MCS8

Management Control Systems:

1) Management By Objective (MBO) concept was popularized by:

(a) Michael Porter (b) Adam Smith (c) Meckency (d) Peter Drucker (e) Macmillan

2)-----------------------method covers the topic called MCS through the study of the
entire field of control and communication?

(a) MBO (b) Centralised (c) Decnetralised (d) Cybernetics (e) matrix control

3) Match the following:

i) Financial analysis I) Reporting Compliance

ii) MBO II) Result control

iii) FDA III) Realistic

iv) Performance appraisal IV) Diagnostic control

(a) i-I,ii-II,iii-III,iv-IV; (b) i-IV,ii-III,iii-I,iv-II; (c) i-IV,ii-III,iii-II,iv-I; (d) ) i-I,ii-III,iii-IV,iv-II;

(e) i-III,ii-II,iii-IV,iv-I;

4) Which is not a formal control method?

(a) a structured system of monitoring (b)training and development (c) budgets (d)
financial reporting (e)Standard Operating Procedures

5)As regards stakeholders, identify the exception for a Non Profit Organization:

(a) community (b) employees (c) shareholders (d) auditors (e) suppliers

6) Which is not a control tool?

(a) Budgets (b) Balance Score Card (c) Concurrent Audit (d) Financial Analysis (e)
rewards

7) ABC is a MNC, in which the plans are in place, however at the time of
implementation some deviations are noticed and actions are taken to control them.
This is an example of---------control

(a) open loop (b) feed back (c) feed forward (d) either b or c (e) neither b or c

8) In an integrated treasury of a foreign bank, Money Market dealer lends Rupee

funds to the Forex trader, Rs.100 crores at MIBOR rate of 5.5%.This would be
treated as:
(a) revenue for the forex desk, and expense for mm desk (b) revenue for the mm
desk, and expense for forex desk (c) (a) revenue for both forex and mm desks.(d)
expense for both mm and forex desks, (e) neither revenue nor expense for both
forex and mm desks.

9) A leading engineering company hires three management students

(Ajit,Bhaskar,Chetan)from a business school. The responsibilities: Ajit to control
cost, Bhaskar to increase revenue and Chetan to control both input as well as
output. Identify the centers handled .

(a) Ajit-profit,Bhaskar-cost,Chetan-revenue (b) Ajit-profit,Bhaskar-revenue, Chetan-

cost(c) Ajit-cost,Bhaskar-profit,Chetan-revenue(d) Ajit-cost,Bhaskar-revenue,Chetan-
profit(e) Chetan-profit,Bhaskar-cost,Ajit-revenue

10) On account of uncertainties in the European Financial Markets, nearly 100

European banks underwent stress tests. This is an example of ----------------------
control

(a) Action (b) Results (c) political (d) diagnostic (e) intuitive

11) When Dr.Manmohan Singh advocated the Liberalized, Privatized and Globalized
(LPG) concept, he introduced ------------------------- control system:

(a) centralized (b) decentralized (c) decontrolled (d) new economic (e) both a and d

12) In an Infotech company, the accountability is determined according to the

responsibility allotted to various levels of management. This is called as:

(a) efficiency audit (b) management audit (c) transfer pricing (d) responsibility
accounting (e) internal control system

13)ROCE is used as a tool to measure the performance of ------------------ center

(a) profit (b) cost (c) revenue (d) both cost and revenue (e) investment

14)Which is an exception to RBI’s credit control methods:

(a) Bank Rate (b) Open Market Operations (c) CRR (d) SLR (e) Monetary Policy

15) Which statement/s is/are correct?

(i) EVA is a financial performance metric (ii) Balance Score Card is used as a tool for
strategic learning (iii) Return on Assets is an example of profitability ratio(d) unfair
pricing policies is part of price failures

(a) i,ii,iii,iv (b) i,ii,iii(c) i,ii (d)ii,iii(e)ii,iii,iv

16) Match the following:

(i) Sig Sigma (A) control tool

(ii) Tax returns (B) compliance

(iii) Budget (C) attrition

(iv) HRM (D) DPMO

(a) i-A,ii-C,iii-D,iv-B(b) i-D,ii-C,iii-B,iv-A(c) ) i-A,ii-B,iii-D,iv-C (d) i-A,ii-B,iii-C,iv-D(e) i-

D,ii-B,iii-A,iv-C

17) A top executive measures the performance of employees by comparing the

number of employees in particular unit, example operations department to the total
number of employees. This is called as:

(a)turnover ratio (b) efficiency ratio (c) personal ratio (d) activity ratio (e)
management ratio

18) What is an attrition level?

