Manila * Cavite * Laguna * Cebu * Cagayan De Oro * Davao

Since 1977

MAS.3201 TRINIDAD/ALENTON/URO
Overview of Management Advisory Serives MAY 2022

LECTURE NOTES

Three objectives of management accounting: Three roles of management accountants

1. To provide information for costing services, • Problem solving: comparative analysis for decision
products, and other objects of interest to
making
management.
2. To provide information for planning, • Scorekeeping: accumulating data and reporting
controlling, evaluation, and continuous reliable results
improvement. • Attention directing: The function of managerial-
3. To provide information for decision making. accounting information in pointing out to managers
issues that need their attention, thereby helping
managers properly focus their attention.

Distinctions Between Management Accounting and Financial Accounting

Management Accounting Financial Accounting

Targeted user: internal users external users

managers stockholders and creditors

Restrictions: no mandatory rules for preparing must follow GAAP when preparing
reports financial statements

Types of information: financial and nonfinancial information financial information

Time orientation: emphasizes the future (planning and historical orientation (reports what
decision making) has already occurred)

Aggregation: detailed information about product information about overall firm

line, departments, etc. performance

In general, accounting information needed by internal HOW MANAGERIAL ACCOUNTING ADDS VALUE
users differs from that needed by external users in the • Provides managers with information (e.g., product
following ways: costs, budgets, cash flows). The information includes
a. More flexible financial and nonfinancial data to help managers with
b. Does not have to comply with GAAP or other rules strategic planning and decision making.
c. Forward looking • Assists in directing and controlling (analyzing and
d. Timely comparing actual performance to budgeted plans;
e. Emphasizes segments, not necessarily the entire attention-directing to highlight successful or
organization problem areas).
• Motivates managers to achieve the organization's
The Work of Management and the Planning and goals by communicating the plans, providing a
Control Cycle. The work of managers can be usefully measurement of how well the plan was achieved, and
classified into three major categories: planning, directing prompting an explanation of deviations from plans.
and motivating, and controlling. All of these activities • Measures performance not only for the entire
involve making decisions. organization, as in financial accounting, but also for
1. Planning consists of strategic planning and many subunits (divisions, departments, managers).
developing more detailed short-term plans. Most of • Assesses the organization's competitive position in
what we refer to below is with reference to the more the rapidly changing business environment. Looks at
detailed short-term plans. how well the firm is doing internally, in the eyes of its
2. Directing and motivating involves mobilizing customers, from the standpoint of innovation and
people to implement the plan. continuous improvement, and financially.
3. Control is concerned with ensuring that the plan is
followed. Accountants maintain the databases and The Changing Business Environment
prepare the reports that provide feedback to 1. Just-In-Time - The term JIT means that materials
managers. The feedback can be used to reward are received just in time to be used in production,
particularly successful employees, but more manufactured parts are completed just in time to be
importantly the feedback can be used to identify assembled into products, and products are completed
potential problems and opportunities that were not just in time to be shipped to customers. As a result,
anticipated in the plan. inventories are virtually eliminated in a JIT system.
4. Decision-making is an integral part of the other
three management activities. Key Elements of JIT
• Improved plant layout

