Chapter 19
Managerial and Quality Control
True/False Questions
1.Organizational control is the systematic process of regulating organizational activities to make them consistent with the expectations in plans, targets, and standards of performance.
Answer: TrueLevel: 1Page: 708Type: F
2.Effectively controlling an organization requires information about product standards and actual products, as well as actions to correct any deviations from the standards.
Answer: FalseLevel: 2Page: 709Type: F
3.The three types of control are formally called feedforward, concurrent, and feedback.
Answer: TrueLevel: 1Page: 709Type: F
4.Feedforward control is sometimes called preliminary or preventive quality control.
Answer: TrueLevel: 1Page: 710Type: F
5.Concurrent control focuses on the organization's outputs.
Answer: FalseLevel: 2Page: 711Type: F
6.Feedback control focuses on the quantity of an end product or service.
Answer: FalseLevel: 2Page: 711Type: F
7.A standard for performance is included in an organization’s overall strategic plan to compare organizational activities against.
Answer: TrueLevel: 2Page: 712Type: F
8.To do nothing if performance is adequate or to take corrective action if performance is inadequate is the final step of the feedback control model.
Answer: True Level: 1 Page: 712 Type: F
9.Managers, in most companies, rely exclusively on quantitative measures
Answer: FalseLevel: 2Page: 712Type: F
10.Corrective action when performance is inadequate may be to simply adjust standards.
Answer: True Level: 2 Page: 713 Type: F
11.The fundamental unit of analysis for a budget control system is called a responsibility center.
Answer: TrueLevel: 1Page: 714Type: F
12.An expense budget lists forecasted and actual revenues of the organization.
Answer: FalseLevel: 1Page: 714Type: F
13.The level of funds flowing through the organization and the nature of cash disbursements is shown through the capital budget.
Answer: FalseLevel: 2Page: 715Type: F
14.A budget that plans and reports investments in major assets to be depreciated over several years is called a balance sheet budget.
Answer: FalseLevel: 2Page: 715Type: F
15.A process in which lower level managers anticipate their department's resource needs and pass them up to top management for approval is called bottom-up budgeting.
Answer: TrueLevel: 1Page: 715Type: F
16.The balance sheet shows the firm’s financial position with respect to expenses and credits at a specific point in time.
Answer: FalseLevel: 2Page: 716Type: F
17.Liabilities are the firm’s debts, both current and long-term.
Answer: TrueLevel: 1Page: 716Type: F
18.The income statement shows revenues coming into the organization from all sources and subtracts all expenses.
Answer: TrueLevel: 1Page: 716Type: F
19.Frequently calculated ratios typically pertain to activity, passivity, and profitability
Answer: FalseLevel: 2Page: 717Type: F
20.The company's ability to meet its current debt obligations and a measurement of the firm's margin of safety is shown by liquidity ratio.
Answer: TrueLevel: 2Page: 718Type: F
21.Inventory turnover is an activity ratio and measures how many times the inventory is turned over to meet the total sales figure.
Answer: TrueLevel: 2Page: 718Type: F
22.An activity ratio that is the percentage returned to investors on total assets is return on total assets (ROA).
Answer: FalseLevel: 1Page: 718Type: F
23.Technology and quality control departments are typically associated with bureaucratic control.
Answer: TrueLevel: 1Page: 720Type: F
24.Decentralized control is the use of cultural values, traditions, shared beliefs and trust to increase compliance with goals.
Answer: True Level: 2 Page: 721 Type: F
25.Decentralized control represents the absence of control because visible rules, supervision, and procedures are absent.
Answer: FalseLevel: 2Page: 721Type: F
26.A quality team is a group of six to twelve volunteer employees who meet regularly to discuss and solve problems affecting their common work activities.
Answer: False Level: 2 Page: 722 Type: F
27.The quality circle concept spread to the United States and Canada from Japan.
Answer: TrueLevel: 2Page: 722Type: F
28.The age-old practice of allowing the artisan to sign his name to the finished product is called benchmarking.
Answer: False Level: 2 Page: 723 Type: F
29.The continuous process of measuring products, services, and practices against the toughest competitors or the industry leaders is called outsourcing.
Answer: False Level: 1 Page: 723 Type: F
30.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.
Answer: False Level: 2 Page: 723 Type: F
31.The implementation of a large number of small, incremental improvements in all areas of the organization and an ongoing basis is called continuous improvement.
Answer: TrueLevel: 1Page: 724Type: F
32.Very high expectations from senior management and a desire to share authority by middle managers are two of the positive factors leading to success of TQM.
Answer: False Level: 2 Page: 725 Type: F
33.Economic value added system identifies various activities needed to provide a product and determines the cost of each of those activities.
Answer: FalseLevel: 1Page: 727Type: F
34.Market value-added systems measure the stock market’s estimate of the value of the company’s past and projected capital investment projects.