(a) The percentage of employees joining a company during a specified period

(b) The percentage of employees transferred to another location during a specified

period

(c) The percentage of employees promoted during a specified period

(d) The percentage of employees leaving a company during a specified period

(e) The percentage of employees assigned additional responsibilities during a

specified period

(19) State which of the following statement/s is/are incorrect:

(i) Life cycle costing analyses the costs incurred on a product throughout its life
cycle

(ii) Inventory turnover is not part of supply chain management

(iii) HR audit does not cover the short term and long term plans of a company

(iv) Discounted Cash Flow is a method used in the evaluation of a project

(a) i,ii,iii,iv (b) i,ii,iii(c) i,ii (d)ii,iii(e)ii,iii,iv

20) In a campus interview, for the question what is a current ratio, three MBA
students

Veena,Uma and Abhaya answered as under:

(i)Veena: Current Assets/Current Liabilities (ii) Uma: Measures the capability of the
company to

meet its current liabilities (iii) Abhaya: Measures the short term solvency of the
company.

Identify whose answer is correct.

(a) i (b) ii (c) iii (d) i and ii (e) i,ii,iii

21) State which statement/s is/are correct?

i) MCS covers both financial and non financial performance

ii) Strategic formulation involves only part of the company

iii) “Cybernetics” is also known as micro control framework

(a) i,ii (b) i,ii,iii (c) i,iii(d) i(e) ii,iii

22) A new young CEO takes over the organization from his father, and introduced a
new MCD.

The MCS design was mainly based on his ideas/suggestions. This is an example of

(a) Management Style (b) Corporate Culture (c) Combination of both a and b (d)
Either a or b

(d) Neither a nor b

23) In a software export company, the unit head appreciated the good work done by
Manoj and

Kavita. They have not been given any merit increase. This is --------- MCS

(a) formal (b) informal (c) both a and b (d) neither a nor b (e) either a or b

24) A firm’s performance is monitored by their MCS in terms of contribution by

employees rather than cost incurred on it. The company uses ----------------------
method

(a) balance scorecard (b)control charts (c) design review (d) efficiency audit (e)
workforce scorecard

25) In supply chain management, as part of MCS,--------- controls the inbound

logistics

(a) warehousing (b) strategic bench trending (c) TQM (d) upstream chain (e)
marketing
26) Which ratios measure a firm’s efficient utilization of its assets?

(a) profitability (b) quick (c) debt equity (d) turnover (e) both a and b

27) --------------is used to calculate the return on investment in respect of human

capital?

(a) ABC analysis (b) Balance Scorecard (c) Marketing Cost analysis (d) Sales
analysis (e) Utility analysis

28) A company aims to reduce the cost and also adapts to local environment, it also
concentrate in ensuring two way know how flow between parent and subsidiary
company. This is an example of

(a) Multi-domestic Strategy (b) Transnational Strategy (c) International Strategy (d)
Global Strategy

(e) Strategic Control

29) In an integrated treasury the money market dealer borrows Indian Rupee funds
from a Forex dealer, at MIBOR+20 basis point. This is an example of ------------------

(a) transfer pricing (b) internal adjustment (c) internal transfer (d) either b or c (e)
yield

30) The new project manager, an MBA from one of the leading US business school
calls for a meeting of all the unit heads and indicates his desire to achieve greater
performance in his organization. He wants the involvement of every department,
employee across all hierarchical levels. The project manager

wants to practice which MCS?

(a) value engineering (b) supply chain management (c) tight control (d) total quality
management (e) six sigma

31) The objective of Six Sigma is to:

(a) increase the price (b) reduce the defects (c) reduce the price (d) increase the
defects (e) reduce the production

32)Standard cost center is also know as:

(a) cost center (b) profit center (c) modified revenue center (d) engineered expense
center (e) expense center

33) As regards stakeholders,Identify the exception:

(a) shareholders (b) creditors (c) suppliers (d) customers (e) regulators
34) A bank’s customer complains about the failure of ATM.This is an called as:

(a) technical failure (b) service failure (c) service encounter failure (d) dissatisfied
service

(d) none of the above

35) A company’s sales manager calculate the revenue variance based on the
margin.

