TEST BANK - Management Control Systems

TEST BANK - Management Control Systems Kenneth Merchant

9781292444130 

5th edition 2023 46 common test questions with answers Summer 2024 1 / 4

Contents Chapter 1: Management and Control..........................................................3 Chapter 2: Results Controls.........................................................................3 Chapter 3: Action, Personnel, and Cultural Controls....................................3 Chapter 4: Control System Tightness..........................................................4 Chapter 5: Control System Costs.................................................................4

Chapter 6: Designing and Evaluating Management Control Systems .........5

Chapter 7: Financial Responsibility Centers.................................................5 Chapter 8: Planning and Budgeting.............................................................6 Chapter 9: Incentive Systems......................................................................6 Chapter 10: Financial Performance Measures..............................................7 Chapter 11: Remedies to Myopia.................................................................7 Chapter 12: Using Financial Results Controls..............................................7 Chapter 15: Ethical Issues...........................................................................7 Chapter 16: Environmental Uncertainty......................................................8 Chapter 17: MCS in Non-Profit Organizations..............................................8 General Questions.......................................................................................8 Actual test questions NO answers.............................................................10 We didn’t do chapters 13 and 14 as professor said it was not important for test 2 / 4

Chapter 1: Management and Control

1.What are the three main causes of management control problems?oLack of direction, motivational problems, and personal limitations.

2.How does a "cybernetic" view of a Management Control System (MCS) differ from the broader view?oThe cybernetic view involves a single feedback loop (e.g., a thermostat), while the broader view considers proactive controls that influence behavior to achieve organizational objectives.

3.What are the key characteristics of "good" management control?oReasonable confidence that no major unpleasant surprises will occur, control at a reasonable cost, and avoidance of control losses.

Chapter 2: Results Controls

4.What is the purpose of results controls?oTo address motivational and personal limitation problems by rewarding employees for achieving desired results.

5.What are the four steps required to implement results controls?oDefining performance dimensions, measuring performance, setting performance targets, and providing rewards.

6.Under what conditions are results controls most effective?oWhen desired results are controllable, can be measured effectively, and are clearly communicated.

Chapter 3: Action, Personnel, and Cultural

Controls 7.What are the four basic forms of action controls? 3 / 4

oBehavioral constraints, preaction reviews, action accountability, and redundancy.

8.What is the primary disadvantage of redundancy as an action control?oIt is expensive and can result in conflict, frustration, or boredom.

9.How do cultural controls encourage employee behavior?oBy shaping organizational norms and using mutual monitoring through emotional ties and shared values.

• What is self-monitoring in personnel controls?

oEmployees internally regulating their behavior to align with organizational goals due to personal commitment.

Chapter 4: Control System Tightness

• What defines a "tight" control system?

oA high degree of assurance that employees will behave as desired by the organization.

• What makes results controls tight?

oCongruent, specific, and communicated goals, effective performance measures, and strong reinforcement of incentives.

• Why might tight controls be unsuitable in some

contexts?oThey can stifle creativity, cause delays, or lead to high costs if improperly implemented.

Chapter 5: Control System Costs

• What is behavioral displacement in the context of MCS?

oWhen employees focus on measures or behaviors that are not aligned with organizational objectives.

• What are the two forms of gamesmanship?

oSlack creation and data manipulation.

• / 4