Answer: TrueLevel: 2Page: 727Type: F
35.Open-book management ties employee rewards to the company's overall success.
Answer: TrueLevel: 2Page: 728Type: F
36.A balanced scorecard contains four major perspectives: customer service, external business processes, financial performances, and the organization’s capacity for learning and growth.
Answer: FalseLevel: 2Page: 730Type: F
Multiple Choice Questions
1.______is the systematic process through which managers regulate organizational activities.
a.Strategic planning
b.Organizational control
c.Organizational goal setting
d.Strategic regulation
e.Organizational leading
Answer: b Level: 1 Page: 708 Type: F
2.The three types of control are
- feedforward, concurrent, and feedback.
- performance, quality, and quantity.
- quality, performance, and feedback.
- feedforward, quality, and feedback.
- feedward, concurrent, and quality.
Answer: aLevel: 2Page: 709Type: F
3.______is the first step in the control system.
a.Establishing strategic objectives
b.Establishing standards of performance
c.Taking corrective action
d.Comparing performance to standard
e.Measuring previous performance
Answer: bLevel: 1Page: 709Type: F
4.Preventive quality control is also known as
a.concurrent control.
b.feedback control.
c.output control.
d.preliminary control.
e.subjective control.
Answer: dLevel: 2Page: 710Type: F
5.______controls deals with active anticipation of problems and their timely solution.
a.Feedforward control
b.Concurrent control
c.Feedback control
d.Post-action control
e.Output control
Answer: aLevel: 2Page 710Type: F
6.All of the following are types of control EXCEPT
a.preliminary control.
b.subjective control.
c.post-action control.
d.concurrent control.
e.all of the above are types of control described in the text
Answer: bLevel: 1Page: 710-711Type: F
7. control focuses on human, material, and/or financial resources.
a.Concurrent
b.Feedback
c.Feedforward
d.Organizational
e.All of the above
Answer: c Level: 1 Page: 710 Type: F
8.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 the above
Answer: d Level: 2 Page: 710 Type: A
9.______control monitors ongoing employee activities.
a.Concurrent
b.Feedback
c.Feedforward
d.Strategic
e.All of the above
Answer: a Level: 1 Page: 711 Type: F
10.Direct supervision is most effective for which type of control?
a.Feedforward
b.Concurrent
c.Feedback
d.Preliminary
e.Post-action
Answer: bLevel: 3Page: 711Type: F
11.When Flowers Unlimited uses hand-held computers to monitor daily sales activity, it is an example of a
a.feedback control.
b.feedforward control.
c.concurrent control.
d.technological control.
e.hand-held control.
Answer: c Level: 2 Page: 711 Type: A
12.Xavier likes to roam through his department to make sure everyone is staying on task. This is an example of a
a.feedback control.
b.concurrent control.
c.feedforward control.
d.behavioral control.
e.non-trusting control.
Answer: b Level: 2 Page: 711 Type: A
13.Feedback control is sometimes called
a.output control.
b.concurrent control.
c.preventive quality control.
d.preliminary control.
e.precaution control.
Answer: aLevel: 2Page: 711Type: F
14. control focuses on the organization's outputs.
a.Feedback
b.Output
c.Post-action
d.All of these
e.a and c only
Answer: d Level: 1 Page: 711 Type: F
15.All of the following are key steps of setting up feedback control systems EXCEPT
- comparing performance to standards.
- establishing standards.
- getting employee opinions.
- measuring performance.
- making necessary corrections.
Answer: cLevel: 2Page: 712Type: F
16.Remote Control 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.
Answer: b Level: 2 Page: 712 Type: A
17.Marie is a manager at Chris’s Candies. On a regular basis Marie and her subordinates set individual and organizational goals. This process is similar to which component of the control model?
a.Taking corrective action when necessary
b.An information system
c.Establishing performance standards
d.Engaging strategic analysis
e.None of the above
Answer: c Level: 2 Page: 712 Type: A
18.After establishing standards of performance, according to the control model, 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.
Answer: cLevel: 1Page: 712-713Type: F
19.Michelle recently discovered that the reject rate for her department has exceeded the standard for performance in this area. What should Michelle do to exercise effective control?
a.She should order more training for her workforce.
b.She should contact the maintenance department and have them come fix her machinery.
c.She should suspend the poorer workers in her department.
d.She should investigate and discover the cause of the problem.
e.None of these
Answer: d Level: 2 Page: 713 Type: A
20.James, a manager at CompuTech, receives quarterly reports, which tracks his department's production statistics. However, these reports lack key information regarding reject rates. Which of the following components of the control model need improvement?
