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Which one of the following is a primary benefit of budgeting?

a. It eliminates potential problems so that managers do not need to be concerned that things may get out of hand.

b. It eliminates the need for coordination of activities throughout the company.

c. It removes the 'plan ahead' from lower-level managers so that they can focus on operations.

d. It provides definite objectives for evaluating performance.

 

 

 

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Beverley Smith
Beverley SmithLv2
15 May 2020

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A decentralized organization is one in which:

a. each stockholder is given decision-making authority.

b. only top-level management is given decision-makingauthority.

c. each employee in the organization is given permission to makedecisions about their company.

d. managers at various levels throughout the organization aregiven decision-making authority.

A local chain department store grants each of its store managersthe authority to make buying decisions for their stores. Grantingmanagers this kind of authority is found in which type oforganization?

a. Desegmented

b. Centralized

c. Segmented

d. Decentralized

A local chain electronics store does not allow its store ordistrict managers to make important decisions about their stores.The main role of store managers is to supervise employees and makesure day-to-day transactions run smoothly while district managerssupervise store managers and report profitability data back totop-level management. Not allowing store or district managersdecision-making authority is most likely to be found in which typeof organization?

a. Centralized

b. Desegmented

c. Segmented

d. Decentralized

When a few individuals at the top of an organization retaindecision-making authority, the organization is referred to asa(n):

a. investment center.

b. centralized organization.

c. decentralized organization.

d. profit center.

Which of the following statements regarding the structure oforganizations is false?

a. In a decentralized organization, decision-making authority isconfined to top-level management.

b. Decentralization may make it difficult for managers to shareunique and innovative ideas.

c. When decision-making authority is spread among too manymanagers, managers may become so concerned with their own area ofresponsibility that they lose sight of the company's overallfocus.

d. In a decentralized organization, there may be a lack ofcoordination and communication between segments.

Which of the following is an advantage of decentralization?

a. It allows top-level management who normally work at corporateheadquarters to get involved with the day-to-day decisions thatneed to be made at lower levels.

b. It allows managers to focus on their own area ofresponsibility rather than what is best for the company as awhole.

c. It requires very little as far as manager training costs.

d. It allows decisions to be made in a more timely manner.

Which of the following is not an advantage ofdecentralization?

a. It allows lower-level managers to focus on their ownparticular goals and objectives without having to consider theoverall company's goals and objectives.

b. It allows top-level managers more time to devote tolong-range strategic planning.

c. It permits lower-level managers to gain valuable on-the-jobtraining in order to become better managers.

d. It often creates higher job satisfaction for managers.

Which of the following is often not a disadvantage ofdecentralization?

a. Lack of coordination and communication between segments.

b. Higher training costs for lower-level managers.

c. Lack of company focus as lower-level managers may makedecisions that benefit their own particular segment.

d. Decreased job satisfaction for lower-level managers.

Which of the following is a disadvantage ofdecentralization?

a. Lower training costs for lower-level managers.

b. Less timely decisions are able to be made on a day-to-daybasis.

c. Decreased job satisfaction for lower-level managers.

d. Lack of coordination and communication between segments.

"Responsibility accounting" is the concept that says:

a. managers should be responsible for both revenues and costs oftheir particular segment.

b. managers should be held entirely responsible for allinvestment decisions that impact the particular segment in whichthey are in charge.

c. managers should be held responsible for only those thingsunder their control.

d. managers should never be held entirely responsible for thingsthat happen within the particular segment in which they are incharge.

A budget for a single unit of a product or service is called asa:

a. real cost.

b. fixed cost.

c. total cost.

d. standard cost.

Which of the following statements is true regarding the budgetedcost for direct materials?

a. It must be determined after materials are purchased for theyear.

b. It can not be determined if a company uses a just-in-timeinventory system.

c. It would consist of two components - a standard quantity anda standard price.

d. It would be used on a static budget but not a flexiblebudget.

Variance analysis compares:

a. standard costs and actual costs.

b. static budgets and flexible budgets.

c. product costs and period costs.

d. practical standards and ideal standards.

Which of the following statements is false regarding taskanalysis?

a. It uses actual historical data in the determination ofstandard costs.

b. It emphasizes what it should cost to produce a product ratherthan historical costs.

c. It examines the production process in detail.

d. It may involve the use of engineers.

Task analysis:

a. is used to set standard costs.

b. is used to determine the tasks that production employeesshould complete on a daily basis.

c. is used to evaluate employee performance.

d. emphasizes the historical costs of a product.

