What Result Can Be Expected If a Management Control System

question 43

Multiple Choice

What result can be expected if a management control system encourages managers to focus on inappropriate measures?

• A)Managers will work extra hard to achieve the targets set in terms of those measures.
• B)Managers will engage in dysfunctional behaviors.
• C)Profits will go up for the foreign operation and for the corporation as a whole.
• D)None of the above

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Definitions:

Insurance Cost

Insurance cost is the expense incurred in purchasing insurance policies, offering protection against potential financial losses.

Safety Reserves

Funds or stocks kept on hand by an organization or individual as a buffer against potential shortfalls or emergencies.

Obsolescence Cost

Obsolescence cost refers to the loss of value of an asset due to technological advancements, changes in market demand, or regulatory changes.

Economic Order Quantity

A formula used to determine the most cost-effective quantity to order to minimize the costs of holding and ordering inventory.