This is called as:

(a) sales variance (b) sales turnover (c) sales overrun (d) sales work plan (d) sales
control

36) As part of summer project, Leela undertakes a market research. Her research
involves gathering

classifying, and studying the sales data of companies at industry level. Leela’s
activity is an called as

(a) sales price variance (b) sales mix variance (c) sales volume variance (d) sales
analysis (e) sales management audit

37) The sales manager of a company gets additional time period for his annual
budget,This is known as ------------------

(a) special budget (b) supplementary budget (c) rolling budget (d) budget overrun
(e) budget review

38) A company’s R& D involves in analyzing a competitor’s products in terms of

every aspect including the cost of production, to improve its own production. This
process is called as

(a) re engineering (b) reverse engineering (c) risk assessment (d) research and
development (e) risk perception

39) Resale price method is associated with-------

(a) costing (b) reengineering (c) cost center (d) net margin (e) transfer pricing

40) A project manager uses a system, which assist him to collect, analyze and
share project related information. The manager uses ------------------- as part of MCS

(a) Six Sigma (b) Balanced score card (c) Budget (d) Project Management
Information System

(d) Total Quality Management System (e) Transfer Pricing

41)----------center manager has control over both input and output?

(a) revenue (b) cost (c) profit (d) investment (e) only a

42) The consultant of a firm indicates due to various reasons of price failure, the
customers may switch to other firm’s products. Identify the instances of price
failures:

(i) increase in existing prices (ii) unfair pricing practices (iii) deceptive pricing
practices

(a) i,ii (b) ) i,ii,iii (c) i(d ) ii,iii(e )iii

43) A project leader undertakes a review of the efficiency of the team members
and uses the review to motivate the team. This method is called as:

(a) performance indicators (b) performance measures (c) performance audit (d)
performance review(e) performance evaluation

44) pay back method is used to evaluate

(a) revenue (b) capital expenditure (c) revenue expenditure (d) non financial
activities (e) financial activities

45) A manufacturing unit carries excess inventory levels of raw material. This is
known as

(a) organizational culture (b) organizational slack (c) organizational policy (d)
organizational behavior (e) organizational practice

46) As regards the objectives of MCS, identify the exception:

(a) effectiveness and efficiency of business operations (b) reliability of financial

reporting (c) adherence to the regulatory requirements (d) non compliance with
the legal frame work (e) achieving the vision of the company

47) Which indicates the company’s profit generation for every rupee it earns?

(a) current ration (b) net profit margin (c) net non interest income (d) net interest
income (e)debt asset ratio

48) The operations budget does not include:

(a) sales budget (b) purchases budget (c) operating expense budget (d) cash
budget (e) payment for purchases

49) -------------------- measures the company’s wealth creation in society:

(a) marketing audit (b) marketing cost analysis (c) market share analysis (d)
market value to book value ratio (e) neither a nor b

50) What is Market Value Added (MVA):

(a) A comparison of actual market share to firm’s planned market share (b) A
comparison of actual market size to the estimated market size (c) A comparison
of market share of a firm’s sales to total sales in the industry (d) the difference
between an investor’s investments and the present market value of such
investments (e) the increase in the profits of the company on yoy basis

51) In a company the project leader in consultation with the team members
jointly setting the goals.This practice is an example of

(a) six sigma (b) MCS (c) MBO (d) balanced score card (e)motivation

52) An audit team conducts audit of a company. Their audit includes

> review and examination of books of accounts, financial position and status of
the company

> diagnosis of the deficiencies in systems and procedures

> suggestions and corrective measures

The audit team conducts ----------- audit

(a) concurrent audit (b) project audit (c) procedural audit (d) financial audit (e)
management audit

53) An automobile company follows a very good waste management system in

its production activities. This practice is also known as

(a) cost cutting measures (b) effective mcs (c) operational efficiency (d)
management by exception (e) lean manufacturing

54)JIT is a term associated with

(a) inventory management (b) management audit (c) management by objective

(d) management by exception (e) management review

55) Performance of an investment centre can be measured by:

(a) Return of Investment (ROI) (b) Economic Value Added (EVA) (c) Return on
Capital Employed(ROCE) (d) Either a,b or c (e) Neither a,b nor c

56) A comprehensive evaluation of the current HR development

strategies,structure,styles and skills is part of --------------
(a) HRD review (b) HRD audit (c) HRD accounting (d) HRD planning (e) HRD
monitoring

57) Bureaucratic controls are also called as:

(a) Management control (b) Centralized control (c) De centralized control(d)

Informal control(e) Formal controls

58) ---------------------measures the effectiveness of external funds in improving the

shareholder’s return.

(a) Debt Asset Ratio (b) Debt Equity Ratio (c) Net Income margin (d) Return on
Asset (e) Quick Ratio

59) Match the following:

A- Stability index I- Project management

B- EVA II- HRM

C- HRM III- equity theory

D- Earned Value IV - Financial performance metric

(a) A-I,B-II,C-III,D-IV (b) A-II,B-IV,C-III,D-I(c) A-I,B-III,C-IV,D-II (d)A-IV,B-III,C-II,D-I (e)

A-IV,B-I,C-II,D-III

60) How can you measure EVA of a firm?

