Question Paper Management Control & Information Systems - II (MB2F4): October 2008

 Answer all 100 questions.
 Each question carries one mark.
1. Efficiency and effectiveness control is one of the types of market control. Effectiveness control in selling mainly focuses on
(a)
Customer satisfaction

(b)
Sales volume

(c)
Purchases

(d)
Sales generated by each salesperson

(e)
Operations.


2. The Strategic Profit Model (SPM) is a technique used in profitability control of marketing. It identifies certain focus areas to improve an organization’s Return on Net Worth (RONW) which include(s)
I. Liability management.
II. Profit margin management.
III. Asset management.
IV. Debt management.
(a)
Only (I) above

(b)
Both (I) and (II) above

(c)
(I), (II) and (III) above

(d)
(II), (III) and (IV) above

(e)
All (I), (II), (III) and (IV) above.


3. Strategic control helps the organization to evaluate its strategies by focusing on the outcomes of the activities undertaken. Strategic surveillance is one of the components of strategic control. Which of the following statements is/are true about ‘strategic surveillance’?
I. It is used to keep the system ready in case any crisis crops up in the organization or in the environment.
II. Its purpose is to ensure that the planned strategies are implemented fully and any changes detected in the environment that could possibly affect the implementation process are dealt with appropriately.
III. It deals with continuously monitoring certain specific environmental conditions which form the basis of the strategies being devised.
IV. It is used to check for the impact of the actions on the strategies and to specify whether they have either a positive or a negative impact.
(a)
Only (II) above

(b)
Only (IV) above

(c)
Both (I) and (III) above

(d)
Both (II) and (IV) above

(e)
All (I), (II), (III) and (IV) above.


4. A marketing audit is a detailed and systematic analysis. An effective marketing audit is
I. Well-defined.
II. Comprehensive.
III. Dependent.
IV. Continuous.
(a)
Both (I) and (II) above

(b)
Both (II) and (III) above

(c)
(I), (II) and (III) above

(d)
(II), (III) and (IV) above

(e)
All (I), (II), (III) and (IV) above.


5. Integration of different functions is an important aspect of the new product development process, which can be achieved through different methods like
I. Integration through strategy.
II. Integration through process.
III. Integration through technology.
IV. Integration through industry.
(a)
Only (I) above

(b)
Both (I) and (II) above

(c)
(I), (II) and (III) above

(d)
(II), (III) and (IV) above

(e)
All (I), (II), (III) and (IV) above.


6. Balanced scorecard is a combination of both financial and non-financial measures called as perspectives. Each of the balanced scorecard perspectives can be mapped with the organizational strategic indicators and the relevant Research and Development (R&D) metrics for various stages of the Stage-Gate framework. Which of the following strategic indicators is/are included in ‘Learning and growth perspective’ of the Balanced scorecard?
I. Revenue growth and productivity.
II. Employee retention and employee development.
III. Innovation and R&D efficiency.
IV. Customer retention, customer acquisition, market share etc.
(a)
Only (II) above

(b)
Only (III) above

(c)
Both (I) and (II) above

(d)
Both (I) and (III) above

(e)
Both (III) and (IV) above.


7. The Stage-Gate framework enables an organization to reduce the time for new product launch and increase the effectiveness of the launch. Stage ‘Detail planning, scrutiny and development’ will pass through which of the following ‘Gate’ for reviewing process?
(a)
Decision to carry on manufacturing

(b)
Final consent for manufacturing and launch of the product

(c)
Checking testability and validity

(d)
Decision to design the business plan

(e)
Decision to design the detailed plan, scrutiny and development.


8. The main objectives of information systems control and auditing are
I. Safeguarding of assets.
II. Maintenance of data integrity.
III. Effectiveness in achieving organizational objectives.
IV. Efficient consumption of resources.
(a)
Both (I) and (II) above

(b)
Both (II) and (III) above

(c)
(I), (II) and (III) above

(d)
(II), (III) and (IV) above

(e)
All (I), (II), (III) and (IV) above.


9. Public Relations (PR) measurement and evaluation is a process which involves assessment of the success or failure of PR strategies, activities and tactics in producing the desired output, outtakes and outcomes. Which of the following is/are true about ‘PR outtakes’?
I. They relate to the information that the public gather or obtain from a particular PR effort.
II. They are long-term in nature and refer to the behavioral and business impact of the PR efforts.
III. They are the short-term result achieved by a PR effort and include the amount of press coverage received or exposure gained by a specific message.
(a)
Only (I) above

(b)
Only (II) above

(c)
Only (III) above

(d)
Both (I) and (II) above

(e)
Both (I) and (III) above.


10. The effectiveness of sales promotions can be measured by direct evaluation or indirect evaluation. Which of the following is not the indicator of sales that can be used in indirect evaluation?
(a)
Number of un-promoted units sold whose sales can be attributed to the promotion and profits from the sales

(b)
Increase in number of units in distribution and display

(c)
Number of promoted units sold and profits from the sales

(d)
Sales volume

(e)
Increase in impulse buying.


11. Efficient channel management helps organizations reduce costs, reach potential customers and make profits. Which of the following is not a step involved in managing channels efficiently?
(a)
The organization has to recruit and select the right channel members

(b)
The organization has to focus on motivating channel members and increasing profitability

(c)
Based on market changes, the organization should suitably modify the existing channel arrangements

(d)
The organization has to periodically evaluate the performance of channel members to ensure that they remain competitive in the market

(e)
The organization tries to influence decisions by enforcing its objectives and perspectives on the channel members.


12. Brand equity denotes the value of a brand to the customer and the organization. Brand equity can be understood in terms of certain underlying concepts. Which of the following is such a concept which refers to the attributes of the brand that affect the consumer decisions?
(a)
Brand assets

(b)
Brand strength

(c)
Brand value

(d)
Brand profile

(e)
Brand audit.


13. Application controls refer to the control features in each application system that is a part of the information systems of an organization. Application controls are different from management controls in which of the following ways?
I. They are predominantly exercised by hardware and software: the role of people is limited.
II. They are applicable to system development, maintenance and operation processes and not to data and data processing.
III. They are more concerned with safeguarding assets and maintaining data integrity than ensuring system effectiveness and efficiency.
IV. Their existence depends on a cost-benefit analysis of each application of the whole set of application systems.
(a)
Both (I) and (II) above

(b)
Both (III) and (IV) above

(c)
(I), (III) and (IV) above

(d)
(II), (III) and (IV) above

(e)
All (I), (II), (III) and (IV) above.


14. Capability Maturity Model (CMM) creates a benchmark for the organizations to monitor the level of maturity of their software processes by comparing it with those in the industry. The key practices in CMM can be grouped by using common features. Which of the following features describes ‘the actions an organization must take to ensure that the process is established and will endure’?
(a)
Verifying implementation

(b)
Measurement and analysis

(c)
Activities performed

(d)
Ability to perform

(e)
Commitment to perform.


15. In terms of timing and purpose of the information systems audit, there are various ways to audit the function of the systems development management and monitor the effectiveness of the systems development management controls. Which of the following is the mechanism by which the auditor can pinpoint the errors at an early stage of system development?
(a)
General audit

(b)
Post-implementation audit

(c)
Concurrent audit

(d)
Trail control audit

(e)
Pre-implementation audit.


16. Boundary controls exist at the interface between the computerized information system and the person intending to use the system. Which of the following is a major technique used in boundary control?
(a)
Data code control

(b)
Batch controls

(c)
Input controls

(d)
Cryptographic control

(e)
Inference controls.


17. Make-or-buy analysis helps organization determine whether it is more economical to produce an item in-house or to purchase it from external vendors. Organizations usually opt for in-house production
I. To maintain a multiple source policy.
II. To maintain control over all the value chain activities.
III. To put excess plant capacity to productive use.
IV. To ensure that the design of a product is kept secret.
(a)
Only (I) above

(b)
Both (I) and (II) above

(c)
(I), (II) and (III) above

(d)
(II), (III) and (IV) above

(e)
All (I), (II), (III) and (IV) above.


