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| AHSEC CLASS 12 BUSINESS STUDIES |
AHSEC Class 12 Business Studies
CHAPTER-8
CONTROLLING
Very Short Answer Type Questions (Marks for each question - 1)
1. What is meant by controlling?
Ans. Controlling means comparision between actual output and planned output to find out the reasons for deviations and taking corrective measures to stop such deviations in future.
2.What is deviation in controlling?
Ans. Deviation is the difference between actual performance and standard perfor mance.
3.Name any one type of budget.
Ans. Sales Budget.
4.What is feedback in controlling?
Ans. Feedback refers the communication regarding the reasons for mismatch be tween actual and plan output and corrective actions.
5. Name the technique of control in which all operations are planned in ad vance in the form of budgets.
Ans. Budgetary control.
6.Why should actual performance be compared with standard performance?
Ans. To find out deviations.
7. Which function of management ensures work accomplishment according to plans?
Ans. Controlling function
8. Give two examples of qualitative standards set up in controlling process. Ans. (i) Labour relations.
(ii) Efficiency level of management.
9. Name one modern technique of management control.
Ans. Management Information System (MIS).
10. Name two principles a manager must consider while dealing with deviation effectively.
Ans. (i) Critical point control. (ii) Control be exception.
Short Answer Type Questions: Type - 1 (Marks for each question 3)
1.Which two steps in the process of control are concerned with compelling events to conform to the plan?
Ans. (i) Comparision of actual performance with standards.
(ii) Taking corrective actions.
2. Write the nature of controlling.
Ans. The nature of controlling are as follows
(i) Controlling is a goal oriented function Controlling function makes sure every one follows the plan or work is accomplished as per the plan and plan always aim at achieving organizational goal.
(ii) Controlling is a continuous function - Controlling is not a one time job but it is an ongoing process. It is carried on till the organization is surviving.
(iii) Controlling is an all pervasive function - Controlling is not the task of top level managers only but managers working at all the levels i.e, top, middle and operational level perform controling function.
3.Discuss three traditional techniques of managerial control.
Ans. The traditional techniques of managerial control are as follows -
(i) Break even analysis - It is a graphical technique of control. It is a technique of identifying the number of units of a product that must be sold in order to generate enough revenue to cover costs.
(ii) Personal observation - It is the oldest and most important technique of control. Under this technique, managers occasionally visit personally the subordinates at work place and observe their performance.
(iii) Statistical report - Statistical data are important source of control. These are col lected and presented in the form of tables, charts and graphs. These data are useful in production control, inventory control and so on.
Short Answer Questions: Type - I (carrying 4 marks each)
1. Write the importance of controlling.
Ans. The importance of controlling are as follows
(i) Helps in achieving organisational goals-Controlling function ensures that all the activities in the organisation take place according to plan and if there is any deviation, timely action is taken to bring the activities in the path of planning.
(ii) Making efficient use of resources-Controlling guides the organisation and keep on the right track. Each activity is performed according to pre determined stan dards.
(iii) Improving employee motivation - An effective control system communicates the goals and standards of appraisal from employees to subordinates well in advance.
(iv) Ensures order and discipline - Control creates an atmosphere of order and disci pline in the organisation Effective controlling system keeps the subordinates under creck and makes sure they perform their functions efficiently.
2. What is Critical Path Method (CPM)?
Ans. Critical path is the sequential activities from start to the end of a project. Critical path method is based on mathematical calculations and it is used for sched uling project activities. In CPM, the critical activities of a program or a project are identified. These are the activities that have a direct impact on the completion date of the project. Critical path identification is required for any project-planning phase. This gives the project management the correct completion date of the overall project and the flexibility to float activities. In applying CPM, there are several steps that can be summarized as follows
(i) Define the required tasks and put them down in an ordered list.
(ii) Create a flowchart showing each task in relation to the other.
(iii) Identify the critical and non-critical relationships among tasks.
(iv) Determine the expected completion or execution time for each task.
(v) Locate or devise alternatives for must critical paths.
3.What are the different types of Budgets?
Ans. The different types of Budgets are as follows -
(i) Sales Budget - A sales budget is an estimate of expected sales during a budget period. A sales budget is known as a nerve centre for backbone of the enterprise. A sales budget is the starting point on which other budgets are also based.
(ii) Production Budget - The production is prepared in relation to the sales budget.
Whatever is to be sold should be produced in time so that it is delivered to the customer. It is a forecast of the production for the budget period.
(iii) Cost of production Budget - The production budget determines the number of units to be produced. When these units are converted into monetary terms, it becomes a cost of production budget. The cost of production budget is the total amount to be spent on producing the units stipulated in the production budget.
(iv) Cash Budget - A cash budget is an estimate of cash receipts and disbursement during a future period of time. It proceeds various other budgets like materials budget, labour budget, overheads cost budget etc. It is an analysis of flow of cash in a business over a future short or long period of time.
Long Answer Type Questions (Marks for each question 5)
1. Explain the relationship between planning and controlling.
Ans. The relationship between planning and controlling are
(i) Planning originates controlling - In planning the objectives or targets are set. In order to achieve these targets control proceed is needed. So, planning precedes control.
(ii) Controlling sustains planning-Controlling directs the course of planning Controlling spots the areas where planning is required.
(iii) Controlling provides information for planning-In controlling the actual performance is compared to the standards set and records the deviations, if any. The information collected for exercising control is used for planning also.