a.Measuring actual performance
b.The planning and setting of performance standards
c.SWOT analysis
d.The ability to take corrective action when necessary
e.All of the above
Answer: a Level: 2 Page: 712-713 Type: A
21.In most organizations, managers must rely on quantitative measures and in order to exert effective control.
a.numerical indicators
b.profits
c.their own judgment
d.goal achievement
e.employees' words
Answer: cLevel: 2Page: 713Type: F
22.Arbor Tree Corporation has a detailed set of organizational goals and management information system that delivers timely and accurate information. Arbor Tree still has control problems, however, because its managers refuse to act on the information they receive. Arbor Tree’s control process has flaws in which of the following areas?
a.Its performance standards
b.Its management information systems
c.Its ability to take corrective action when necessary
d.Its measurement systems
e.None of the above
Answer: c Level: 2 Page: 713 Type: A
23.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 employees for excessive absenteeism
d.All of the above would be good examples of taking corrective action.
e.None of these
Answer: d Level: 3 Page: 713 Type: A
24.Kurt’s work group consistently exceeds the goals the members set for themselves some months ago. In an attempt to better motivate the group, Kurt thought it would be a good idea to set new goals. This is an example of Kurt exercising control by
a.comparing performance to standards.
b.developing adequate measures of performance.
c.taking corrective action.
d.all of these
e.a and b only
Answer: c Level: 2 Page: 713 Type: A
25.Any organizational department or unit under the supervision of a single person who is responsible for its activity is called a(n)
- independent center.
- responsibility center.
- analysis center.
- control center.
- budgeting center.
Answer: bLevel: 2Page: 714Type: F
26.A(n) ______includes anticipated and actual expenses for a responsibility center.
- revenue budget
- cash budget
- capital budget
- expense budget
- operating budget
Answer: dLevel: 2Page: 714Type: F
27.______is a financial budget that estimates cash flows on a daily basis or weekly basis to ensure that the company can meet its obligations.
a.Capital expenditure budget
b.Balance sheet budget
c.Cash budget
d.Revenue budget
e.Profit budget
Answer: cLevel: 1Page: 715Type: F
28.Melissa has been assigned to work on the development of a budget that plans future investments in major assets such as buildings and heavy machinery. Melissa is working on a(n)
a.cash budget.
b.capital budget.
c.revenue budget.
d.operating budget.
e.expense budget.
Answer: bLevel: 2Page: 715Type: A
29.The plans future investments in major assets to be depreciated over several years.
a.capital budget
b.balance sheet budget
c.cash budget
d.revenue budget
e.profit budget
Answer: aLevel: 1Page: 715Type: F
30.Joey is a department manager at IronRods.com. His sole role in the budget process is to implement the budget that is developed for him. This is an example of
a.strategic budgeting.
b.operational budgeting.
c.top-down budgeting.
d.management by objectives.
e.bottom-up budgeting.
Answer: cLevel: 2Page: 715Type: A
31.Juanita is an area manager at Home Theater, Inc. She anticipates her area's needs and formulates a proposed budget every quarter. She then sends this proposal to her manager. This is an example of
a.top-down budgeting.
b.strategic budgeting.
c.revenue budgeting.
d.bottom-up budgeting.
e.none of these.
Answer: dLevel: 2Page: 715Type: A
32.The firm’s financial position with respect to assets and liabilities at a specific point in time is shown by its
- activity ratio.
- profitability ratio.
- income statement.
- liquidity ratio.
- balance sheet.
Answer: eLevel: 2Page: 716Type: F
33.An advantage of the bottom-up budgeting process is
a.its emphasis on bureaucratic control.
b.lower managers are more involved.
c.top managers control the information flow.
d.top managers are often not committed to achieving budget targets.
e.all of these.
Answer: bLevel: 2Page: 716Type: F
34.The ability of the organization to meet its current debt obligations is indicated by a(n) ______ratio.
a.activity
b.liquidity
c.profitability
d.conversion
e.growth
Answer: bLevel: 2Page: 718Type: F
35.______is a ratio that measures the firm's internal performance with respect to key activities defined by management.
a.A liquidity ratio
b.An activity ratio
c.Return on total assets
d.A current ratio
e.Profit margin on sales
Answer: bLevel: 1Page: 718Type: F
36.The is purchase orders divided by customer inquiries.
a.current ratio
b.inventory turnover ratio
c.conversion ratio
d.profit margin on sales
e.none of these
Answer: cLevel: 2Page: 718Type: F
37.Jena is a production manager at Scooby Snacks. She is concerned that too much money is being wasted on inventory that is sitting in the warehouse too long. She should calculate a(n)
a.current ratio.
b.inventory turnover ratio.
c.conversion ratio.
d.profitability ratio.
e.leverage ratio.
answer: bLevel: 2Page: 718Type: A
38.Net income divided by sales is the correct formula for calculating
a.return on total assets.
b.a current ratio.
c.a liquidity ratio.
d.profit margin on sales.
e.a corporate evaluation.