18. Which of the following is true about customer order promised cycle time?
(a)
It is the total time that elapses in moving a unit of work from the beginning to the end of a physical process

(b)
This is the anticipated or agreed upon cycle time of a purchase order

(c)
This is the average time taken to actually fulfill a customer’s purchase order

(d)
This is the number of days between paying for the raw materials and receiving payment for the finished product

(e)
This is the total time that would be taken to satisfy a customer order if all inventory levels were zero.


19. Arvind Ltd., has to ensure the timely receipt of chemicals required in production process of various dyes used in printing. In the given example, the receipt of the materials is identified as
(a)
Outbound logistics

(b)
Inbound logistics

(c)
Procurement and storage

(d)
Transformation and storage

(e)
Order management.


20. The process of life cycle costing and the costs incurred during the different stages of the product life cycle have given rise to target costing. Which of the following are the stages of target costing?
I. Identifying the price that customers are ready to pay for the product.
II. Estimating the actual cost of the product.
III. Determining ways to reduce the actual cost to meet the target cost if the estimated cost exceeds the target cost.
IV. Adding the target profit margin to the target price to determine the target cost.
(a)
Both (I) and (III) above

(b)
Both (II) and (IV) above

(c)
(I), (II) and (III) above

(d)
(II), (III) and (IV) above

(e)
All (I), (II), (III) and (IV) above.


21. In order to ensure consistency, the management of the organization needs to make certain that the Disaster Recovery Plan (DRP) is in tune with the overall business continuity plan. Before drawing up a DRP, the organization should identify and prioritize its functions based on their nature. ‘Sensitive functions’ are functions that
(a)
Cannot be performed unless they are replaced by similar functions

(b)
Can be manually performed but only for a short period of time

(c)
Can be performed manually for an extended period at a reasonable cost

(d)
Are episodic in nature and may extend for a period at little or no cost to the organization

(e)
Are also termed as mission-critical functions.


22. Business continuity is the organization’s ability to carry out its business operations with negligible disruption or downtime during a natural or man-made disaster. To face these events and to carry on business smoothly, an organization needs to go in for Business Continuity Planning (BCP). Which of the following plan contains details about various ways of carrying out the essential services at the crisis site?
(a)
Disaster recovery

(b)
Business resumption

(c)
Business recovery

(d)
Contingency

(e)
Test.


23. An information systems audit provides the people who rely on a particular information system with an authoritative and objective opinion on the extent to which they can safely rely on that system. There are three ways in which computers can be used in information systems audit. Which of the following are the limitations of ‘Audit through the computer’?
I. Cannot be used in complex computer systems.
II. Does not give information as to whether the system logic is appropriate.
III. Higher costs.
IV. Requires higher technical expertise.
(a)
Both (I) and (II) above

(b)
Both (III) and (IV) above

(c)
(I), (II) and (IV) above

(d)
(II), (III) and (IV) above

(e)
All (I), (II), (III) and (IV) above.


24. According to Patrick Lencioni, conducting meetings will help improve decision-making and also in reducing the time taken for the decision-making process. He recommends different types of meetings which will serve different purposes. Which of the following is/are true about the weekly tactical meetings?
I. These meetings last for 45-90 minutes.
II. These meetings are held to discuss issues relating to long-term decisions.
III. These meetings should address only two or three most important topics.
IV. These meetings should be conducted in a location away from office.
(a)
Only (I) above

(b)
Only (III) above

(c)
Both (I) and (II) above

(d)
Both (I) and (III) above

(e)
Both (III) and (IV) above.


25. Eureka Airlines offers package tour that includes air travel, accommodation and sightseeing. This is an example of which of the following strategies of capacity management?
(a)
Customer development

(b)
Differentiation

(c)
Cost advantage

(d)
Enhancing the productivity

(e)
Bundling.


26. A service blueprint is a map or a diagrammatic representation of different levels of interactions between the customers and the service provider. Which of the following are the benefits of blueprinting?
I. It can help service organizations in lowering costs and increasing profitability by giving clues on how many people need to be recruited, trained, etc.
II. It helps the employees to gain a better focus on the services provided.
III. It helps to map the time that may be spent on each activity, which help the employees in better time management.
IV. It helps an organization to sell the right inventory unit to the right type of customer, at the right time and for the right price.
(a)
Both (I) and (III) above

(b)
Both (II) and (IV) above

(c)
(I), (II) and (III) above

(d)
(II), (III) and (IV) above

(e)
All (I), (II), (III) and (IV) above.


27. Operational audit plays a vital role in appraising the management about the effectiveness, efficiency, profitability etc., of an operation. Which of the following statements is/are true about ‘functional audit’, which is one of the categories of operational audit?
I. This type of audit deals with particular set of activities, like marketing or purchasing.
II. This type of audit deals with organizational units like departments, or manufacturing plants, and not with individual activities or processes.
III. This type of audit deals with process, quality, safety, risk, environment, control techniques etc.
(a)
Only (I) above

(b)
Only (II) above

(c)
Only (III) above

(d)
Both (I) and (II) above

(e)
Both (II) and (III) above.


28. In economics-based models of yield management in the airline industry, the best way to allocate the seats is achieved through which of the following?
(a)
When marginal revenue obtained for the last seat sold in one specific fare class is equal to the fare of the next higher fare class

(b)
When marginal revenue obtained for the last seat sold in one specific fare class is equal to the fare of the next lower fare class

(c)
When marginal revenue obtained for the first seat sold in one specific fare class is equal to the fare of the next higher fare class

(d)
When marginal revenue obtained for the last seat sold in one specific fare class is higher to the fare of the next higher fare class

(e)
When marginal revenue obtained for the last seat sold in one specific fare class is lower to the fare of the next higher fare class.


29. The nature of the production process is one of the variables on which the production controls in manufacturing organizations is dependent on. The nature of the production process is defined in terms of process production or discrete production. Which of the following is not an example of process production?
(a)
Automobile industry

(b)
Food and beverages industry

(c)
Pharmaceuticals industry

(d)
Petrochemicals industry

(e)
Petroleum refining.


30. Management control is implemented by a number of people both internal and external to the organization. Which of the following is not one of the external entities which play an important role in the implementation of control systems in an organization?
(a)
Legislators and regulators

(b)
Customers and suppliers

(c)
Financial analysts

(d)
External auditors

(e)
Employees.


31. Organizational decline is defined as ‘a condition in which a substantial, absolute decrease in an organization’s resources base occurs over a period of time’. Which of the following is not one of the issues that arise when the organization is on decline?
(a)
Greater resistance towards change

(b)
More conflicts

(c)
Exit of key employees

(d)
Downsizing

(e)
Centralizing key decisions.


32. For effective production control, the management requires regular reports on various production-related parameters and activities. Which of the following is not one of these reports?
(a)
Production efficiency report

(b)
Production planning report

(c)
Daily check-in report

(d)
Downtime analysis report

(e)
Shift handover report.


33. Which of the following is/are true regarding contingency rundown curve in the control of projects?
I. If the actual contingency usage curve is above the planned contingency usage curve, it is a good sign for the project since it means it is going more or less as per the original plan.
II. If the actual contingency usage curve is below the planned contingency usage curve, the project is using contingencies at a faster rate than planned.
III. If the actual contingency usage curve is above the planned contingency usage curve, the project is using contingencies at a faster rate than planned.
IV. If the actual contingency usage curve is below the planned contingency usage curve, it is a good sign for the project since it means it is going more or less as per the original plan.
(a)
Only (I) above

(b)
Only (IV) above

(c)
Both (I) and (II) above

(d)
Both (I) and (III) above

(e)
Both (III) and (IV) above.