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• Reduced setup time Value Chain - The value chain is a set of value-adding
• Low defect rates functions or processes that convert inputs into
• Flexible workforce products and services for the organization’s
customers:
Benefits of JIT
• Inventories are reduced. 1. Research and Development—experimenting to
• Space is freed up. reduce costs or improve quality.
• Throughput time is reduced. 2. Design—developing alternative product, service,
or process designs.
• Defect rates are reduced.
3. Supply—managing raw materials received from
vendors to reduce costs and improve quality.
2. Total Quality Management (TQM) - Total Quality
4. Production—acquiring and assembling resources
Management means different things to different people. to produce a product or render a service.
Nevertheless, most TQM programs seem to share at 5. Marketing—promoting a product or service to
least two common elements—a focus on the customer current and prospective customers.
and systematic problem-solving using teams made up 6. Distribution—delivering a product or service to a
largely of front-line workers. customer.
7. Customer Service—supporting customers after
3. Process Reengineering - involves completely the sale of a product or service.
redesigning a business process from the ground up. In
Corporate governance
this respect, it can be differentiated from TQM which
Corporate governance is designed to compensate for
tends to emphasize small, incremental improvements.
the agency problem resulting from the fact that
The process is redesigned with a focus on simplification corporations are managed by professional management
and elimination of non-value-added activities. that may not operate them in the best interest of the
shareholders.
4. Theory of Constraints (TOC) - The goal in the Theory
of Constraints is not to eliminate all constraints; there Components of Corporate governance
is always a constraint somewhere in the system if the Policies, procedures and mechanism that are
goal is to make more money. However, constraints established to control management. These major
determine the performance of the entire system, so controls over management include:
they should be intelligently managed. • compensation systems,
o boards of directors (including major committees),
5. Organizational Structure o external auditors, internal auditors, attorneys,
• Centralization vs. decentralization regulators, creditors, securities analysts. and
• Line and staff relationships internal control systems.
• The controller
Forms of Executive Compensation
6. Strategic decisions and management accounting - A key objective in setting executive compensation is to align
key to a company’s success in creating value for management's decisions and actions
customers while differentiating itself from its with the long-term interests of shareholders (e.g., long-
competitors. term stock price). If managers are given too much fixed
• Providing a quality product or service at a lower compensation, they may become too complacent and not
take appropriate risks to increase share price. If managers
price than competitors
are given too much incentive compensation based on
• Providing a unique product or service at a higher operating profit or short-term stock price, they have
price than competitors incentives to manage profit or take excessive risks to
maximize their compensation.
Role of Accountants and Treasurer
The chief financial officer (CFO) or controller is the Common types of management compensation
chief accountant responsible for: a. Base salary and bonuses. Using this system, managers
• the supervision of the accounting department are compensated based on performance which is
• preparation of reports typically measured by accounting profit. Compensation
• the interpretation of information to line systems based on accounting measures of profit are
managers. problematic because accounting profit can be
manipulated or managed.
The treasurer is responsible for: b. Stock options. The use of stock options as a form of
• raising capital compensation provides managers with an incentive to
• safeguarding assets manage the corporation to increase the stock price,
• managing investments which is consistent with the goal of shareholders. A
• insurance coverage disadvantage of stock options is that managers may
• credit policy of an organization. have an incentive to increase the stock price in the
short-term at the expense of long-term stock value,
Line personnel are directly involved in carrying out the even by manipulating accounting income to increase
mission of the organization (e.g., assembly workers stock price. In addition, stock options may encourage
in a factory, doctors in a hospital, teachers in a management to take on risks that are that are in excess
school). of shareholders' risk appetite.
Staff personnel (accountants, lawyers, personnel directors, c. Stock grants-Stock grants involve issuing shares of
and other administrative positions) provide support for stock as part of management's compensation. Two
the organization's mission. common types of stock grants:
(1) Restricted stock. The issuance of stock that cannot
be sold by the manager for a specific period of time,

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usually about 10 years. This form of compensation (6) control activities

