Chapter 16 Flashcards

1
Q

4 Steps of Typical Control System (Cycle)

A

1: Set performance standards.
2: Measure Performance
3: Compare performance with standards.
4: Reward successes, correct problems.

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2
Q

Standard

A

expected performance for a given goal: a target that establishes a desired performance level, motivates performance, and serves as a benchmark against which actual performance is assessed

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3
Q

Performance standards can be set with respect to:

A

1: Quantity
2: Quality
3: Time Used
4: Cost

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4
Q

Principle of Exception

A

a managerial principle stating that control is enhanced by concentrating on the exceptions to or significant deviations from the expected result or standard

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5
Q

After-action review

A

a frank and open-minded discussion of four basic questions aimed at continuous improvement

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6
Q

4 Basic question for AAR

A

1: What were our intended results?
2: What were our actual results?
3: What caused our results?
4: What will we sustain? Improve?

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7
Q

Feedforward Control

A

the control process used before operations begin, including policies, procedures, and rules designed to ensure that planned activities are carried out properly
(“preliminary control”)

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8
Q

Concurrent Control

A

the control process used while plans are being carried out, including directing, monitoring, and fine-tuning activities as they are performed

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9
Q

Feedback Control

A

control that focuses on the use of information about previous results to correct deviations from the acceptable standard

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10
Q

DPMO

A

defects per million opportunities

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11
Q

Six Sigma

A

aims for defect free performance (DPMO is 3.4)

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12
Q

Management Audit

A

an evaluation of the effectiveness and efficiency of various systems within an organization

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13
Q

External Audit

A

an evaluation conducted by one organization, such as a CPA firm, on another

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14
Q

Internal Audit

A

a periodic assessment of a company’s own planning, organizing, leading, and controlling processes

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15
Q

Sustainability Audits

A

an evaluation of how effectively they are serving all stakeholders and protecting the environment

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16
Q

Triple Bottom Line

A

profit, planet, people (for Sustainability)

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17
Q

Budgeting

A

the process of investigating what is being done and comparing the results with the corresponding budget data to verify accomplishments or remedy differences; also called budgetary controlling

18
Q

Sales Budget

A

usually data for the sales budget include forecasts of sales by month, sales area, and product

19
Q

Production Budget

A

commonly expressed in physical units; requires types and capacities of machines, economic quantities to produce, and availability of materials

20
Q

Cost Budget

A

used for areas of the organization that incur expenses but no revenue (HR for ex)

21
Q

Cash Budget

A

shows anticipated receipts and expenditures, the amount of working capital available, the extent to which outside financing may be required, and the periods and amounts of cash available

22
Q

Capital Budget

A

used for the cost of fixed assets such as plants and equipment; not expenses but investments

23
Q

Master Budget

A

includes all the major activities of the business; brings together and coordinates all the activities of the other budgets and can be though of as a budget of budgets

24
Q

Accounting Audits

A

procedures used to verify accounting reports and statements

25
Q

Activity-Based Costing (ABC)

A

a method of cost accounting designed to identify streams of activity and then to allocate costs across particular business processes according to the amount of time employees devote to particular activities

26
Q

Balance Sheet

A

a report that shows the financial picture of a company at a given time and itemizes assets, liabilities, and stockholders’ equity

27
Q

Assets

A

the values of the various items the corporation owns

28
Q

Liabilities

A

the amounts a corporation owes to carious creditors

29
Q

Stockholders’ Equity

A

the amount accruing to the corporation’s owners

30
Q

Profit and Loss Statement

A

an itemized financial statement of the income and expenses of a company’s operations

31
Q

Current Ratio

A

a liquidity ratio that indicates the extent to which short-term assets can decline and still be adequate to pay short-term liabilities

32
Q

Debt-Equity Ratio

A

a leverage ratio that indicates the company’s ability to meet its long-term financial obligations

33
Q

Return on Investment (ROI)

A

a ratio of profit to capital used, or a rate of return from capital

34
Q

Management Myopia

A

focusing on short-term earnings and profits at the expense of longer-term strategic obligations

35
Q

5 Steps to Designing Effective Control Systems

A

1: Establish valid performance standards
2: Provide adequate information to employees
3: Ensure acceptability to employees
4: Maintain open communication
5: Use multiple approaches

36
Q

7 Deadly Sins of Performance Measurement

A

Vanity, Provincialism, Narcissism, Laziness, Pettiness, Inanity, Frivolity

37
Q

Progressive Discipline

A

clear standards are established but failure to meet them is dealt with in a progressive or step-by-step process

38
Q

Balanced Scorecard

A

combination of four sets of performance measures: financial, customer satisfaction, business processes (quality and efficiency), and learning and growth

39
Q

Transfer Price

A

price charged by one unit for a good or service provided to another unit within the organization

40
Q

Empowerment

A

creating a strong culture of high standards and integrity so that employees will exercise effective control on their own