(iv) Planning and controlling are inter-related Planning is the first function of management. All other functions are organised for implementing plans. Control records the actual performance and compares it with standards set. In case of any deviations proper corrective measures are taken to improve the performance in future.
(v) Planning and control are forward looking-Planning and control are concerned with the future activities of the business. Planning is always for future and control is also forward looking.
2.Where is Budgetary control? Explain.
Ans. Budgetary control is the process of determining various budgeted figures for the enterprise for the future period and then comparing the budgeted figures with the actual performance for calculating variances, if any. First of all, budgets are prepared and then actual results are recorded. The comparision of budgeted and actual figures will enable the management to find out discrepancies and take remedial measures at a proper time. The budgetary control is a continuous process wheih helps in planning and co-ordination. It provides a method of control too A budget is a means and budgetary control is the end-result
The main objectives of budgetary control (i) To co-ordinate the activities of different departments.
(ii) To anticipate capital expenditure for future
(iii) To centralise the control system.
(iv) Elimination of wastes and increase in profitability
3. Define control and explain its benefits to a business.
Ans. Control can be defined as comparision of actual performance with the planned performance. If there is any difference or deviation then finding the reasons for such difference and taking corrective measures or actions to stop those reasons so that in future there is match actual and planned performance. Benefits of controlling to a business are
(i) Helps in achieving organisational goals- When the plans are made in the organisation these are directed towards achievement of organisational goal and the controlling function ensures that all the activities in the organisation take place according to plan and if there is any deviation, timely action is taken to bring back the activities on the path of planning. (ii) Judging accuracy of standards - Through strategic controlling we can easily judge whether the standard or target set are accurate or not. An accurate control system revises standards from time to time to match them with environmental changes.
(iii) Making efficient use of resources - Each activity is performed according to pre determined standards. As a result there is most and effective use of resources.
(iv) Improving employee motivation - An effective control system communicate the goals and standards of appraisal for employees to subordinates well in advance. A good control system also guides to come out from their problems.
Long Answer Type Questions (Marks for each question - 6)
1. Explain the various steps involved in the process of control.
Ans. There are four steps involved in control process. They are -
(i) Setting of control standards - Every enterprise plans its activities in advance. On the basis of plans, the objectives and goals of every department, branch etc are fixed. These are to be achieved in future. Standards must be set up keeping in mind the resources of the organisation.
(ii) Measuring of performance - The second step in controlling process is the measurement of performance. The actual performance is measured against the standards set. This will enable management to determine whether the work is being done according to plans or not. It is an important process in controlling.
(iii) Comparing actual and standard performance - After measuring the performance the manager compares the actual performance with the planned performance and standard. If there is match in both then the controlling function ends, there only. But if there is mismatch then the manager tries to find out the extent of deviation.
(iv) Analysing deviations - An deviations need not be brought to the notice of top
management. A range of deviations should be established and only cases beyond this range should be brought to the knowledge of top level management.
2. Explain the traditional technique and modern technique of management control.
Ans. The traditional technique of control are
(i) Personal observation - This is the oldest method of controlling under which the manager observe the performance of his subordinates. Personal observation creates a psychological pressure on the employees to work properly and avoid wastage of time and material
(ii) Statistical data and reports - Statistical data are widely used for the purpose of managerial control Statistical data may be presented in the form of statistical tables, graphical charts or special reports. A report is a form of systematic presentation of information and statistical data relating to some aspect of business
(iii) Break-even Analusis - Break even analysis is concerned with the effect which changes in fixed costs, variable costs, sales volume, sales prices and sales mix will have on profits. This analysis helps in determining the volume of sales at which total cost will be fully covered. Modern technique of control are__
(i) Programme Evaluation and Review Technique (PERT)-PERT is a basic network
technique which includes planning, monitoring and controlling of project.
(ii) Critical Path Method (CPM)-CPM is used in these projects where activity timing are relatively well known. It is used for planning and controlling the most logical sequence of activities for accomplishing a project.
3.Write the features of a good control system. Also discuss about the limitation of controlling.
Ans. The features of a good control system are -
(i) Goal oriented - A control system is good only when it is goal oriented Before formulating a control system its goals should be clearly defined.
(ii) Simple-A good system of control is one which is simple and easy to understand. (iii) Flexible-A control system should have the flexibility to adjust itself to the changing requirements of the organisation and its environment.
(iv) Economy-The system of control must be worth its cost. It must justify the expenses lavolved.
Limitation of control___
(i) It proves to be ineffective if deviation cannot be corrected quickly.
(ii) There are certain cases when control becomes a time consuming process.
(iii) Controlling is an expensive process.
(iv) In certain areas of business measurable standards of performance cannot be set
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CHAPTER-WISE SOLUTION FOR BUSINESS STUDIES
SL.NO | CHAPTER | LINK |
| 1 | Nature and Significance of Management | Click here |
| 2 | Principles of Management | Click here |
| 3 | Business Environment | Click here |
| 4 | Planning | Click here |
| 5 | Organising | Click here |
| 6 | Staffing | Click here |
| 7 | Directing | Click here |
| 8 | Controlling | Click here |
| 9 | Business Finance | Click here |
| 10 | Financial Market | Click here |
| 11 | Marketing Management | Click here |
| 12 | Consumer Protection Act. | Click here |
AHSEC HS 2nd Year Business Studies Solutions
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