is effective because it encourages managers to (7) information and communication
undertake operations that increase the long-term (8) monitoring.
value of the corporation's stock price. TERMINOLOGIES
(2) Performance shares. The issuance of stock to Benchmarking (or competitive benchmarking) -
management if certain levels of performance are The continual search for the most effective
met. If the price of the corporation's stock method of accomplishing a task, by comparing
increases, the value of the manager's compensation existing methods and performance levels with those
increases. of other organizations or with other subunits within
d. Executive perquisites (perks). Management also may the same organization.
get various perquisites such as retirement benefits, use
of corporate assets, golden parachutes, and corporate Continuous improvement - The constant effort to
loans. eliminate waste, reduce response time, simplify the
e. The best forms of executive compensation-It is generally design of both products and processes, and improve
believed that the best compensation systems include a quality and customer service.
combination of fixed compensation and incentive
compensation that is related to long-term stock price. Empowerment - The concept of encouraging and
authorizing workers to take the initiative to improve
Audit committee - a "committee established by and operations, reduce costs, and improve product quality
amongst the board of directors of an issuer for the purpose and customer service.
of overseeing the accounting and financial reporting
processes of the issuer, and audits of the financial Line position - Position held by managers who are
statements of the issuer." A major responsibility of the directly involved in providing the goods or services
audit committee is the appointment, compensation and that constitute an organization's primary goals.
oversight of the corporation's external auditor, including the
resolution of any disagreements between management and Non-value-added costs - The costs of activities that can
the external auditor be eliminated without deterioration of product
quality, performance, or perceived value.
Other important characteristics of an audit committee
(a) At least one member should be a "financial expert." The Reengineering - The complete redesign of a process,
names of the financial experts must be disclosed. A with an emphasis on finding creative new ways to
financial expert is one that possesses all of the following accomplish an objective.
attributes:
1] An understanding of generally accepted accounting Total quality management (TQM) - The broad set of
principles and financial statements; management and control processes designed to focus
2] Experience in preparing, auditing, analyzing, or an entire organization and all of its employees on
evaluating financial statements of the breadth and providing products or services that do the best
complexity expected to be encountered with the possible job of satisfying the customer.
company;
3] An understanding of internal controls and Treasurer - An accountant in a staff position who is
procedures for financial reporting: and responsible for managing an organization's
4] An understanding of audit committee functions. relationships with investors and creditors and
maintaining custody of the organization's cash,
Enterprise risk management: Enterprise risk investments, and other assets.
management is a process, effected by an entity's board of
directors, management and other personnel, applied in a Theory of constraints - A management approach that
strategy-setting and across the enterprise, designed to focuses on identifying and relaxing the constraints
identify potential events that may affect the entity, and that limit an organization's ability to reach a higher
manage risk to be within its risk appetite, to provide level of goal attainment.
reasonable assurance regarding the achievement of entity
objectives. Type of Cost
ERM helps align the risk appetite of the organization with its Out-of-pocket costs require a cash outlay.
strategy, enhances risk response decisions, reduces Opportunity costs are the benefits you give up when you
operational surprises and losses, identifies and manages choose one alternative over another.
cross-enterprise risks, provides integrated responses to
Direct costs can be directly and conveniently traced to
multiple risks, helps the organization seize opportunities,
a specific cost object.
and improves the deployment of capital.
A key aspect of ERM is the identification and management Indirect costs either cannot be traced to a specific cost
of events that have a negative impact, positive impact, or object or are not worth the effort of tracing.
both. Events with negative impact represent risks. Events Variable costs change, in total, in direct proportion to
with positive impact may offset negative impacts or changes in activity.
represent opportunities. The risk management process Fixed costs remain the same, in total, regardless of
involves (1) identifying risks, assessing risks, prioritizing activity.
risks, determining risk responses. and monitoring risk Manufacturing costs are associated with making a
responses. physical product. They can be classified as direct
materials, direct labor, or manufacturing overhead.
Interrelated components of ERM
Nonmanufacturing costs are associated with selling a
(1) internal environment
product or service or running the overall business.
(2) objective setting
(3) event identification Product costs are assigned to a product as it is being
(4) risk assessment produced; they accumulate in inventory accounts
(5) risk response until the product is sold.

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Period costs are reported as expenses as they are • Communicate unfavorable as well as favorable
incurred. information and professional judgments or opinions.
Relevant costs are future oriented costs that differ • Refrain from engaging in or supporting any activity
among decision alternatives.
that would discredit the profession.
Irrelevant costs are those that remain the same
regardless of the alternatives and thus will not affect
the decision. 4 Objectivity
• Communicate information fairly and objectively.
IMA Standards of Ethical Conduct for Management • Disclose full all relevant information that could
Accountants reasonably be expected to influence an intended
user’s understanding of the reports, comments,
1. Competence
and recommendations presented.
• Maintain an appropriate level of professional
competence by ongoing development of their Resolution of Ethical Conflict
knowledge and skills. In applying the standards of ethical conduct,
• Perform their professional duties in accordance with management accountants may encounter problems in
identifying unethical behavior or in resolving an ethical
relevant laws, regulations, and technical standards.
conflict. When faced with significant ethical issues,
• Prepare complete and clear reports and management accountants should follow the established
recommendations after appropriate analyses of polies of the organization bearing on the resolution of
relevant and reliable information. such conflict. If these polies do no resolve the ethical
conflict, management accountants should consider the
following courses of actions:
2. Confidentiality
• Discuss such problems with the immediate
• Refrain from disclosing confidential information superior except when it appears that the superior
acquired in the course of their work except when is involved, in which case the problem should be
authorized unless legally obligated to do so. presented initially to the next higher management
• Inform subordinates as appropriate regarding the level. If satisfactory resolution cannot be
confidentiality of information acquired in the course achieved when the problem is initially presented,
submit the issues to the next higher managerial
of their work and monitor their activities to assure the
level.
maintenance of that confidentiality. • If the immediate superior is the chief executive
• Refrain from using or appearing to use confidential officer, or equivalent, the acceptable reviewing
information acquired in the course of their work for authority may be a group such as the audit
unethical or illegal advantage either personally or committee, executive committee, board of
directors, board of trustees or owners. Contact
through third parties.
with levels above the immediate superior should
be initiated only with the superior’s knowledge,
3 Integrity assuming the superior is not involved.
• Avoid actual or apparent conflicts of interest and • Clarify relevant concepts by confidential
advise all appropriate parties of any potential conflict. discussion with an objective advisor to obtain an
understanding of possible courses of action.
• Refrain from engaging in any activity that would
• If the ethical conflict still exists after exhausting
prejudice their ability to carry out their duties ethically all levels of internal review, the management
. accountant may have no other recourse on
• Refuse any gift, favor, or hospitality that would significant matters that to resign from the
influence or would appear to influence their actions. organization and to submit an informative
• Refrain from either actively or passively subverting memorandum to an appropriate representative of
the organization.
the attainment of the organization/s legitimate and Except where legally prescribed, communication of such
ethical objectives. problems to authorities or individuals not employed or
• Recognize and communicate professional limitations engaged by the organization is not considered
or other constraints that would preclude responsible appropriate.
judgment or successful performance of an activity.