A(n) ____ is attainable only when near-perfect conditionsexist.

a. static budget

b. ideal standard

c. flexible budget

d. practical standard

In most companies, machines break down occasionally andemployees are often less than perfect. Which type of standardacknowledges these characteristics when determining the standardcost of a product?

a. Practical standard

b. Ideal standard

c. Efficiency standard

d. Budgeted standard

Hathaway Inc. produces and sells golf umbrellas to localresorts. Hathaway anticipates April to be a busy month with thesale of 2,000 umbrellas. The company has prepared the followingstatic budget for April:

Sales revenue (2,000 units)

$60,000

Variable costs:

Direct materials

6,000

Direct labor

8,000

Overhead

2,500

Fixed costs

6,000

Net operating income

$37,500


During April, Hathaway actually produced and sold 2,300 umbrellas.What should be Hathaway's net operating income in April based on aflexible budget?

a. $35,025

b. $43,125

c. $44,025

d. $37,500

Hoppe Inc. manufactures widgets. Management has determined thateach widget has a standard materials cost of $3.50 when 2.5 ouncesof raw material at a cost of $1.40 per ounce are used. The staticbudget for the month of December showed an estimated production of4,000 widgets in December. During December, 4,300 widgets wereactually produced. The actual cost for each widget was $3.60 when2.25 ounces of raw material at a cost of $1.60 per ounce werepurchased and used. What should be the total direct materials costaccording to Hoppe's flexible budget for December?

a. $14,000

b. $15,480

c. $14,400

d. $15,050

Violetta Inc. manufactures plastic storage boxes. Management hasdetermined that each medium-sized box has a standard materials costof $1.20 when 4 pounds of raw material at a cost of $.30 per poundare used. The static budget for the month of March showed anestimated production of 15,000 boxes in March. During March, 17,000boxes were actually produced. The actual cost for each box was$1.56 when 3.9 pounds of raw material at a cost of $.40 per poundwere purchased and used. What should be the total direct materialscost according to Violetta's flexible budget for March?

a. $26,520

b. $23,400

c. $18,000

d. $20,400

Read the article below and write a brief (1-2 paragraph) summary. This assignment should be approximately 250 words . Complete this assignment as a Word document.

Time to Scrap Performance Appraisals

Times have changed. More and more companies have decided to radically change (read “scrap” or “re-engineer”) their performance appraisal process.

Last week at our research conference we spoke with Adobe, Juniper, Kelly Services, and a variety of other companies who have decided to do away with traditional performance ratings and dramatically change the annual appraisal process.

Our research shows that this is a strong and positive trend.

Why the process must change.

Why do companies have annual reviews in the first place? They are an artifact from traditional top-down organizations where we had to “weed out” the bottom performers every year. By forcing managers to rate people once per year we can have annual talent reviews and decide who gets more money, who to promote, and who to let go.

Coupled with the performance rating is the “potential” rating, which tries to capture an individual’s potential to move up two levels in the organization (the traditional definition).

This approach is based on a philosophy that “ we cant totally trust managers” so we’re going to force them to fit people into these rating scales. And in many companies (around 20%) there are forced distributions, which mandate that some percent of employees are rated at the bottom and only a limited percent can be rated at the top.

The well publicized problems with this process abound. These include:

Employees need and want regular feedback (daily, weekly), so a once-a-year review is not only too late but it’s often a surprise. Regular coaching is the key to alignment and performance.

Managers cannot typically “judge” an entire year of work from an individual at one time (imagine if your spouse gave you an annual review!), so the annual review is awkward and uncomfortable for both manager and employee.

Manager-employee relationships are not 1:1 like they used to be. We work with many leaders and peers during the year, so one person cannot adequately rate you without lots of peer input.

While some employees are a poor fit and likely are poor performers, these issues should be addressed immediately, not at the end of the year.

Some companies really do have a lot of high performers, so forced ranking eliminates great people and damages the culture.

People are inspired and motivated by positive, constructive feedback – and the “appraisal” process almost always works against this.

The most valuable part of an appraisal is the “development planning” conversation – what can one do to improve performance and engagement – and this is often left to a small box on the review form.

Companies are nervous about eliminating this process because:

We need a fair and validated way to distribute compensation increases (don’t we?)

We need a record of low performance when we let someone go

We need to capture performance data in an employee’s profile for future promotion and other talent reviews, development plans, and career migration

We need a way to make sure managers are doing their jobs well.

Well, I’ve probably discussed these issues with 100+ companies over the last five years and our research shows more and more that companies are ready to let this process go.

Organization structures have changed and companies need to be more agile. We have a shortage of key talent and the keys to success now focus on regular alignment, coaching, creating passion and engagement, and continuous employee development.

The new keys to success:

Develop a “feedback-rich” culture and set of tools (often online, sometimes formal, often informal) that encourages all employees to give each other feedback. Tools from companies like Achievers, Globoforce, and most HR software vendors now enable and make this easy.

Separate the discussions about performance from discussions about potential and future career plans. Yes we need to evaluate people when raise time comes, but that can be a totally different conversation from.

