Deck 18: Managing Quality and Performance

Question 1

A balance sheet budget is a budget that plans and reports investments in major assets to be depreciated over several years.

Answer 1

False

Question 2

Feedback control focuses on the quantity of an end product or service.

Answer 2

False

Question 3

Customer service, external business processes, financial performances, and the organization's capacity for learning and growth are the four major perspectives of the balanced scorecard.

Answer 3

False

Question 4

The balance sheet shows the firm's financial position with respect to expenses and credits at a specific point in time.

Question 5

Managers focus on the various elements of the scorecard to set targets, evaluate performance, and guide discussion about what further actions need to be taken.

Question 6

The final step of the feedback control model is to do nothing if performance is adequate or to take corrective action if performance is inadequate.

Question 7

The level of funds flowing through the organization and the nature of cash disbursements is shown through the capital budget.

Question 8

The fourth step in the control process is comparing actual activities to performance standards.

Question 9

Effective management control involves subjective judgment and employee discussions, as well as objective analysis of performance data.

Question 10

A process in which lower level managers anticipate their department's resource needs and pass them to top management for approval is called top-down budgeting.

Question 11

An expense budget lists forecasted and actual revenues of the organization.

Question 12

Liabilities are the firm's debts, both current and long-term.

Question 13

In most companies, managers rely exclusively on quantitative measures to measure actual performance.

Question 14

A standard for performance is included in an organization's overall strategic plan to compare organizational activities against.

Question 15

A responsibility center is the fundamental unit of analysis for a budget control system.

Question 16

It is important to create a written Internet policy for an "acceptable use policy" for workplace Internet use.

Question 17

The feedback control model is a comprehensive management control system that balances traditional financial measures with measures of customer service, internal business processes, and the organization's capacity for learning and growth.

Question 18

Bottom-up budgeting is a process in which lower level managers anticipate their department's resource needs and pass them up to top management for approval.

Question 19

Effectively controlling an organization requires information about product standards and actual products, as well as actions to correct any deviations from the standards.

Question 20

The systematic process of regulating organizational activities to make them consistent with the expectations in plans, targets, and standards of performance refers to organizational control.

Question 21

The liquidity ratio shows the company's ability to meet its current debt obligations and a measurement of the firm's margin of safety.

Question 22

Open-book management ties employee rewards to the company's overall success.

Question 23

The use of cultural values, traditions, shared beliefs and trust to increase compliance with goals refers to decentralized control.

Question 24

The goal of open-book management is to get every employee thinking and acting like a business owner.

Question 25

Frequently calculated ratios typically pertain to activity, passivity, and profitability.

Question 26

Closed-book management helps employees appreciate why efficiency is important to the organization's success as well as their own.

Question 27

Benchmarking is the age-old practice of allowing the artisan to sign his name to the finished product.

Question 28

The return on total assets (ROA) is an activity ratio that is the percentage returned to investors on total assets.

Question 29

An organization-wide commitment to infusing quality into every activity through continuous improvement defines six sigma.

Question 30

Under hierarchical control, employees are actively engaged and committed to their work.

Question 31

Finland has the highest 2007-2008 opacity score.

Question 32

The implementation of total quality management involves the use of many techniques such as quality circles, benchmarking, Six Sigma principles, reduced cycle time, and continuous improvement.

Question 33

Outsourcing is the continuous process of measuring products, services, and practices against the toughest competitors or the industry leaders.

Question 34

The income statement shows revenues coming into the organization from all sources and subtracts all expenses.

Question 35

An activity ratio that measures how many times the inventory is turned over to meet the total sales figure is called the inventory turnover.

Question 36

Six Sigma is most beneficial when employees have challenging jobs.

Question 37

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.

Question 38

A group of six to twelve volunteer employees who meet regularly to discuss and solve problems affecting their common work activities refers to a quality team.

Question 39

Management By Walking Around is often used to control the flow and pace of work or to monitor employees.

Question 40

Continuous improvement is the implementation of a large number of small, incremental improvements in all areas of the organization and an ongoing basis.

Question 41

All well-designed control systems involve the use of ____ to determine whether performance meets established standards.

A) opinions
B) advice
C) consultants
D) benchmarks
E) feedback

Question 42

Market value-added systems measure the stock market's estimate of the value of the company's past and projected capital investment projects.

Question 43

All of the following are major perspectives of the Balanced Scorecard EXCEPT:

A) Competitors
B) Customers
C) Learning and growth
D) Financial
E) Internal business processes

Question 44

Kendra is a manager at George's Goodies. On a regular basis Kendra 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 these

Question 45

ABC is a control system that identifies the various activities needed to provide a product and allocates costs accordingly.