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DISCUSSION QUESTIONS
EXERCISE NO. 1.
Indicate whether each of the following pertains to 5. Which statement about the degree of detail in a
financial accounting or managerial accounting. report is true?
1. An internal report used by management a. It depends on the level of the manager receiving
2. An external report used by investors the report.
3. A report prepared periodically (monthly, b. It may depend on the frequency of the report.
quarterly, annually) c. It depends on the type of manager receiving the
4. Information is subjective, relevant, future- report.
oriented d. All of the above.
5. Reports are prepared as needed
6. Information is reported at the decision-making 6. The approaches and activities of managers in short-
level run and long-run planning and control decisions that
7. Information is reported for the company as a increase value for customers and lower costs of
whole products and services are known as:
8. Information is objective, reliable and historical a. value chain management
9. The report is verifiable and reliable. b. enterprise resource planning
10. It provides reasonable and timely estimates. c. cost management
11. Information is focused on the long term. d. customer value management
12. There are no regulations governing the reports.
13. The scope tends to be highly aggregated. 7. The function of management that compares planned
14. Reliance on the criterion of usefulness rather than results to actual results is known as:
formal guidelines or restrictions for gathering and a. planning.
reporting information. b. directing and motivating.
15. A focus on a segment of the business entity. c. controlling.
16. Contribution approach income statement. d. decision making.
17. A report prepared according to GAAP
18. Emphasizes relevance and flexibility rather than 8. The process of establishing objectives or goals for the
precision. firm and determining the means by which they will be
19. Complies with Securities and Exchange met is:
Commission rules and regulations. a. controlling.
20. Assists in measuring the performance of b. analyzing profitability.
managers and subunits. c. planning.
d. assigning responsibility.
EXERCISE NO. 2.
1. The primary purpose of management advisory 9. Which of the following functions is best described as
services is choosing among available alternatives?
a. to achieve the objectives of the MAS firm. a. Decision making.
b. to help the client maximize its resources. b. Planning.
c. to improve the client's use of its capabilities and c. Directing operational activities.
resources to achieve the objectives of such d. Controlling.
client's organization.
d. to help the client identify its problems. 10. Which of the functions of management involves
overseeing day-to-day activities?
2. Which of the following is a characteristic of a. Planning
management advisory services? b. Directing and motivating
a. Services rendered are for third parties. c. Controlling
b. Engagements are usually recurring. d. Decision making
c. Human relations do not play a vital role in each
engagement. 11. Which of the following statements represents a
d. It involves problem solving. similarity between financial and managerial
accounting?
3. Management accounting: a. Both are useful in providing information for
a. focuses on estimating future revenues, costs, and external users.
other measures to forecast activities and their b. Both are governed by GAAP.
results c. Both draw upon data from an organization's
b. provides information about the company as a accounting system.
whole d. Both rely heavily on published financial
c. reports information that has occurred in the past statements.
that is verifiable and reliable
d. provides information that is generally available 12. Which activity is NOT normally performed by
only on a quarterly or annual basis managerial accountants?
a. Assisting managers to interpret data in
4. Management accounting is considered successful managerial accounting reports.
when it: b. Designing systems to provide information for
a. helps creditors evaluate the company's internal and external reports.
performance c. Gathering data from sources other than the
b. helps managers improve their decisions accounting system.
c. is accurate d. Deciding the best level of inventory to be
d. is relevant and reported annually maintained.

