Management Decisions
1.1 Explain the importance of the following types of management decisions: organizational vision, organizational core
competencies, organizational strategies, and operating plans.
1.2 Why do managers need to measure, monitor, and motivate performance?
1.3 List three types of internal reports and explain how each is used. List three types of external reports and explain how each is used.
1.4 What types of information in addition to cost accounting are needed for management decisions?
1.5 Explain why avoidable (incremental) cash flows are relevant. Explain why unavoidable cash flows are irrelevant.
1.6 What are business risks, and how do they affect the quality of management decisions?
1.7 What are biases, and how do they affect the quality of management decisions?
1.8 In your own words, explain the path to higher-quality decisions (Exhibit 1.7).
1.9 Explain why it is important for both individuals and organizations to behave ethically.
1.10 In your own words, define ethical behavior. Why do accountants have a professional responsibility to behave ethically?
1.11 In your own words, define nonrational escalation of commitment. Can you think of situations where you or people you know have inappropriately escalated their commitment to a decision or course of action?
1.12 Define belief systems and boundary systems in your own words and describe the similarities and differences in the parts they play in the four levers of control.
1.13 Define interactive control systems in your own words and explain the part they play in the four levers of control.
1.14 Define diagnostic control systems in your own words and explain the part they play in the four levers of control.
1.15 Explain how the four levers of control are used together to increase an organization’s strategic success.
