plus two business studies
                     NOTES ON CONTROL -MEANING AND IMPORTANCE
 controlling

Controlling implies the measurement of accomplishment against the standards and the correction of deviations to assure attainment of objectives according to plans. In simple --measurement of accomplishment against standards

Control By exception / Management by exception

Only significant deviations which goes beyond the permissible limit should be reported to the management ....... "An attempt to control everything may end up by controlling nothing"

Eg:-The management lays down a standard that the cost of production or service per unit shouldn't exceed by 5%from the earlier period .If the actual cost exceed by 5% (20%), it should be reported to the management.
Relationship between Planning and Controlling.....(controlling blind without planning)They are inseparable twins of management.
Steps in the Controlling process
1.Setting performance standards 2. Measurement of actual performance

3.Comparing actual performance with standards 4. Analyzing deviations 5. Taking corrective action
Critical Point Control:
An ideal control technique should focus on key result areas (K R As)Which are critical to the success of an organisation.

For eg. ,in a manufacturing organisation an increase of 10%in the labour cost may be more troublesome than 10%increase in stationery charges.

Importance of Controlling

"control is the soul of business management"

1. Controlling helps in achieving organisational goal or common endeavor.
2. An efficient control system enables management to verify whether the standards set are accurate and objective by keeping a careful check on changes taking places in the organisation and in the environment.
3.Controlling helps to reduce wastage and spoilage of resources due to performance with standard
4.It will ensure the initiation of employees, - the plan gives the details of work to perform.
5. Controlling creates an situation of order and discipline in organisation.
6.Controlling ensure inter dependent activities in better coordination.
Managerial control system ensure the smooth running of business with the best and cheapest way.

Limitation of controlling

Difficulty in setting quantitative standards:

No control on external factors
control is often resisted by employee because they feel that it will curb their freedom
It is time consuming and costly

Techniques of controlling:

TRADITIONAL CONTROL TECHNIQUES	MODERN CONTROL TECHNIQUE
BUDGETARY CONTROL	RETURN ON INVESTMENT
STATISTICAL REPORTS	RATIO ANALYSIS
BREAK-EVEN ANALYSIS	MANAGEMENT AUDIT
PERSONAL OBSERVATION	PERT AND C P M
	MANAGEMENT INFORMATION SYSTEM

BUDGETARY CONTROL

A budget is a quantitative statement for a definite future period of time for the purpose of obtaining a given objective.The most common types of budget s used by an organisation are:-

types of budgets-

sales budget: A quantitative statement of organisation to explain what an organisation expect to sell in terms of quantity as well as value

EQUATION

EXPECTED SALE  = OPENING STOCK+ PURCHASES  -  CLOSING STOCK

Production budget------A quantitative statement of organisation to explain what an organisation expect to PRODUCE IN QUANTITY AS WELL AS VALUE

EQUATION

EXPECTED PRODUCTION :=
SALES - OPENING STOCK OF FINISHED + CLOSING STOCK OF FINISHED GOODS

Material Budget:-A quantitative statement of organisation to explain what an organisation expect to purchase of Raw material in quantity and value.

EQUATION -
EXPECTED PURCHASE (RAW MATERIAL) =RAW MATERIAL+CLOSING STOCK- OPENING STOCK OF RAW MATERIAL

Cash budget : anticipated cash in flow and outflow for the budgeted period
Capital Budget;- Estimated spending on major long term asset like new factory or major equipment
Research and Development Budget : Estimated spending for the development of products.


Advantages of budgetary control:-
1.It helps to attain the organisational objectives
2. budgetary control helps the employee to maintain the standard
3.Optimum utilization of resources
4.It integrate actions of different departments

Personal observation

 Is a primary data collection method that is considered to be too general to be applied in this research. The researcher is usually the investigators and does a direct contact with the informants.(employees).

Statistical reports

 Statistical reports are particularly interesting because the reader can easily be overwhelmed by the raw data Without an appropriate preliminary statistical analysis to make the important points stand out and without an efficient organization and presentation the reader might be lost Graphics and text are two different media that have to be well integrated in order to achieve their full potential. A picture shows but a text describes. In a statistical report graphics show the data that is analyzed in the text This paper describes an important part of a system called Postgraphe because it combines with a text generator called Pretext.