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23. Process Reengineering includes all of the following

13. The person MOST likely to use management steps except:
accounting information is a(n): a. constructing a diagram flowcharting the current
a. banker evaluating a credit application process.
b. shareholder evaluating a stock investment b. redesigning the process.
c. governmental taxing authority c. elimination of non-value-added activities.
d. assembly department supervisor d. elimination of all constraints.

14. ________ management exists to provide advice and 24. Which of the following best describes the term
assistance to those responsible for attaining the “benchmarking?”
objectives of the organization. a. producing a particular product at the lowest
a. Line possible cost.
b. Functional b. designing the highest quality product in a given
c. Staff market.
d. Risk c. developing the best selling product
d. improvement gained through measuring one’s
15. The person(s) directly responsible for the attainment products against the best products.
of organizational objectives is/are
a. the treasurer. 25. What modern production methodology emphasizes
b. line management. strengthening the weakest link of the company to
c. the controller. improve operations to become more efficient and
d. the chief financial officer. effective?
a. Weakest link theory
16. The professional certification most relevant for b. Just-in-time
managerial accountants is the c. Total quality
d. Theory of constraints.
a. CMA c. CSA
b. CPA d. MAS 26. Osorio Corporation recently implemented a just-in-
time (JIT) production system along with a series of
17. The linked set of activities that increases the continuous improvement programs. If the firm is
usefulness (or value) of the products or services of an now considering adopting a total quality
organization is the management (TQM) program, it would likely find
a. direct chain c. value chain that TQM is:
b. indirect chain d. variable chain a. consistent with both JIT and continuous
improvement.
18. Which of the following reflects the correct order in a b. consistent with JIT but inconsistent with
value-chain? continuous improvement.
a. Research & Development, Design, Production c. consistent with continuous improvement but
b. Distribution, Customer Service, Marketing inconsistent with JIT.
c. Design, Research & Development, Production d. inconsistent with both JIT and continuous
d. Distribution, Marketing, Research & Development improvement.

19. Four themes are common to many managers. The 27. Ideally, how many units should be produced in a just-
critical theme for all of these is in-time manufacturing system? GN
a. developing relationships with suppliers. a. budgeted customer demand for the current week.
b. benchmarking and continuous improvement. b. budgeted customer demand for the following
c. reducing costs and improving efficiencies. week.
d. improving customer focus and customer satisfaction. c. actual customer demand for the current week.
d. maximum production capacity for the current
20. A cost object is week.
a. an item for which managers are trying to
determine the cost. 28. After careful planning, Jammu Manufacturing
b. an item to which managers must directly trace Corporation has decided to switch to a just-in-time
costs. inventory system. At the beginning of this switch,
c. an item to which it is not worth the effort of Jammu has 30 units of product in inventory. Jammu
tracing costs. has 2,000 labor hours available in the first month of
d. an item for sale by a business. this switch. These hours could produce 500 units of
product. Customer demand for this first month is 400
21. A firm that is competing using a units. If just-in-time principles are correctly followed,
_______________________ strategy is attempting how many units should Jammu plan to produce in the
to create a perception of uniqueness that will permit first month of the switch?
a higher selling price. a. 370 c. 430
a. value chain c. lead time b. 400 d. 470
b. lowest cost d. differentiation
29. Which of the following statements concerning an
22. An approach to developing new ways to perform organization’s strategy is NOT true?
existing activities is called a. Strategy specifies how an organization matches
a. process value analysis its own capabilities with the opportunities in the
b. re-engineering marketplace to accomplish its objectives.
c. caveat analysis b. Management accountants provide input to help
d. benchmarking managers formulate strategy.