34. Service factories are service organizations that are characterized by a low degree of variations and low relative throughput time. Which of the following is not among the service quality determinants that are usually to be considered in case of service factories?
(a)
Access

(b)
Tangibles

(c)
Recovery

(d)
Responsiveness

(e)
Competence.


35. Which of the following is the service quality determinant, important in the case of mass services?
(a)
Homogeneity

(b)
Perishability

(c)
Intangibility

(d)
Separability

(e)
Reliability.


36. Schedule Performance Index (SPI) is calculated as
(a)
BCWP-BCWS

(b)
BCWP-ACWP

(c)


(d)


(e)
BCWS-ACWP.


37. Services are utilized as soon as they are produced. For instance, the vacant seats on a flight will be of no use once the flight takes off. This example comes under which of the following attributes of service organizations?
(a)
Inseparability

(b)
Heterogeneity

(c)
Intangibility

(d)
Perishability

(e)
Reliability.


38. The format of an audit report depends on the nature of the project under evaluation and the purpose of the evaluation. Which of the following is not true regarding project audit report?
(a)
The information in audit report should be arranged is such a manner that it is easy to compare the planned and the actual output

(b)
The content of the report should be limited to the information and the issues that pertain to the project

(c)
The report should be written in a professional style without any scope for emotional overtones

(d)
It is always advantageous to use a customized format for presenting audit reports

(e)
If the audit report is to be distributed within the organization, then the management should prepare a distribution list.


39. Which of the following methods helps in enhancing cost performance analysis by measuring the amount of work done in a unit that is comparable to cost?
(a)
Critical path method

(b)
Earned value analysis

(c)
Project evaluation and review technique

(d)
Output per work-hour ratio

(e)
Variance analysis.


40. A no-frills, low- cost airline is example of which of the following categories of services?
(a)
Mass services

(b)
Service shops

(c)
Professional services

(d)
Service factory

(e)
Class services.


41. The different levels of Research and Development (R&D) effectiveness show the gradual advancement of the R&D activity from a stage of ambiguity to one of continuous improvement. At which of the following levels the activity “Close association with marketing but lack of understanding regarding the responsibilities between technical and product concept” exists?
(a)
Issue not identified

(b)
Responsibilities clarified

(c)
Continuous improvement in progress

(d)
Proper methods used

(e)
Issue being addressed.


42. J.B. Quinn has suggested a few areas in the Research and Development (R&D) function that can be measured. Though R&D performance measurement has been used for a long time, many managers still find it difficult to undertake R&D performance measurements. Which of the following is not a reason for the failure of performance measurement systems?
(a)
There is a low emphasis on behavioral controls which may mislead the organization in the appraisal process

(b)
Organizations face difficulty in pinpointing the contribution of R&D to the overall performance

(c)
It is difficult to find a link between the resources used in terms of investments and the intermediate results like the technologies discovered with the final outcomes like the products and services

(d)
A lot of importance is given to outputs like patents and proposals written, without taking into consideration the quality and cost incurred

(e)
The strategic infrastructure of the organization is a set of intangible assets that are difficult to measure.


43. According to Mark G. Brown and Raynold A. Svenson study, the Research and Development (R&D) system consists of input as one of its components. Which of the following is not included as ‘inputs’?
(a)
Information

(b)
Facilities

(c)
People

(d)
New proposals

(e)
Ideas.


44. Koyo Corporation, a leading global manufacturer of electronics, shifted its competitive focus towards innovation for new product development, by building superior capabilities for innovation. The Koyo Corporation acquired which of the following by taking above step?
(a)
Inimitability

(b)
Durability

(c)
Appropriability

(d)
Competitive advantage

(e)
Substitutability.


45. Analyzing accounts receivables or receivables management is an important step in devising the credit control policy. The important ways in which profitability from receivable management can be increased are
I. Devising and implementing an appropriate portfolio strategy.
II. Precise order fulfillment and invoicing.
III. Having an efficient conflict resolution procedure in place.
IV. Devising and implementing a fixed collection method for all customers.
(a)
Both (I) and (II) above

(b)
Both (II) and (III) above

(c)
(I), (II) and (III) above

(d)
(II), (III) and (IV) above

(e)
All (I), (II), (III) and (IV) above.


46. Which of the following budgeting methods is said to be used, when the total of the budget is uniformly spread out over the year?
(a)
Rolling budget

(b)
Flexible budget

(c)
Fixed budget

(d)
Capital budget

(e)
Zero-based budget.


47. There are different methods that organizations use for developing selling-expense budgets for the activities of the sales force. Which of the following is not one of the methods?
(a)
Affordability method

(b)
Objective-and-task method

(c)
Competitive parity method

(d)
Percentage-production method

(e)
Return-oriented method.


48. Vertical Marketing Systems (VMS) are most prevalent and successfully used in the food service industry. Kentucky Fried Chicken (KFC) is an example of which of the following types of VMS?
(a)
Corporate VMS

(b)
Administered VMS

(c)
Contractual VMS

(d)
Industry VMS

(e)
Global VMS.


49. Control Objectives for Information and related Technology (COBIT) describes 34 IT control processes that are covered under various domains. Which of the following domains explain six control processes and provides guidelines on how to increase the shelf life of the deployed technology?
(a)
Planning and organization

(b)
Acquisition and implementation

(c)
Delivery and support

(d)
Monitoring

(e)
Leading.


50. Which of the following set of the IT Infrastructure Library (ITIL) describes the processes and tools used in planning, conveying and managing the quality of Information Technology (IT) services?
(a)
Service delivery

(b)
Service support

(c)
Planning to implement service management

(d)
Security management

(e)
Infrastructure management.


51. Which of the following prominent framework(s) help(s) organization to implement Information Technology (IT) governance?
I. IT infrastructure Library.
II. Control objectives for information and related technology.
III. The information systems audit and control.
IV. The balanced scorecard.
(a)
Only (I) above

(b)
Both (I) and (II) above

(c)
(I), (II) and (IV) above

(d)
(I), (III) and (IV) above

(e)
All (I), (II), (III) and (IV) above.


52. Management controls of the Information systems are the managerial functions that have to be performed for ensuring planned and controlled development, implementation, operation and maintenance of information systems. There are various categories of Information system management controls. Which of the following is an activity of ‘Data resource management controls’?
(a)
Feasibility study and project initiation

(b)
Systems design and development

(c)
Implementation and maintenance

(d)
Monitoring operations and performance

(e)
Acceptance testing.


53. For effective production control, the management requires regular reports on various production-related parameters and activities. Which of the following is true regarding the production planning report?
(a)
This report gives details of the standard production within a given timeframe as against actual production, or the comparison of the standard time required to produce the given target against the actual time utilized for the given target

(b)
The important points that are considered in this report are targeted production, cumulative production, capacity per shift, etc.

(c)
This report can be used to rectify any anomalies in the production process

(d)
This report provides the production manager with the reasons for and the length of the downtime

(e)
This report contains details about the production achieved, the materials used, the utilities used, the problems that occurred during the shift, the action taken to resolve or reduce the problems, etc.


54. Productivity is a commonly used tool to measure how an organization’s production function is performing. Multifactor productivity is calculated using which of the following formula?
(a)


(b)


(c)


(d)


(e)
.


55. Mobile Customer Relationship Management (Mobile CRM) can be defined as extension of the traditional Customer Relationship Management (CRM), wherein a mobile, remote access or wireless component application has been incorporated into the standard CRM system. Mobile Sales Force Automation (Mobile SFA) as typical example of Mobile CRM enables field sales personnel to
(a)
Access pricing

(b)
Facilitate scheduling and dispatch

(c)
Facilitate service parts management

(d)
Facilitate service order and contract management

(e)
Facilitate bi-directional interaction with customer support.


56. The operations starting from procurement of inputs to distribution of finished goods are grouped together and are collectively referred to as supply chain management. The chain dealing with the post-production activities is referred to as
(a)
Downstream chain

(b)
Upstream chain

(c)
Midstream chain

(d)
Inbound chain

(e)
Outbound chain.


