management control jeopardy: an active-learning prototype frank selto directions:

Management Control Jeopardy: An active-learning prototypeFrank Selto

Directions:1. If you have never watched the TV game show, Jeopardy, take the time to

watch an episode.2. Assigned teams and knowledge bases can depend on the size of the

class and the extent of the background research reading. For this prototype, I assigned sets of readings (which became categories of the game) to sub-groups of the class, who were free to read any or all of the other sets of readings, too. Because the class had only 16 students, each was a solo participant. Teams of two or three might work more smoothly for larger classes.

3. You can choose the first participant randomly, or, as a reward, I allowed the highest performer on the previous exam to choose the first category and answer. The game proceeded as closely as possible to the TV version.

4. I allowed students to keep their own scores, and I was careful to label their points as “basis” points that I converted to modest bonus points on the next exam.

Performance Measure JeopardyFinancial Measures

Non-Financial Measures

Transfer Pricing Incentives EFG

10 10 10 10

20 20 20 20

30 30 30 30

40 40 40 40

50 50 50 50

1. Cost center2. Discretionary cost center 3. Revenue center4. Profit center5. Investment center

Financial Measures – 10 points


?

“Managers focus only on the most significant variances”



?

“Income/Sales Revenue X Sales Revenue/ Invested Capital”



?

“Managers forego investments that exceedthe firm’s cost of capital”



?

1. Income after tax2. Net operating assets3. Weighted average cost of capital



?

• Employee capabilities• Process and product quality• Customer satisfaction• Market share

Non-Financial Measures – 10 points


?

“Non-financial performance that signalsfuture financial performance”



?

“Relationships among lead and lag indicators of performance”



?

• Logical• Finality• Causal



?

1. “A” is logically independent of “B”2. “A” closely but always precedes “B”3. Observation of “A” predicts the

subsequent observation of “B”



?

“The value attached to a transfer of goods or services between divisions

of a single company”

Transfer Pricing – 10 points


?

Debit to Division A’s G&A expenseCredit to Division B’s revenue



?

“Arm’s length market price”



?

1. Comparable uncontrolled price*

2. Resale price3. Cost-plus*4. Comparable profits5. Profit split*

Transfer Pricing – 40 points* = 5-point bonus question


?

*

• Administrative or managerial services

• Germany or Switzerland



?

“An individual’s compensation is contingent

on organizational outcomes”

Incentives – 10 points


?

“Quarterly earnings”and“Long-term growth;

environmental responsibility”



?

1. Pay is not a motivator2. Rewards punish3. Rewards rupture relationships4. Rewards ignore reasons5. Rewards discourage risk taking6. Rewards undermine interest



?

“It is only by giving a special inducement or incentive that the

employer can hope even approximately to get the initiative of

his workmen”

Incentives – 40 points*bonus = “Scientific Management”


?

1. Absolute or relative?2. Formula or subjective?3. Financial or non-financial?4. Narrow or broad responsibility?5. Current or deferred rewards?6. Salary, bonus or stock?



?

Insert Text for AnswerOthers – 10 points

Insert Text for QuestionOthers – 10 points


What are organizational controls?

Final Jeopardy – 50 Points

“The learning organization”

Final Jeopardy – 50 Points

management control jeopardy: an active-learning prototype frank selto directions:

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