Talk about performance regularly and let employees create their own goals on a regular basis. Force managers to provide ongoing feedback and teach them how to have honest conversations.

Assume that employees already know something about their own performance, and force them to self-assess. People tend to have a good idea of their own strengths and weaknesses – give them an open and positive opportunity to share it. That starts the dialogue about expectations and the match between their self-assessment and that of the organization.

Enable managers to assess performance regularly. Software teams now use Agile tools which evaluate code on a weekly basis. Managers should be giving people feedback regularly. If they learn to do this on a regular basis it will get easier and employees will learn to appreciate it.

Focus managers on hiring the best, so they build a team which strives for 100% high performers. This is never possible of course, but rather than assuming that 20% of your employees will perform poorly, spend more time on assessment, culture, and fit to make sure very few low performers make it into the organization in the first place.

Remember that everyone wants to succeed. If they aren’t performing well it’s not necessarily their fault – the organization should take responsibility for helping them find a better fit if possible.

Set and reset goals frequently. Companies that set performance goals quarterly generate 31% greater returns from their performance process than those who do it annually, and those who do it monthly get even better results. This means employees get feedback on a continuous basis (most sales organizations work this way). Read our research for more details.

Beware of pay for performance plans. While many companies (particularly investment banking, sales) have large pay for performance plans, research showsthat these can create perverse behavior. People focus on their own goals at the expense of the organization. In sales related roles this process works well – when you move to customer service, engineering, and other “builder” roles they can create problems.

Give your leaders a cultural framework and set of values to work from. Companies like Juniper and Deckers (Uggs shoes) focus very heavily on corporate values, forcing managers to hire and manage to these values. This makes selection easier and enables us to evaluate and coach people against higher level frameworks.

Invest in leadership development. Being a manager is a tough job. Managers at all levels struggle with selection, hiring, training, coaching, and evaluation. Give them time and tools to learn, a framework for feedback, and a continuous development process so they learn how to become better.

Reward talent “production” not talent “hoarding.” If you pay your managers to “produce output,” they will focus heavily on talent performance and evaluation. This may be a good thing, but ultimately companies thrive by building skills – so in addition to encouraging managers to produce good work, incent them to produce good talent as well.

I’ve had the opportunity to study HR and performance management for almost 15 years now, and this topic has been controversial for a long time. In today’s globalized,talent constrained workplace it’s clear to me that the traditional appraisal has to change.

Businesses thrive on agility, speed, passion, and alignment. The process of driving and measuring performance has to do the same.

As a senior manager for a global player in automobile productionand sales, Kirby Ellis had joined thousands of fellow employees inthe excitement surrounding production of the company’s new hybridvehicles. But barely two years into production, embarrassingcomponent shortages, delivery delays, and a recall of the firstmodels had a ripple effect, presenting the company with mountingconcerns. In the confusion, many customers canceled orders andturned to competitors for purchase of the eco-friendly vehicles.Ellis’s company was facing a financial downturn. With three decadesof service to the company, Kirby led a contingent of managersintent upon keeping together as much of the company and as manyemployees as possible. “We know there will be some necessary cuts,”Kirby admitted. “But this company has a long history of sticking byits people. Our first priority should be internal streamlining ofhow we do things and making sure we have the right people onboard.” Many managers liked what they heard from Kirby. He was wellrespected and had an unequaled reputation for his leadership andcollaborative skills and his ability to work with managers, as wellas line workers on the factory floors. People marveled at thenumber of individuals he knew on a personal level throughout thecompany. Drew Cunningham influenced a second contingent within themanagement group. A brash go-getter with a reputation for fixingcompanies in crisis, Cunningham proposed across-the-board cuts inemployees in order to implement a solution as quickly as possible.He proposed the immediate creation of a forced ranking system inorder to identify and get rid of lower-ranking employees. Kirbyraised his hand and rose to his feet in objection. “So we’re goingto create a system to fire …” “I didn’t say fire …” “OK, cut ourown hard-working people? It sounds like some lame governmentcommission,” Kirby said. “We’ve got bright people. This thingsimply got worse faster than we thought. We can work with thepeople we have in setting up more efficient workflow, establishingreasonable deadlines to increase output and …” “Kirby, these arenot the days of knowing everyone in the plant,” Drew said. “You’renot throwing out your wife’s uncle Harry. We are taking a seriouslook at what we do, how we do it, and streamlining everything bykeeping the right people in the organization and cutting therest.

1. What kind of employee social contract is assumed by Kirby andCunningham?Explain.

2. If you were an HR manager at the company, which view wouldyou support? Why?.

3. HR department hire and develop human capital tp serve theorganization's strategy and drive performance. Which approach-Kirby's or Cunningham's-is more likely to have a greater positiveimpact on performace? Discuss

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