57. Which of the following are not among the major types of database recovery operations?
I. Roll forward.
II. Cryptographic controls.
III. Concurrency controls.
IV. Integrity controls.
(a)
Both (I) and (II) above

(b)
Both (III) and (IV) above

(c)
(I), (II) and (IV) above

(d)
(II), (III) and (IV) above

(e)
All (I), (II), (III) and (IV) above.


58. Transmission impairment results in a difference between the data sent by the sender and the data received by the receiver, in terms of quality and/or integrity. To prevent, detect or correct errors caused due to transmission impairment, which of the following communication controls is not used?
(a)
Internet working controls

(b)
Topological controls

(c)
Integrity controls

(d)
Flow controls

(e)
Line error controls.


59. As a part of input controls for information systems, which of the following is used to avoid the mistakes that occur during data capturing and entry activities?
(a)
Data code controls

(b)
Batch controls

(c)
Audit trail controls

(d)
Existence controls

(e)
Communication controls.


60. The output subsystem of the application system delivers the information to the end users. Which of the following is not a type of output controls?
(a)
Inference controls

(b)
Batch report design controls

(c)
Access controls

(d)
Audit trail controls

(e)
Existence controls.


61. The business environment is becoming increasingly complex and globalized and in order to survive and grow in such an environment, an organization needs distinct techniques like ‘Benchtrending’, which guide and control organizational performance. Which of the following is true about one of the techniques of ‘Benchtrending’?
(a)
This technique helps to improve the effectiveness and flexibility of the business as a whole by organizing and involving every department, every activity and each and every person across all hierarchical levels

(b)
This technique helps organizations identify the best way to perform their operational activities so that it leads to superior organizational performance

(c)
This technique is used to improve operational effectiveness, efficiency and profitability through fundamental and radical redesign of business processes

(d)
This technique helps in controlling and directing the organization’s response to the volatility of market forces and the dynamics of the industry in which it operates

(e)
This technique gives significant power to employees to improve the manufacturing process as they are the people closest to the production process and to the customers.


62. An environmental cost report states costs incurred by an organization on its environmental development and sustainability initiatives. Costs incurred on ensuring that the organization’s activities conform to the regulatory laws imposed by the Government comes under which of the following category of environmental costs?
(a)
Environmental prevention costs

(b)
Environmental external failure costs

(c)
Environmental appraisal costs

(d)
Environmental internal failure costs

(e)
Environmental regulatory costs.


63. Processing of customer requests may be done by the production department, the marketing department and the customer processing department. If the costs incurred on each of these activities have to be analyzed, which of the following techniques will be useful?
(a)
Activity-based costing

(b)
Standard costing

(c)
Target costing

(d)
Variable costing

(e)
Absorption costing.


64. Total Quality Management (TQM) focuses on making every aspect of the organization’s activity customer-oriented. Which of the following is/are false about the differences between TQM and traditional management?
I. TQM views customers as important resources that drive the processes of the organization, whereas in traditional management, the customer is considered separate from the organization.
II. TQM is a result oriented approach whereas traditional management is a process-oriented approach.
III. In TQM, economy of time and economy of scope are considered for achieving higher efficiency, whereas in traditional management only economy of scale is considered for increasing efficiency.
IV. TQM advocates hierarchical and vertical organization structure whereas traditional management proposes flatter organization structure.
(a)
Only (I) above

(b)
Both (II) and (IV) above

(c)
Both (III) and (IV) above

(d)
(I), (II) and (III) above

(e)
(II), (III) and (IV) above.


65. In any organization, the management should pay attention and continuously monitor the implementation and administration of management control systems. Which of the following are the issues that hinder the management control process?
I. When an organization does not have a proper organizational structure and the hierarchy is not clear, it may face an issue in implementing management control system.
II. If the control system holds managers responsible for achieving targets which are not in their control but are subject to significant influence of the environment, it reduces the credibility of the top management and the control system.
III. The controlled person and the controlling person may team up to cover up financial frauds or violate the control procedures.
IV. Tight control can lead to negative emotions such as fear and resentment, negative attitudes and counterproductive behavior.
(a)
Both (I) and (II) above

(b)
Both (I) and (III) above

(c)
(I), (II) and (IV) above

(d)
(II), (III) and (IV) above

(e)
All (I), (II), (III) and (IV) above.


66. Internal auditors are responsible for evaluating the controls and suggesting improvements in them. Which of the following is/are not the responsibility(ies) of internal auditors?
I. Assessing whether the control systems conform to the set standards and regulations.
II. Assessing the operations to check whether the outcomes of the operations are matching with the set objectives of the organization.
III. Assessing whether the organization’s effectiveness – current performance as well as potential for future performance – is good enough from the perspectives of investor and/or lenders.
IV. Ensuring the proper utilization of resources.
(a)
Only (I) above

(b)
Only (III) above

(c)
Both (I) and (II) above

(d)
Both (I) and (III) above

(e)
Both (III) and (IV) above.


67. Who is the highest authority in the organization that is responsible for the management control system?
(a)
Chief financial officer

(b)
Chairman

(c)
Controller

(d)
Director

(e)
Chief executive officer.


68. According to Larry E. Greiner, organizations usually go through five different phases of development and growth. In which of the following phases, may the manager not comply with plans and budgets of the organization and choose to use his/her own discretion in decision making?
(a)
Collaboration phase

(b)
Coordination phase

(c)
Decentralization phase

(d)
Direction phase

(e)
Creativity phase.


69. Keaveney identified different reasons relating to service failure on the part of service organizations that causes customers to switch to other service providers. Which of the following is true relating to ‘Service encounter failures’?
(a)
This service failure includes all mistakes and technical problems encountered while rendering the core service

(b)
This service failure occurs if employees are hostile towards the customers and do not give due consideration to the customer opinions

(c)
This service failure includes all the failures relating to price of the products

(d)
This service failure occurs due to the inappropriate treatment of customers by employees, while attending to service failures

(e)
This service failure refers to the trouble customers are put to due to factors such as location of service delivery, hours of operation and waiting period.


70. The Six Sigma strategy helps organizations to not only attain the desired levels of service performance but also to reduce the variability in the process. Which of the following is false regarding implementation of Six Sigma?
(a)
The quality of decisions is improved as the decisions are based on facts rather than assumptions

(b)
Higher levels of human interactions and influence of human characteristics like friendliness being valued by customers make it easier to measure customer satisfaction

(c)
Service delivery is fast due to minimization of steps which do not add value to the process

(d)
The organization is benefited through achieving better cross-functional teamwork

(e)
There is enhanced consistency of results due to reduced process variability.


71. Which of the following are the main components of service quality?
I. People’s actions.
II. Professional opinion.
III. People opinion.
IV. Physical facilities and processes.
(a)
Both (I) and (III) above

(b)
Both (II) and (IV) above

(c)
(I), (II) and (IV) above

(d)
(II), (III) and (IV) above

(e)
All (I), (II), (III) and (IV) above.


72. Which of the following term refers to “the interval of time between availability for use and completion of the service encounter”?
(a)
Throughput time

(b)
Discrete throughput time

(c)
Marginal throughput time

(d)
Manageable time

(e)
Encounter throughput time.


73. Which of the following business strategies aims at controlling wasteful processes by eliminating them or by improving them?
(a)
Kaizen

(b)
Total quality management

(c)
Just-in-time

(d)
Lean manufacturing

(e)
Benchmarking.


74. Which of the following are true about Activity-based costing?
I. The aim of activity-based costing is to fulfill the needs of customers by consuming fewer organizational resources.
II. This method gives information about the costs incurred by different activities that may cut across departmental boundaries.
III. Its aim is to fulfill the needs of customers by consuming fewer organizational resources.
IV. A team comprising personnel from different departments such as design, marketing, finance, production and purchasing are involved in the activity-based costing.
(a)
Both (I) and (III) above

(b)
(I), (II) and (III) above

(c)
(I), (II) and (IV) above

(d)
(II), (III) and (IV) above

(e)
All (I), (II), (III) and (IV) above.