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c. A good strategy will always overcome poor 36. The Standards of Ethical Conduct for Management
implementation. Accountants developed by the Institute of
d. Businesses usually follow one of two broad Management Accountants states that significant
strategies: offering a quality product at a low ethical issues should be discussed with an immediate
price or offering a unique product or service superior unless the superior is involved. If
priced higher than the competition. satisfactory resolution cannot be achieved when the
problem is initially presented, then the issues should
30. Which item is not an IMA Standard for Ethical be:
Conduct? a. submitted to the next higher managerial level.
a. Integrity c. Loyalty b. submitted to the chief executive officer.
b. Competence d. Objectivity c. submitted to the audit committee, executive
committee, board of directors, or owners.
31. This principle imposes the obligation on all d. submitted to outside legal counsel.
professional accountants to be fair, intellectually
honest, and free of conflicts and interests. 37. Samantha Galloway is a managerial accountant in the
a. Integrity c. Maturity accounting department of Mustang Industries, Inc.
b. Objectivity d. Independence in mental Samantha has just discovered evidence that some of
attitude the corporation's marketing managers have been
wrongfully inflating their expense reports in order to
32. Which ethical standard has been violated if an obtain higher reimbursements from the firm.
accountant fails to prepare financial statements According to the Institute of Management
according to industry standards? Accountants' Standards of Ethical Conduct, what
a. Competence c. Integrity should Samantha do upon discovering this evidence?
b. Confidentiality d. Credibility a. notify the controller.
b. notify the marketing managers involved.
33. Which ethical standard is violated when an c. notify the president of the corporation.
accountant uses information from a financial d. ignore the evidence because she is not part of the
statements he is preparing to advise a relative of a Marketing Department.
stock purchase?
a. Competence c. Integrity 38. When comparing performance report information for
b. Confidentiality d. Credibility top management with that for lower-level
management:
34. Which of the following statements relating to a. Lower-level management reports are typically for
Standards of Ethical Conduct for Management longer time periods.
Accountants is correct? b. Top management reports show control over fewer
a. A management accountant should refuse all gifts costs.
and hospitality offered by one of the company’s c. Lower-level management reports are likely to
suppliers. contain more quantitative data and less financial
b. A management accountant should inform his data.
superiors regarding the confidentiality of d. Top management reports are usually not of the
information acquired in the course of their work exception type but present a complete analysis of
and monitor their activities to assure the all variances.
maintenance of that confidentiality.
c. A management accountant should prepare 39. The performance measurement tool generally
complete and clear reports and recommendations associated with the display of information evaluating
before appropriate analyses of relevant and multiple dimensions of business outcomes is referred
reliable information. to as the:
d. Management accountants have a responsibility to a. Balanced scorecard. c. Kaizen.
disclose fully all relevant information that could b. Return on Investment. d. Market value
reasonably be expected to influence an intended added
user’s understanding of the reports, comments,
and recommendations presented. 40. In order for a company to achieve a sustainable
competitive advantage, it must perform value chain
35. The Standards of Ethical Conduct for Management activities:
Accountants developed by the Institute of a. the same quality level as competitors, but at a
Management Accountants state that when faced with lower cost, or at a higher quality level than at the
significant ethical issues, management accountants same quality level as competitors, at the same
should first: cost.
a. discuss such problems with the immediate b. at the same quality level as competitors, but at a
superior except when it appears that the superior lower cost.
is involved. c. at a higher quality level than competitors, at a
b. clarify relevant concepts by confidential higher cost.
discussion with an objective advisor to obtain an d. at a higher quality level than competitors, but at
understanding of possible courses of action. no greater cost.
c. follow the established policies of the organization
bearing on the resolution of such conflict. 41. The unit of measurement used in management
d. submit an informative memorandum describing accounting is
the ethical issue to an appropriate representative a. primarily the historical peso.
of the organization and resign if no action is taken b. usually current replacement cost.
as a result of the memorandum. c. any measurement unit that is useful in a
particular situation.

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d. the measurement unit used by competing d. communicating to all employees a boundary

companies. system that states what actions will not be
tolerated
42. Control is the process of monitoring the company’s
operations to determine whether the company’s 44. Which of the following best identifies the reason that
objectives are being achieved. Effective control is effective corporate governance is important?
achieved through all of the following except: a. The separation of ownership from management.
a. periodically measuring and comparing company b. The goal of profit maximization.
results. c. Excess management compensation.
b. assigning responsibility for costs to employees d. Lack of oversight by boards of directors.
responsible for those costs.
c. constantly monitoring employees to ensure they 45. An advantage of downsizing is
do exactly as they are told. a. decreased costs in the long run.
d. taking necessary corrective action when b. layoffs.
variances warrant doing so. c. one-time losses.
d. reduced communication.
43. Fostering a culture of high ethical standards includes
all of the following EXCEPT:
a. following the good example set by senior – end -
management
b. communicating to employees a belief system that
inspires and promotes commitment to the
organization’s core values
c. following the general examples set by front-line
employees

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