Answer: dLevel: 1Page: 718Type: F
39.______refers to funding activities with borrowed money.
- ROA
- Leverage
- Liquidity
- Profitability
- Activity
Answer: bLevel: 2Page: 720Type: F
40.Bureaucratic control is most consistent with
a.bottom-up budgeting.
b.top-down budgeting.
c.operational budgeting.
d.revenue budgeting.
e.horizontal budgeting.
Answer: bLevel: 2Page: 720Type: F
41.The basic philosophy of control at Calendar Days, Inc. is based on the policies found in the employee handbook, as well as a strict hierarchy of authority. This philosophy is consistent with
a.clan control.
b.bottom-up control.
c.bureaucratic control.
d.culture control.
e.decentralized control.
Answer: cLevel: 2Page: 720Type: A
42.______control is implemented through the organization's administrative system
a.Clan
b.Bureaucratic
c.Organizational
d.Administrative
e.Decentralized
Answer: b Level: 2 Page: 720 Type: F
43.The control "system" at Quality Corporation is based on the culture of the organization and norms that develop in the individual work teams. This is an example of
a.bureaucratic control.
b.decentralized control.
c.organizational control.
d.feedback control.
e.none of these.
Answer: b Level: 2 Page: 721 Type: A
44.Decentralized control is most consistent with which of the following budget processes?
a.Bottom-up budgeting
b.Top-down budgeting
c.Strategic budgeting
d.Cost budgeting
e.None of these
Answer: aLevel: 2Page: 721Type: F
45.Which of the following elements is not typically associated with bureaucratic control?
a.Management control systems
b.Hierarchy of authority
c.Technology
d.Peer group
e.The quality control department
Answer: dLevel: 2Page: 721Type: F
46.Which of the following elements is usually associated with bureaucratic control?
a.Technology
b.Peer groups
c.Corporate culture
d.Self-control
e.All of these
Answer: aLevel: 2Page: 721Type: F
47.Minimum standards, little direction, and trust are all characteristics of ______control.
a.feedforward
b.bureaucratic
c.concurrent
d.decentralized
e.centralized
Answer: dLevel: 2Page: 721Type: F
48.Decentralized control is usually implemented in all of the following areas except
a.self-control.
b.peer group.
c.corporate culture.
d.employee selection and socialization.
e.the quality control department.
Answer: eLevel: 2Page: 721Type: F
49.It is to assume that decentralized control is .
a.accurate, weak
b.acceptable, weak
c.a mistake, weak
d.useless, strong
e.useful, useless
Answer: cLevel: 3Page: 721Type: A
50.Total quality management
a.is based on the ideas of Frederick Taylor.
b.gives managers total responsibility for achieving quality goals.
c.gives all employees the responsibility for achieving quality goals.
d.was first successfully implemented in the United States.
e.all of these.
Answer: c Level: 2 Page: 722 Type: F
51.Total quality management is most consistent with
a.bureaucratic control.
b.systematic control.
c.decentralized control.
d.feedforward control.
e.centralized control.
Answer: c Level: 2 Page: 722 Type: F
52. is a philosophy of organization-wide commitment to continuous improvement, focusing on teamwork, customer satisfaction, and lowering costs.
a.Engineering
b.Total quality management
c.Outsourcing
d.Culture
e.Diversity
Answer: bLevel: 1Page: 722Type: F
53.With TQM, employees must be trained to think in terms of and not .
a.detection, prevention
b.prevention, detection
c.measurement, prevention
d.innovation, improvement
e.none of these
Answer: bLevel: 3Page: 722Type: F
54.A quality circle is a group of volunteer employees.
a.2 to 4
b.6 to 12
c.10 to 20
d.15 to 25
e.30 to 50
Answer: bLevel: 1Page: 722Type: F
55.A group of 6 to 12 volunteer employees who meet regularly to discuss and solve problems affecting their common work activities is a
a.feedforward control group.
b.work team.
c.quality circle.
d.committee.
e.problem team.
Answer: c Level: 1 Page: 722 Type: F
56.Quality circles are based on the assumption(s) that
a.the people who do the job know it better than anyone else.
b.quality can be increased by increasing the size of the organization.
c.quality can be increased by talking more about it.
d.the more employees talk, the more satisfied they will be.
e.all of these.
Answer: a Level: 2 Page: 723 Type: F
57.Marilyn belongs to an informal group at work that meets twice a month to discuss common issues and problems in the workplace. Recently, this group has been focusing on ways to improve safety in the workplace. This group is an example of
a.a safety group.
b.a quality circle.
c.an ad-hoc committee.
d.a problem team.
e.none of these.
Answer: b Level: 2 Page: 723 Type: A
58.______is the key to successful benchmarking.