Chapter 9

Question 1

refers to the “process of ascertaining
whether organizational objectives have been achieved; if
not, why not; and determining what activities should then
be taken to achieve objectives better in the future

Answer 1

Controlling

Question 2

STEPS IN THE CONTROL PROCESS

Answer 2

1. establishing performance objectives and stan-
   dards
   2 measuring actual performance
2. comparing actual performance to objectives and
   standards, and ·
3. taking necessary action based on the results of
   the comparisons.

Question 3

Examples of such objectives and standards
are as follows:

Answer 3

1. Sales targets- which are expressed in quantity
   or monetary terms;
2. Production targets - which are expressed in
   quantity or quality;
3. Worker attendance - which are expressed in
   terms of rate of absences;
4. Safety record -which is expressed in number
   of accidents for given periods;
5. Supplies used- which are expressed in quantity
   or monetary terms for given periods.

Question 4

TYPES OF CONTROL

Answer 4

1 . feedforward control
2. concurrent control, and
3. feedback control.

Question 5

When management anticipates problems and pre-
vents their occurrence, the type of control measure
undertaken is called

Answer 5

feedforward control.

Question 6

When operations are already ongoing and activities
to detect variances are made, _____ is said
to be undertaken.

Answer 6

concurrent control

Question 7

When information is gathered about a completed
activity, and in order that evaluation and steps for improvement are derived, ____ is undertaken

Answer 7

feedback control

Question 8

COMPONENTS OF ORGANIZATIONAL
CONTROL SYSTEMS

Answer 8

1. strategic plan
2. the long-range financial plan
3. tbe operating budget
4. performance appraisals
5. statistical reports
6. policies and procedures

Question 9

provides
the basic control mechanism for the organization. When
there are indications that activities do not facilitate the
accomplishment of strategic goals, these activities are
either set aside, modified or expanded.

Answer 9

Strategic plan

Question 10

indicates the expenditures, revenues, or profits planned for some future pertod
regarding operations.

Answer 10

Operating budget

Question 11

pertain to those that contain data
on various developments within the firm.

Answer 11

Statistical reports

Question 12

information which may be found in a statistical report
pertains to the following:

Answer 12

1. labor efficiency rates
2. quality control rejects
3. accounts receivable
4. accounts payable
5. sales reports
6. accident reporte
7. power consumption report

Question 13

refer to “the framework within which the
objectives must be pursued.”’ A procedure is a plan that
describes the exact series of actions to be taken in a given
situatioo.

Answer 13

Policies

Question 14

STRATEGIC CONTROL SYSTEMS

Answer 14

1. financial analysis
2. financial ratio analysis

Question 15

Financial ratios may be categorized into the following types:

Answer 15

1. liquidity
2. efficiency
3. financial leverage
4. profitability

Question 16

These ratios assess the ability of
a company to meet its current obligations.

Answer 16

Liquidity ratio

Question 17

This shows the extent to which
current assets of the company can cover its
current liabilities.

Answer 17

Current ratio

Question 18

This is a measure of the firm’s
ability to pay off short-term obligations with the
use of current assets and without relying on the
sale of inventories

Answer 18

Acid-test ratio

Question 19

These ratios show how effectively
certain assets or liabilities are being used in the produc-
tion of goods and services

Answer 19

Efficiency ratios

Question 20

This is a group of ratios
designed to assess the balance of financing obtained
through debt and equity sources.

Answer 20

Financial leverage ratio

Question 21

These ratios measure how much
operating income or net income a company is able to gen-
erate in relation to its assets, owner’s equity, and sales.

Answer 21

Profitability ratios

Question 22

IDENTIFYING CONTROL PROBLEMS

Answer 22

1. executive reality check
2. comprehensive internal audit
3. general checklist of symptoms of inadequate
   control

Question 23

Symptoms of Inadequate Control

Answer 23

1. An unexplained decline in revenues and profits.
2. A degradation of service (customer complaints).
3. Employee dissatisfaction (complaints, grievances,
   turnover}.
4. Cash shortages caused by bloated inventories
   or delinquent accounts receivable.
5. Idle facilities or personnel.
6. Disorganized operations (work flow bottlenecks, excessive paperwork).
7. Excessive costs
8. Evidence of waste and inefficiency (scrap,
   rework).