75. Life cycle costing helps the management in evaluating the cost consequences of developing and making a product so that the areas where cost reduction techniques have to be implemented can be easily identified. Which of the following is the type of costs that have not yet been incurred but will be incurred in future because of decisions that have already been taken?
(a)
Committed costs

(b)
Target costs

(c)
Activity-specific costs

(d)
Environmental costs

(e)
Internal costs.


76. A project manager has to conduct various reviews throughout the life of a project to ensure that it is progressing toward achieving the planned objectives. Status review is the most common of all the reviews and conducted usually at which of the following levels?
I. Cursory review.
II. Process review.
III. Comprehensive review.
IV. Design review.
(a)
Both (I) and (II) above

(b)
Both (I) and (III) above

(c)
(I), (II) and (IV) above

(d)
(II), (III) and (IV) above

(e)
All (I), (II), (III) and (IV) above.


77. Balanced autonomy is one of the activities undertaken by the managers to foster and manage innovativeness in the organization. Operational autonomy is one of the types of balanced autonomy. Which of the following is/are true about the ‘operational autonomy’?
I. This type of autonomy brings in a sense of fulfillment when the project is completed and also promotes the feeling of ownership in the employees.
II. This type of autonomy links individual aspirations to the organizational objectives.
III. This type of autonomy is enjoyed by the employees of the R&D function in an organization that score high on innovation.
(a)
Only (I) above

(b)
Only (II) above

(c)
Both (I) and (II) above

(d)
Both (I) and (III) above

(e)
All (I), (II) and (III) above.


78. National culture is an important aspect that impacts the Research and Development (R&D) structure. According to Offereins and Fruytier, which of the following structural factors in the R&D function is most influenced by national culture?
(a)
Conflict

(b)
Cooperation

(c)
Autonomy

(d)
Rewards

(e)
Decision making.


79. A formal process must be in place to identify, quantify and verify changes to the work that has to be performed. There are various concepts associated with overall change control. Which of the following is true about the concept of ‘Scope creep’?
(a)
It includes tracking systems and approval procedures necessary to authorize the changes

(b)
It is a documenting procedure that is used to ensure that the description of the project output is accurate and complete

(c)
It occurs due to the repeated attempts by the project team and the client to improve the product/service

(d)
It includes developing monthly reports detailing all the changes and their impact on the project

(e)
It includes redrawing the project network diagrams and understanding the proposed changes.


80. The Perrow model has been used to explain the use of various controls in the Research and Development (R&D) set-up. Which of the following is true about ‘behavioral controls’?
(a)
These are the internal control systems which are difficult to incorporate in the non-production activities of the organization

(b)
These controls include the set of rules and regulations that employees have to follow while working in the organization

(c)
These are self and group control processes

(d)
These type of controls are suited for manufacturing units

(e)
It is difficult to incorporate these controls as the link between costs incurred and the levels of activities is not clear.


81. Which of the following is a ‘systematic approach toward the design of products and the way they are manufactured, assembled, stocked, transported, distributed and recycled’?
(a)
Concurrent engineering

(b)
Value engineering

(c)
Business process reengineering

(d)
Financial reengineering

(e)
Human resource reengineering.


82. Research and Development (R&D) structures are created in such a way that they integrate both knowledge and creativity. Which of the following is/are true about ‘Employment relationship’ as one of the types of structures that are possible for the R&D function?
I. This includes factors like the tasks, cooperation and conflict situations in the organization.
II. This includes factors like autonomy, decision making and leadership.
III. This includes factors like reward and appraisal systems.
IV. It deals with task coordination and finding out who takes the final decisions.
(a)
Only (I) above

(b)
Only (III) above

(c)
Both (I) and (II) above

(d)
Both (I) and (III) above

(e)
Both (III) and (IV) above.


83. The effective control of a project requires a precise description of what is expected from the execution of the project. The project overview statement is a precise description of what the goal of a project is and how it will be achieved. The project overview statement is also known as
I. Document of understanding.
II. Statement of work.
III. Initial project definition.
IV. Project scope statement.
(a)
Both (I) and (II) above

(b)
Both (I) and (III) above

(c)
(I), (II) and (IV) above

(d)
(II), (III) and (IV) above

(e)
All (I), (II), (III) and (IV) above.


84. The equity theory states that employees should be equitably paid if they are to be satisfied and productive. The employee compensation structure is designed taking certain perspectives into consideration. Which of the following perspectives is/are related to the theory of internal equity?
I. The employee’s preconceived notions regarding equitable compensation.
II. The correlation between the performance of the employee and the compensation he/she receives.
III. Comparisons of compensation paid for similar jobs in other organizations in the same industry or other industries.
(a)
Only (I) above

(b)
Only (II) above

(c)
Only (III) above

(d)
Both (I) and (II) above

(e)
Both (II) and (III) above.


85. Which of the following is not true about Kaizen, used by the Japanese to reduce and control costs?
(a)
Kaizen is the term used for making improvements in the processes through small increments rather than through large-scale innovations

(b)
Kaizen is applied during the design stage

(c)
Employees are encouraged to identify ways of reducing costs, wherever possible

(d)
Kaizen aims at cost reduction by focusing on improving the manufacturing process

(e)
Kaizen is an approach to improve productivity.


86. The Workforce Scorecard approach views the workforce in terms of the contribution made by it instead of cost incurred on it. Which of the following is true about ‘workforce success’, one of the dimensions of workforce scorecard?
(a)
It reflects the manner in which the workforce has contributed to the execution of the organization’s strategy

(b)
It reflects the behaviors which are considered appropriate in the organization

(c)
It includes the skills, knowledge, ability and personal characteristics which serve as the foundation for workforce behaviors

(d)
It addresses the question of whether the workforce and its leadership team are consistently behaving in a manner that will lead to the achievement of the organization’s strategic objectives

(e)
It reflects whether the organization has a workforce culture that is both strategic and
high-performance-oriented.


87. A Human Resource Development (HRD) audit is a comprehensive evaluation of the current human resource development strategies, structure, systems, styles and skills in the context of the short-term and long-term business plans of a company. Which of the following is not used to conduct HRD audit?
(a)
Questionnaires

(b)
Group discussion

(c)
Records

(d)
Manuals

(e)
Workshops.


88. By using which of the following techniques, the project manager is able to update the project plan with minimal effort and to communicate the revised plans to various project stakeholders?
(a)
Project management information system

(b)
Progress measurements

(c)
Milestone tracking

(d)
Project status review

(e)
Contingency planning.


89. Total cost of annual sales plan of Charisma Ltd., for the year 2008-09 is Rs.30,00,000 and the total cost of goal inventory is Rs.6,00,000.The projected inventory turns of the company for the year 2008-09 will be
(a)
0.20

(b)
1.00

(c)
2.00

(d)
4.50

(e)
5.00.


90. According to the “Internal control-Integrated framework” proposed by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), there are five components of management control. Which of the following is not such a component?
(a)
Monitoring the control system

(b)
Financial assessment

(c)
Risk assessment

(d)
Control environment

(e)
Information and communication.


91. Which of the following, measures the economic contribution of a program in terms of how effective it was in identifying and modifying employee behavior and the future service contribution of the employees?
(a)
Value analysis

(b)
Spectrum analysis

(c)
Utility analysis

(d)
Economic analysis

(e)
Objectivity analysis.


92. An applied behavioral management program, designed for managers and supervisors, was implemented at Monarch Power, an electric and gas utility company. In a follow-up evaluation, it was found that the payoff from the first year program was Rs.10,77,500, while the total implementation costs were
Rs. 2,15,500. Thus the benefit-to-cost ratio was
(a)
5:1

(b)
4:1

(c)
2:3

(d)
3:3

(e)
1:4.