Question 46

The system of governing an organization so that the interests of corporate owners are protected refers to corporate governance.

Question 47

CyberChasers 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.

Question 48

The certification based on a set of international standards for quality management, setting uniform guidelines for processes to ensure that products conform to customer requirements is the ISO certification.

Question 49

Zachary, a manager at ExecuComp, 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 these

Question 50

Which of the following is a comprehensive management control system that balances traditional financial measures with operational measures relating to a company's critical success factors?

A) Economic value-added system
B) Activity-based costing system
C) Market value-added system
D) Balanced scorecard
E) Open-book management system

Question 51

According to the 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.

Question 52

Which of the following 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

Question 53

According to MANAGER'S SHOPTALK in Chapter 18, guidelines for creating an effective but fair "acceptable use policy" for workplace Internet use includes all of the following EXCEPT:

A) make sure employees understand that they have no legal right to privacy in the workplace
B) create a written Internet policy
C) describe the disciplinary process
D) review the policy at regular intervals
E) all of these are included in the guidelines

Question 54

What is the first step in the feedback control system?

A) Establishing strategic objectives
B) Establishing standards of performance
C) Taking corrective action
D) Comparing performance to standard
E) Measuring previous performance

Question 55

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.

Question 56

____ indicators focus on production and operating statistics.

A) Financial performance
B) Business process
C) Critical success
D) Potential for learning and growth
E) Performance measurement

Question 57

All of the following are key steps of setting up feedback control systems EXCEPT

A) comparing performance to standards.
B) establishing standards.
C) getting employee opinions.
D) measuring performance.
E) making necessary corrections.

Question 58

One area in which many managers are implementing stronger controls is

A) employee use of e-mail and Internet.
B) employee breaks.
C) office socialization.
D) employee conflict
E) promptness.

Question 59

Tiffany recently discovered that the reject rate for her department has exceeded the standard for performance in this area. What should Tiffany 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

Question 60

Economic value added system identifies various activities needed to provide a product and determines the cost of each of those activities.

Question 61

Mistletoe Corporation has a detailed set of organizational goals and management information system that delivers timely and accurate information. Mistletoe still has control problems, however, because its managers refuse to act on the information they receive. Mistletoe'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 these

Question 62

Brad is a department manager at Home Theater, Inc. 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.

Question 63

Kyle's work group consistently exceeds the goals the members set for themselves some months ago. In an attempt to better motivate the group, Kyle thought it would be a good idea to set new goals. This is an example of Kyle exercising control by

A) comparing performance to standards.
B) developing adequate measures of performance.
C) taking corrective action.
D) all of these
E) comparing performance to standards and developing adequate measures of performance only.

Question 64

Which of these 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

Question 65

The firm's financial position with respect to assets and liabilities at a specific point in time is shown by its

A) activity ratio.
B) profitability ratio.
C) income statement.
D) liquidity ratio.
E) balance sheet.

Question 66

The conversion ratio is considered to be a(n)

A) activity ratio.
B) liquidity ratio.
C) profitability ratio.
D) leverage ratio.
E) cash ratio.

Question 67

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 these would be good examples of taking corrective action.
E) None of these

Question 68

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

Question 69

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.

Question 70

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

Question 71

____ provide the basic information used for financial control of an organization.

A) Owners equity
B) Income statements
C) Financial position
D) Mission Statements
E) 100-K's

Question 72

The ____ ratio refers to the ability of the organization to meet its current debt obligation.

A) activity
B) liquidity
C) profitability
D) conversion
E) growth

Question 73

____ is(are) the difference between assets and liabilities and is the company's net worth in stock and retained earnings.

A) Assets
B) Current debt
C) Net profit
D) Owners' equity
E) Liabilities

Question 74

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

Question 75

Managers must rely on quantitative measures and ____ in order to exert effective control, in most organizations.

A) numerical indicators
B) profits
C) their own judgment
D) goal achievement
E) employees' words

Question 76

Pauline is an area manager at Ironman Gym. 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.

Question 77

Which of the following includes anticipated and actual expenses for a responsibility center?

A) revenue budget
B) cash budget
C) capital budget
D) expense budget
E) operating budget

Question 78

Which of the following 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

Question 79

Madison has been assigned to work on the development of a budget that plans future investments in major assets such as buildings and heavy machinery. Madison is working on a(n)

A) cash budget.
B) capital budget.
C) revenue budget.
D) operating budget.
E) expense budget.

Question 80

____ is any organizational department or unit under the supervision of a single person who is responsible for its activity.

A) Independent center
B) Responsibility center
C) Analysis center
D) Control center
E) Budgeting center