. expense budget. ANS: E TOP:

PTS: 1 Financial control

DIF: Moderate

NAT: AACSB Analytic

21. A financial budget that estimates cash flows on a daily or weekly basis to ensure that the company can meet its obligations is called a:

A. B. C. D. E.

capital expenditure budget cash budget balance sheet budget revenue budget profit budget.

ANS: B TOP:

PTS: 1 Financial control

DIF: Moderate

NAT: AACSB Analytic

22. Sam has been assigned to work on the development of a budget that plans future investments in major assets such as buildings and heavy machinery. Sam is working on a(n): A. cash budget B. capital budget C. revenue budget D. operating budget E. expense budget. ANS: B TOP:

PTS: 1 Financial control

DIF: Moderate

NAT: AACSB Analytic

23. Hierarchical control is most consistent with which of the following budget processes? A. Bottom-up budgeting B. Revenue budgeting C. Operational budgeting D. Top-down budgeting E. Horizontal budgeting ANS: D TOP:

PTS: 1 DIF: Moderate Top-down budgeting.

NAT: AACSB Analytic

24. A budgeting process in which middle and lower level managers set their budget targets in accord with overall organisational revenues and expenditures as specified by top management is an example of: A. strategic budgeting B. operational budgeting C. top-down budgeting D. management by objectives E. bottom-up budgeting. ANS: E TOP:

PTS: 1 DIF: Moderate Bottom-up budgeting

NAT: AACSB Analytic

25. The use of rules, policies, reward systems and other formal devices to reference employee behaviour and assess performance is known as: A. hierarchical control B. bottom-up control C. hierarchical control D. culture control E. decentralised control. ANS: A TOP:

PTS: 1 DIF: Moderate Hierarchical control

NAT: AACSB Analytic

26. Large organisations such as Rio Tinto, WMC and the Commonwealth Bank assign financial analysts to work exclusively on developing __________ and monitoring whether actual __________ is going according to plan. A. finan...