93. In Arvind Agro Ltd., 50 employees leave in the third quarter (October to December) of 2007-08. The number of employees on October 1 was 1,000 and the number of employees at the end of the study period, December 31 was 800. The employee turnover rate for the year will be
(a)
11.55%

(b)
22.22%

(c)
18.11%

(d)
12.00%

(e)
10.80%.


94. Aditya Construction has conducted a program with initial costs of Rs.1,00,000 with a useful life of three-years. If the annual net savings from the program is expected to be Rs.40,000, then the payback period of the original investment will be
(a)
1.0 years

(b)
2.5 years

(c)
3.0 years

(d)
2.0 years

(e)
1.5 years.


95. An eighteen-week training and development program was conducted for entry-level software engineers at Connexions Ltd., and the results of the program were impressive. Enhancement in productivity and quality yielded an annual value of Rs.3,21,600, while the total costs for the program were only Rs.38,233. Thus, the return on investment was
(a)
521%

(b)
400%

(c)
741%

(d)
841%

(e)
200%.


96. Mekastar Ltd., had 500 employees at the beginning of the year and 350 at the end. The number of new hires in this period was 50. During this period, 70 employees (with varying experience levels) left the organization. At the end of the year, 250 employees had one or more years of experience. The employee retention rate is
(a)
77.70%

(b)
42.00%

(c)
60.00%

(d)
45.55%

(e)
58.82%.


97. The channel performance is evaluated at both the macro-level and the micro-level. Performance at macro-level is evaluated in terms of the contribution made by the intermediaries to society. Which of the following is not a major element that will determine the contribution of an intermediary at macro-level?
(a)
Channel efficiency

(b)
Productivity

(c)
Effectiveness

(d)
Equity

(e)
Integration.


98. A formal change control system that can minimize the risk associated with a change is usually a part of the configuration management system that integrates and coordinates changes across the project development life cycle. Which of the following guidelines are useful in designing an effective change control system?
I. All project agreements should include a detailed report on how requests for a change in the plan, budget, schedule or output of a project should be introduced and processed.
II. A change order that describes every change in the project should be prepared.
III. Obtaining an approval letter from the project manager is mandatory though it is not mandatory to obtain the letter from client’s agent and senior management.
IV. Once the master plan is approved, a change order of the project should be made reflecting the changes and the master plan becomes a part of the change order.
(a)
Both (I) and (II) above

(b)
Both (I) and (III) above

(c)
(I), (II) and (IV) above

(d)
(II), (III) and (IV) above

(e)
All (I), (II), (III) and (IV) above.


99. The price of an external hard-disk is Rs.3,000, the probability of some employee attempting to steal it during a year may be 33 percent and the probability of the security guard detecting the theft may be 67 percent. The exposure or expected loss is
(a)
Rs. 555

(b)
Rs. 900

(c)
Rs. 1,347

(d)
Rs. 327

(e)
Rs. 663.


100. Which of the following is not a way in which organizations undertake direct marketing?
(a)
Direct mailing

(b)
Telemarketing

(c)
Hoarding

(d)
Newspaper advertising

(e)
Internet advertising.


