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Chapter 18 Foundations of Control TRUE/FALSE QUESTIONS WHAT IS CONTROL AND WHY IS IT IMPORTANT? 1. Control is the process of monitoring activities to ensure that they are being accomplished as planned. (True; moderate; p. 526) 2. The criterion that determines the effectiveness of a control system is how well it reduces unnecessary costs. (False; moderate; p. 526) 3. Clan control is found almost exclusively in small family-owned businesses, and is dependent upon the individual and the group to identify appropriate and expected behaviors and performance measures. (False; difficult; p. 527) 4. The value of the control function lies in its relation to organizational structure. (False; moderate; p. 528) 5. Managers need to control to protect the organization and its assets. (True; moderate; p. 529) THE CONTROL PROCESS 6. The control process is a two-step process that compares actual performance against a standard and takes managerial action to correct deviations or inadequate standards. (False; difficult; p. 529) 7. Some control criteria, such as employee satisfaction, are applicable to any management situation. (True; easy; p. 530) 8. Deviations that exceed the acceptable range of variation become significant and need the manager’s attention. (True; moderate; p. 531) 9. Understating sales is not nearly as troublesome as overstating. (False; moderate; p. 532) 10. In taking managerial actions, managers must correct actual performance, as it is the only choice. (False; difficult; p. 532) 11. Basic corrective action is aimed at correcting more generalized problems as quickly as possible, leaving more detailed action for later. (False; easy; p. 532) 243
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12. Effective managers analyze deviations and, when the benefits justify it, take the time to pinpoint and correct the causes of variance. (True; moderate; p. 532) CONTROLLING FOR ORGANIZATIONAL PERFORMANCE 13. Performance is the end result of an activity. (True; easy; p. 534) 14. The most frequently used organizational performance measures include liquidity, profitability, leverage, and activity ratios. (False; moderate; p. 535) 15. What guides managerial decisions in designing strategies and work activities and in coordinating the work of employees is how well the organization meets its goals. (True; moderate; p. 536) TOOLS FOR CONTROLLING ORGANIZATIONAL PERFORMANCE 16. The key to feedforward controls is taking action while the problem is occurring. (False; easy; p. 538) 17. Feedforward provides managers with meaningful information on how effective their planning efforts were. (False; moderate; p. 538) 18. Concurrent control prevents anticipated problems since it takes place before the actual activity. (False; easy; p. 538) 19. Direct supervision is the best-known form of concurrent control. (True; easy; p. 538)
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