Fundamentals of Cost Accounting 3rd Edition by William N. Lanen, Shannon W. Anderson, Michael Maher

Exercise 19

Tone at the Top, Ethics

Once upon a time, a major television news group rigged a major U.S. automaker’s truck to explode upon impact with another object. The news group was trying to demonstrate that the automaker had placed the gas tanks on the truck in a dangerous location. Many of these trucks’ gas tanks had exploded when the trucks were involved in accidents. However, the trucks that the news group were using for their production did not explode on contact, apparently. So the news group provided the gas tanks with some assistance by adding explosive materials, thus making the trucks go up in flames on impact with another object. According to newspaper reports of this incident, the president of the television network stated that the problem was not so much that it happened but that the news group got caught.

Required

What tone did the television network executive set when he stated that the problem was not so much that it happened but that the news group got caught?

Step 1 of 2

Management control system

Management control system is needed to manage the complications arising out of decentralization like dysfunctional decision making. Owners of the organization use structure and procedures of management control system to influence the actions of its managers and other employees to ensure smooth implementation of organizational strategies. Management controls system comprises of three elements such as delegation fo decision making authorities, evaluation of performance and measurement systems and finally awarding compensation and rewards for performance.