Break-even Analysis
1    It is a useful technique of decision -making and control in following ways :
2    It helps in estimating profit at different levels of activities
3    It helps in calculating the minimum sales volume at which no profit no loss can be earned.
4    By separating fixed cost and variable cost ,it enables control over variable expenses




 BREAK-EVEN POINT =FIXED COST/CONTRIBUTION PER UNIT
CONTRIBUTION PER UNIT =  SELLING PRICE -VARIABLE COST PER UNIT

AT BREAK EVEN POINT CONTRIBUTION EQUAL TO FIXED COST
B E P IS A POINT AT WHICH NO PROFIT NO LOSS 

RETURN ON INVESTMENT:

Return on Investment (R O I) is a performance measure, used to evaluate the efficiency of an investment or compare the efficiency of a number of different investments. ... To calculate R O I, the benefit (or return) of an investment is divided by the cost of the investment. The result is expressed as a percentage or a ratio.

          R O I = Net income/ total investment X 100

RATIO ANALYSIS Ratio Analysis is a form of Financial Statement Analysis that is used to obtain a quick indication of a firm's financial performance in several key areas.

 The ratios are categorized as Short-term Solvency Ratios, Debt Management Ratios, Asset Management Ratios, Profitability Ratios, and Market Value Ratios.
Ratios generally hold no meaning unless they are bench marked against something else, like past performance or another company. Thus, the ratios of firms in different industries, which face different risks, capital requirements, and competition are usually hard to compare. In the analysis of financial statements it is better to have a complete understanding of the different types of ratios, their calculation, and interpretation. Financial ratios can be classified into five types as follows.

1. Liquidity ratios 2. Asset Management ratios 3. Leverage ratios 4. Profitability ratios
5. Valuation ratios

RESPONSIBILITY ACCOUNTING;
Responsibility accounting is an underlying concept of accounting performance measurement systems. The basic idea is that large diversified organizations are difficult, if not impossible to manage as a single segment, thus they must be decentralized or separated into manageable parts.A responsibility center is an organizational unit headed by a manager, who is responsible for its activities and results. In responsibility accounting, revenues and cost information are collected and reported on by responsibility centers.The following are the four common types of responsibility centers:

• Cost Center: A cost or expense center is a segment of an organisation in which the managers are held responsible for the cost incurred in that segment but not for revenues. ...
• Revenue Center: .--which is primarily responsible for generating revenue..
• Profit Center: ...whose manager is responsible for both revenues and cost
• Investment Center:--responsible not only for profit but also for investment made in the center in the form of asset
• Management audit :-Systematic appraisal of the overall performance of the management of an organisation.           
• 
  
•  As defined in ISO 19011:2011—Guidelines for auditing management systems, an audit is a “systematic, independent and documented process for obtaining audit evidence [records, statements of fact or other information which are relevant and verifiable] and evaluating it objectively to determine the extent to which the ...

•  The purpose of a management audit is not to appraise individual executive performance, but to evaluate the management team in its effectiveness to work in the interests of shareholders, maintain good relations with employees and uphold reputation standards.

P E R T AND C P M-

CPM (Critical Path Method) is used to assist the project manager in scheduling the activities (i.e., when should each activity start). It assumes that activity duration are known with certainty. ➢ PERT (Program Evaluation and Review Technique) is used to assist in project scheduling similar to CPM. PERT stands for Program Evaluation Review Technique, a methodology developed by the U.S. Navy in the 1950s to manage the Polaris submarine missile program. A similar methodology, the Critical Path Method (CPM) was developed for project management in the private sector at about the same time.•

 Critical path 

1  A critical activity is an activity that cannot be delayed without delaying the               completion of the project.

 2  That is, a delay of Δ days on a critical activity will increase the length of the project        by Δ days.

3  Critical activity should be monitored carefully to avoid delays.

  

 4   A critical activity has a total float of zero. 

 5    A path from the start node to the finish node that consists entirely of critical nodes        is a critical path.

  6   A critical path is the longest path from start node to finish node.