END OF QUESTION PAPER

Suggested Answers
Management Control & Information Systems - II (MB2F4): October 2008
Answer Reason
1. A Option (a): Effectiveness control in selling mainly focuses on Customer satisfaction.
Hence the answer is (a). <>
2. D The organization can maximize its profitability in terms of RONW through
Profit margin management.
Asset management.
Debt management.
Hence the answer is (d). <>
3. A The following is true about the ‘strategic surveillance’ component of strategic control in marketing:
Statement (II): Its purpose is to ensure that the planned strategies are implemented fully and any changes detected in the environment that could possibly affect the implementation process are dealt with appropriately.
Statement (I), (III) and (IV) pertain to premise control, implementation control and Special alert control.
Hence the answer is (a). <>
4. A An effective marketing audit is
Statements (I) and (II) are true.
Well-defined.
Comprehensive.
Independent.
Periodic.
Statements (III) and (IV) are false.
Hence the answer is (a). <>
5. C Integration can be achieved through the following methods:
Integration through strategy.
Integration through process.
Integration through technology.
Integration through organization.
Hence the answer is (c). <>
6. A In ‘Learning and growth perspective’, the strategic indicators included are employee retention, employee development and strategic skill coverage ratio by competency category.
Hence the answer is (a). <>
7. C Option (c): Stage ‘Detail planning, scrutiny and development’ will pass through checking testability and validity ‘Gate’ for reviewing process.
Hence the answer is (c). <>
8. E All the statements are true.
The main objectives of information systems control and auditing are:
 Safeguarding of assets.
 Maintenance of data integrity.
 Effectiveness in achieving organizational objectives.
 Efficient consumption of resources.
Hence the answer is (e). <>
9. A Statement (I): They relate to the information that the public gather or obtain from a particular PR effort is true about ‘PR outtakes’.
Hence the answer is (a). <>
10. D Option (d): Sales volume is not the indicator of sales that can be used in indirect evaluation. It is used as the parameter for measurement in direct evaluation.
Option (a), (b), (c) and (e) are the indicators of sales that can be used in indirect evaluation.
Hence the answer is (d). <>
11. E Statement (e): The step not involved in managing channels efficiently is that of the organization trying to influence decisions by enforcing their objectives and perspectives on the channel members.
Statement (a), (b), (c) and (d) are the steps involved in efficient channel management.
Hence the answer is (e). <>
12. A Brand assets are the attributes of the brand that affect the consumer decisions. These attributes include brand awareness, brand personality and brand reputation. Hence the answer is (a). <>
13. C Application controls are different from management controls in following ways :
Statement (I): They are predominantly exercised by hardware and software: the role of people is unlimited.
Statement (III): They are more concerned with safeguarding assets and maintaining data integrity than ensuring system effectiveness and efficiency.
Statement (IV): Their existence depends on a cost-benefit analysis of each application whereas the existence of management controls is based on a cost-benefit analysis of the whole set of application systems.
Hence the answer is (c). <>
14. E Option (e): Commitment to perform describes ‘the actions an organization must take to ensure that the process is established and will endure’.
Hence the answer is (e). <>
15. C Option (c): Concurrent audit is the mechanism by which the auditor can pinpoint the errors at an early stage of system development.
Hence the answer is (c). <>
16. D Option (d): Cryptographic control is a major technique used in boundary control.
Hence the answer is (d). <>
17. D Organizations usually opt for in-house production to
Statement (II): Maintain control over all the value chain activities.
Statement (III): Put excess plant capacity to productive use.
Statement (IV): Ensure that the design of a product is kept secret.
Statement (I) is true about outsourcing of material.
Hence the answer is (d). <>
18. B Option (b): Customer order promised cycle time is the anticipated or agreed upon cycle time of a purchase order.
Option (a): is the cycle time
Option (c): customer order actual cycle time
Option (d): Cash to cash cycle time
Option (e): supply chain cycle time.
Hence the answer is (b). <>
19. B Option (b): The receipt of materials is identified as Inbound logistics. The supply chain dealing with purchases and inventory leading up to production is termed as inbound logistics.
Hence the answer is (b). <>
20. C Target costing involves various stages. The following are the stages:
Statement (I): Identifying the price that customers are ready to pay for the product.
Statement (II): Estimating the actual cost of the product.
Statement (III): Determining ways to reduce the actual cost to meet the target cost if the estimated cost exceeds the target cost.
Statement (IV) is not a stage of the target costing.
Hence the answer is (c). <>
21. C Option (c): Sensitive functions are the functions that can be performed manually for an extended period at a reasonable cost.
Other statements belong to critical functions, vital functions and non-critical functions.
Hence the answer is (c). <>
22. B Option (b): A business resumption plan contains details about various ways of carrying out the essential services at the crisis site.
Hence the answer is (b). <>
23. B The following are the limitations of ‘Audit through the computer’:
Statement (III): Higher costs.
Statement (IV): Requires higher technical expertise.
Statements (I) and (II) are the limitations of ‘ Auditing around the computer’.
Hence the answer is (b). <>
24. A Statement (I): Weekly tactical meeting lasts for 45-90 minutes.
All other statements are true about Daily check in, Monthly strategic, Quarterly Off-site review meetings.
Hence the answer is (a). <>
25. E Option (e): Eureka Airlines offers package tour that include air travel, accommodation and sightseeing, is an example of Bundling strategy of capacity management strategies.
Option (a) and (b) are other two strategies of capacity management dealing with enhancing customer loyalty and handling exceptional situations.
Option (c) and (d) are not relevant in present context.
Hence the answer is (e). <>
26. C The benefits of blueprinting are:
Statement (I): It can help the organizations in lowering costs and increasing profitability by giving clues on how many people need to be recruited, trained, etc.
Statement (II): It helps the employees to gain a better focus on the service provided.
Statement (III): It helps to map the time that may be spent on each activity, which help the employees in better time management.
Statement (IV) is a benefit of yield management.
Hence the answer is (c). <>
27. A The following is true about ‘functional audit’:
Statement (I): Functional audit deals with particular set of activities, like marketing or purchasing.
The false statements are:
Statement (II): Organizational audit deals with organizational units like departments, or manufacturing plants, and not with individual activities or processes.
Statement (III): Special assignment audit deals with process, quality, safety, risk, environment, control techniques etc.
Hence the answer is (a). <>
28. B Option (b): In economics-based models of yield management, the best way to allocate the seats is achieved when marginal revenue obtained for the last seat sold in one specific fare class is equal to the fare of the next lower fare class.
Other options are not correct with respect to allocation.
Hence the answer is (b). <>
29. A Option (a): Automobile industry is not an example of process production. It is an example of discrete production.
Hence the answer is (a). <>
30. E Option (e): Employees is not the external entities which play an important role in the control systems of the organization.
All other options are the external entities.
Hence the answer is (e). <>
31. E Option (e): Centralizing key decisions is not an issue arises when the organization is on decline. It is a measure to handle decline.
Hence the answer is (e). <>
32. C Option (c): Daily check-in is a type of meeting.
Hence the answer is (c). <>
33. C The following are true regarding contingency rundown curve:
Option (c): Statement (I) and (II) are true:
Statement (I): If the actual contingency usage curve is above the planned contingency usage curve, it is a good sign for the project since it means it is going more or less as per the original plan.
Statement (II): If the actual contingency usage curve is below the planned contingency usage curve, the project is using contingencies at a faster rate than planned.
Hence the answer is (c). <>
34. A Option (a): In a service factory, the service quality determinant that is not usually to be considered is access.
Hence the answer is (a). <>
35. E Option (e): Reliability is the service quality determinant which is important in the case of mass services.
Hence the answer is (e). <>
36. C Schedule performance Index (SPI) is calculated as
.
Hence the answer is (c). <>
37. D Services are utilized as soon as they are produced. That is, they are perishable.
For instance, the vacant seats on a flight will be of no use once the flight takes off. This example comes under Perishability attribute of service organization.
Hence the answer is (d). <>
38. D The following is not true regarding project audit report:
Statement (d): It is always advantageous to use a customized format for presenting audit reports.
The right statement is: It is always advantageous to use a standard format for presenting audit reports.
Hence the answer is (d). <>
39. B Option (b): Earned value analysis is a method that helps in enhancing cost performance analysis by measuring the amount of work done in a unit that is comparable to cost.
Hence the answer is (b). <>
40. D Service factories are service organizations that are characterized by a low degree of variations and low relative throughput time. A no-frills, low –cost airline, which have low turnaround times at the airport and less variation in operations tend to be more productive.
Hence the answer is (d). <>
41. D Option (d): Proper method used is the level of R&D effectiveness at which there is “Close association with marketing but lack of understanding regarding the responsibilities between technical and product concept”.
Hence the answer is (d). <>
42. A Statement (a): There is a low emphasis on behavioral controls which may mislead the organization in the appraisal process is not a reason for performance measurement system to fail.
Others statements are the reasons for the failure.
Hence the answer is (a). <>
43. D Option (d): New proposals is not included as ‘inputs’.
Hence the answer is (d). <>
44. D Option (d): Koyo Corporation, a leading global manufacturer of consumer durables, shifted its competitive focus towards innovation for new product development, by building superior capabilities for innovation, the organization acquired Competitive advantage over its competitors.
Hence the answer is (d). <>
45. C The important ways in which profitability from receivable management can be increased are:
Devising and implementing an appropriate portfolio strategy
Precise order fulfillment and invoicing
Having an efficient conflict resolution procedure in place.
Statement (IV) is not one of the ways.
Hence the answer is (c). <>
46. C If fixed budgets are used in marketing control, the total marketing expense budget is uniformly spread out over the year.
Hence the answer is (c). <>
47. D Option (d): Percentage-production method is not one of the methods. Hence the answer is (d). <>
48. C Kentucky Fried Chicken (KFC) is an example of Contractual VMS.
Hence the answer is (c). <>
49. B Option (b): The Acquisition and implementation domain explains six control processes that talk about the strategies the organization should adopt to identify its Information Technology (IT) requirements, procure technology and implement the technology and provides guidelines on how to increase the shelf life of the deployed technology.
Hence the answer is (b). <>
50. E The Infrastructure management set in the IT Infrastructure Library (ITIL) framework describes the processes and tools used in planning, conveying and managing the quality of Information Technology (IT) service.