(a) Net operating profit + opportunity cost of capital (b) Gross operating profit –
opportunity cost of capital (c) Gross operating profit + opportunity cost of
capital (d) Net operating profit - opportunity cost of capital (e) Net interest
income + Net non interest income

61) The term “Downstream Chain” is associated with

(a) inbound logistics (b) outbound logistics (c) inward remittances(d) outward
remittances(e)reverse engineering

62) In a company each division independently handles a separate product,

market or geographic location. This model of MCS is called as

(a) Management By Objective (b) Management by exception (c) Strategic

Business Units (d) either a or b (e) neither a nor b
63) Discounted Cash Flow (DCF) approach uses net present value (NPV) and
-----------

(a) cash flow (b) internal rate of return (c) standard deviation (d) correlation (e)
probability-

64) Detection risk is associated with:

(a) Production (b) Marketing (c) GRM (d) Auditing (e) Finance

64) ------------measures the number of times receivables turn over during a year.

(a) Debtors Turn over ratio (b) Debt: Asset ratio (c) Creditors Turn Over ratio (d)
Debt Equity ratio (e)Net income ration

65) Debt Service Coverage Ratio is measures ------------

(a) servicing of interest and principal (b) investment (c) equity (d) income
(e)expenses

66) A company set aside a particular amount in the annual budget to meet
unforeseen circumstance.

This is called as-------------------

(a) contingent planning (b) contingent spending (c) contingent planning (d) either
a or b (e) neither a nor b

67) As regards cash flow statement reflects the flow of cash under different
categories, identify the exception:

(a) investing activities (b) operating activities (c) financial activities (d) inflow/out
flow of funds (e) off balance sheet items

68) ----------------------- a type of MCS, which documents the procedure to ensure

that the description of the project output is accurate and complete.

(a) cost management (b) control management (c) configuration management (d)
contingency management (e) conflict management

69)In a manufacturing company the young CEO has introduced the following :

> a systematic approach toward the design of products covering all areas such as
production, assembly, level of inventory, transportation etc.,

> a better design to take care of both external/internal demands. The company is
practicing
(a) concurrent auditing (b) concurrent engineering (c) control environment (d)
control alternatives (e) concurrent evaluation

70)A unit manager while preparing the budget for his unit, budgeted the figures
in excess of the required numbers. This is an example of:

(a) budgetary slack (b) annual plans (c) either a or b (d) neither a nor b (e)
budget overrun

71) The life cycle of a product is on the declining phase. The company appoints a
consultant to revive the product. The consultant advised the company to modify
the systems and procedures to improve productivity, reduce costs and change
the marketing style. The consultant’s action is ----------------------

(a)Business continuity plan (b) Business Process Reengineering (c) Business

Process Reverse Reengineering (d) Economic Value Added (e)Interactive
Communication System

72) What is brand equity

(a) Value of a brand to the company (b) Value of the brand to the client (c) Value
of the brand to employees (d) a,b and c (e) neither a nor b

73) ------------------ helps a company in strategic performance control and learning

(a) Balanced Score Card (b) Benchmarking (c) Bench trending (d) b and c (e) a
and c

74) Identify the off balance sheet item

(a) bills receivables (b) prepaid expenses (c) certificate of deposit (d) interest rate
swap (e) GOI sec

75) An auditor while auditing the books of accounts of a company could not
detect the mismatches in the accounts. This is an example of:

(a) credit risk (b) market risk (c) audit risk (d) liquidity risk (e) systemic risk

76) ---------------analysis classifies the resources based on the usage value as high,
moderate and low

(a) Trend analysis (b) Breakeven analysis (c) Utility analysis (d) technical
analysis (e) ABC analysis

77) performance appraisals, promotion and retention are the terms associated with

(a) Financial Management (b) Management Control System (c) Production

Management (d) Human Resource Management (e) Marketing Management
Ans:

1(d)2(d)3(b)4(b)5(c)6(e)7(b)8(b)9(d)10(d)11(c)12(d)13(e)14(e)15(a)16(e)17(c)18(d)
19(d)20(e)

21(b)22(a)23(b)24(e)25(d)26(d)27(e)28(b)29(a)30(d)31(b)32(d)33(a)34(c)35(a)36(d
)37(c38(b)39(e)40(c)

41(c) 42(b) 43(e) 44(b) 45(b) 46(d) 47(b) 48(d) 49(d) 50(d) 51(c) 52(e) 53(e)
54(a)55(d)56(b)57(e)58(b)

59(b)60(d)61(b)62(c)63(b)64(d)65(a)66(c)67(e)68(c)69(b70(a)71(b)72(e)73(a)74(d)
75(c)76(e)77(d)