Identify Which of the Following Statements Should Guide the Design

question 41

Multiple Choice

Identify which of the following statements should guide the design of management control systems.

• A) Always expect that individuals will act selflessly.
• B) Consider both financial performance and nonfinancial performance.
• C) Concentrate performance measures at the most critical points in the value chain.
• D) Design incentives so that individuals who pursue their own self- interest are also achieving the organization's objectives.

---

Definitions:

Economic Losses

Financial losses suffered by an individual or organization, often as a result of unfavorable business conditions or activities.

Price-Taker Market

A market condition in which individual buyers or sellers cannot influence the market price through their own actions.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, reflecting the true profitability of a firm's operations.

Demand Increase

A situation where there is a rise in consumer desire to purchase goods or services, leading to higher quantities demanded at the same price levels.