The first step in designing a management control system is
A) evaluating management's performance.
B) establishing organizational goals.
C) preparing financial statements.
D) distinguishing between profit centres and cost centres.

Question

Quizplus · Accepted Answer

The first step in designing a management control system is to establish organizational goals. This is because the control system should be aligned with the goals of the organization to ensure that they are achieved. Once the goals have been established, management can then develop appropriate strategies and tactics to achieve those goals, evaluate performance, and make necessary adjustments. Evaluating management's performance, preparing financial statements, and distinguishing between profit centres and cost centres are all important steps in the design and implementation of a management control system, but they come after the establishment of organizational goals.

The First Step in Designing a Management Control System Is