Hence the answer is (e). <>
51. C The following frameworks helps organization to implement Information Technology (IT) governance:
 Statement (I): IT infrastructure Library.
 Statement (II): Control objectives for information and related technology.
 Statement (IV): The balanced scorecard.
Hence the answer is (c). <>
52. D Option (d): Monitoring operations and performance is an activity of ‘Data resource management control’.
All other option belongs to ‘System development management controls’.
Hence the answer is (d). <>
53. B Statement (b): The important points that are considered in this report are targeted production, cumulative production; capacity per shift etc is true regarding Production planning report.
Statement (a), (c), (d) and (e) belong to Production efficiency report, Daily production report, downtime analysis report and shift handover report respectively.
Hence the answer is (b). <>
54. A Multifactor productivity is calculated by the formula:
.
Hence the answer is (a). <>
55. A Mobile SFA enables field sales personnel to access Pricing.
Option (b), (c), (d) and (e) are related to Mobile field service management (Mobile FSM).
Hence the answer is (a). <>
56. A The chain dealing with the post-production activities is referred to as Downstream chain.
Option (b) refers to purchases and inventory.
Option (c), (d) and (e) are not relevant in present context.
Hence the answer is (a). <>
57. D The following are not the major types of database recovery operations:
Cryptographic controls are used to protect the integrity of the data in the database.
Concurrency controls allow users of the database to share the same data resources.
Integrity controls ensure data is correct and complete.
The true statement is :
 Roll forward is the major type of database recovery operations.
Hence the answer is (d). <>
58. C Option (c): Integrity controls are not a communication control used to prevent, detect or correct errors caused due to transmission impairment.
Hence the answer is (c). <>
59. B Option (b): Batch controls are used to avoid the mistakes that occur during data capturing and entry activities.
Hence the answer is (b). <>
60. C Option (c): Access controls is not an output controls.
All other are the types of output controls.
Hence the answer is (c). <>
61. D Benchtrending helps in controlling and directing the organization’s response to the volatility of market forces and the dynamics of the industry in which it operates.
Option (a) is true about Total quality management.
Option (b) is true about Benchmarking.
Option (c) is true about Business process reengineering.
Option (e) is true about Kaizen.
Hence the answer is (d). <>
62. C Costs incurred on ensuring that the organization’s activities conform to the regulatory laws imposed by the Government come under category of Environmental appraisal costs.
Hence the answer is (c). <>
63. A Processing of customer requests may be done by the production department, the marketing department and the customer processing department. The costs incurred on such activities are analyzed by Activity-based costing.
Hence the answer is (a). <>
64. B The following is false about the differences between TQM and traditional management:
Statement (II): TQM is a result oriented approach whereas traditional management is a
process-oriented approach.
Statement (IV): TQM advocates hierarchical and vertical organization structure whereas traditional management proposes flatter organization structure.
Hence the answer is (b). <>
65. B The following are the issues that hinder the management control process:
Statement (I): When an organization does not have a proper organizational structure and the hierarchy is not clear, it may face an issue.
Statement (III): The controlled person and the controlling person may team up to cover up financial frauds or violate the control procedures.
The false statements are:
Statement (II): If the control system holds managers responsible for achieving targets which are not in their control but are subject to significant influence of the environment, it reduces the credibility of the top management and the control system.
Statement (IV): Tight control can lead to negative emotions such as fear and resentment, negative attitudes and counterproductive behavior.
Statements (II) and (IV) is dysfunctional consequences of management control system.
Hence the answer is (b). <>
66. B Statement (III): Assessing whether the organization’s effectiveness - current performance as well as potential for future performance – is good enough from the perspectives of investor and/or lenders is the responsibility of Financial analysts.
All other are the responsibilities of internal auditors.
Hence the answer is (b). <>
67. E Chief executive officer is the highest authority in the organization that is responsible for the management control system.
Hence the answer is (e). <>
68. C Option (c): The issue of manager not complying with plans and budgets of the organization and choose to use their own discretion in decision making may arise at decentralization phase.
Hence the answer is (c). <>
69. B The following is true relating to ‘Service encounter failures’:
Option (b): service failure occurs if employees are hostile towards the customers and do not give due consideration to the customer opinions.
Other options are related to other service failures faced by the organization.
Hence the answer is (b). <>
70. B The correct statement is :
Higher levels of human interactions and influence of human characteristics like friendliness being valued by customers also make it difficult to measure customer satisfaction.
Hence the answer is (b). <>
71. C The following are the P’s of service quality:
People’s actions.
Professional opinion.
Physical facilities and processes.
Hence the answer is (c). <>
72. A Option (a): Throughput time is the interval of time between availability for use and completion of the service encounter.
Hence the answer is (a). <>
73. D Option (d): Lean manufacturing is a business strategy which aims at controlling wasteful processes by eliminating them or by improving them.
Hence the answer is (d). <>
74. B The following are true about Activity-based costing:
Statement (I): The aim of activity-based costing is to fulfill the needs of customers by consuming fewer organizational resources.
Statement (II): This activity gives information about the costs incurred by different activities that may cut cross departmental boundaries.
Statement (III) : Its aim is to fulfill the needs of customers by consuming fewer organizational resources
Statement (IV) is true about target costing.
Hence the answer is (b). <>
75. A Option (a): The cost that has not yet been incurred but will be incurred in future because of decisions that have already been taken is called as committed costs or locked-in costs.
Hence the answer is (a). <>
76. B Status review is the most common of all the reviews and conducted usually at following levels:
Statement (I): Cursory review.
Statement (III): Comprehensive review.
Statement (II) and (IV) are not the part of status review.
Hence the answer is (b). <>
77. D The following are true about the ‘operational autonomy’:
Statement (I): This type of autonomy brings in a sense of fulfillment when the project is completed and also promotes the feeling of ownership in the employees.
Statement (III): This type of autonomy is enjoyed by the employees of the Research and Development (R&D) function.
The following is the false statement:
Statement (II): Strategic autonomy links individual aspirations to the organizational objectives.
Hence the answer is (d). <>
78. C Autonomy is one of the structural factors which is most influenced by national culture.
Hence the answer is (c). <>
79. C The following is true about the concept of ‘Scope creep’:
Option (c): It occurs due to the repeated attempts by the project team and the client to improve the product/service.
Hence the answer is (c). <>
80. B Option (b): ‘Behavioral controls’ include the set of rules and regulations that employees have to follow while working in the organization.
Other options are true relating to financial controls and personnel controls.
Hence the answer is (b). <>
81. A Concurrent engineering is a systematic approach toward the design of products and the way they are manufactured, assembled, stocked, transported, distributed and recycled.
Hence the answer is (a). <>
82. B The following is true about ‘Employment relationship’
 This includes factors like reward and appraisal systems.
All other statements are true relating to production structure and control structure.
Hence the answer is (b). <>
83. E The project overview statement is also known as
 Document of understanding.
 Statement of work.
 Initial project definition.
 Project scope statement.
Hence option (e) is correct. <>
84. D The following perspective are related to internal equity:
Statement (I): The employee’s preconceived notions regarding equitable compensation.
Statement (II): The correlation between the performance of the employee and the compensation he/she receives.
Statement (III) refers to external equity.
Hence the answer is (d). <>
85. B The correct statement is: It is applied during the production stage.
Hence the answer is (b). <>
86. A The following is true about ‘workforce success’, one of the dimensions of workforce scorecard: Option (a): It reflects the manner in which the workforce has contributed to the execution of the organization’s strategy.
All other options are related to other dimension of workforce scorecard.
Hence the answer is (a). <>
87. B Group discussion is not a used to conduct HRD audit.
All other options are the used to conduct HRD audit.
Hence the answer is (b). <>
88. A Option (a): By using Project management information system technique, the project manager is able to update the project plan with minimal efforts and to communicate the revised plans to various project stakeholders.
Hence the answer is (a). <>
89. E Projected inventory turns = = 5.00.
Hence the answer is (e). <>
90. B Option (b): Financial assessment is not a component of management control proposed by COSO.
All other are the component of Management control.
Hence the answer is (b). <>
91. C Option (c): Utility analysis measures the economic contribution of the program in terms of how effective it was in identifying and modifying employee behavior and the future service contribution of the employees.
All other options are not relevant in this context.
Hence the answer is (c). <>
92. A Benefit-to-cost ratio = = = 5:1.
Hence the answer is (a). <>
93. B Employee Turnover Rate = .
Average number of employees during the period = = 900.
Employee turnover rate (for the year) = .
The no.50 is multiplied by four to arrive at the annual turnover from the quarterly turnover date.
Hence the answer is (b). <>
94. B Payback period = = = 2.5 years.
Hence the answer is (b). <>
95. C Return on Investment (ROI) =
= = 741%.
Hence the answer is (c). <>
96. E Average number of employees during the period = .
Employees retention rate = .
Hence the answer is (e). <>
97. E Option (e): Integration is not a major element that will determine the contribution of an intermediary at macro-level.
Integration is an objective considered for evaluating performance at micro level.
Hence the answer is (e). <>
98. A The following guidelines are useful in designing an effective change control system:
Statement (I): All project agreements should include a detailed report on how requests for a change in the plan, budget, schedule or output of a project should be introduced and processed.
Statement (II): A change order that describes every change in the project should be prepared.
Hence the answer is (a). <>
99. D The probability of occurrence of a threat event (Pte) = 33% = 0.33.
The probability of control failure (Pcf) = (100%-67%) = 33% = 0.33.
The asset involved is a commonly available hardware component, the monetary value of asset loss (L) may be assumed to be equal to its price, that is, L= Rs. 3,000.
Exposure or expected loss(EL)
EL = (Pte) (Pcf) L = 0.33 0.33 3,000 = Rs. 327.
Hence the answer is (d). <>
100. C Option (c): Hoarding is not a way in which organizations undertake direct marketing.
Option (a), (b), (d) and (e) are related to direct marketing.
Hence the answer is (c). <>

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