1. CONTROLLING Welingkar’s Distance Learning Division CHAPTER-17
We Learn – A Continuous Learning Forum

2. Welingkar’s Distance Learning Division
Introduction
Control is the last function of management. The controlling function will be unnecessary to the management if other functions of management are performed properly. Planning identifies the activities and controlling regulates the activities. Success or failure of planning depends upon the results of success or failure of controlling.
We Learn – A Continuous Learning Forum

3. Welingkar’s Distance Learning Division
We Learn – A Continuous Learning Forum

4. Welingkar’s Distance Learning Division
Definition
“Control is any process that guides activity towards some pre-determined goal. The essence of the concept is in determining whether the activity is the achieving desire results”
We Learn – A Continuous Learning Forum

5. Areas or scope pf control
Welingkar’s Distance Learning Division
Areas or scope pf control
Control over the policies of the concern, organization, the personnel employed in an organization, capital available to the concern, capital expenditure, production, wages and salaries paid to the employed, the cost of production, public relation, research and development, tools and equipment and overall control.
We Learn – A Continuous Learning Forum

6. Steps in Control process
Welingkar’s Distance Learning Division
Steps in Control process
Establishing Measuring
standards performance
Taking
Corrective action
Comparison of
actual with
standards
We Learn – A Continuous Learning Forum

7. Requirements of effective control system
Welingkar’s Distance Learning Division
Requirements of effective control system
Feedback
Objective
Suitability
Prompt reporting
Pointing out exceptions
Flexible
Economy
Indelible
Suggest remedial action
Motivation
We Learn – A Continuous Learning Forum

8. Techniques of Control CONTROL Welingkar’s Distance Learning Division
Statistical control reports
Management information system
Gantt milestone chart
Critical path method
Personal observation
Zero-based budgeting
Cost accounting and cost control
Production control
CONTROL
Break-even analysis
Performance evaluation
Special control reports
Managerial statistics
Management audit
Standard costing
Internal audit
Return on investment
Responsibility accounting
We Learn – A Continuous Learning Forum

9. Pert/Cpm Advantages of pert/cpm Ensure planning:
Welingkar’s Distance Learning Division
Pert/Cpm
Advantages of pert/cpm
Ensure planning:
identification of favorable factors:
Savings of cost and time:
Taking preventive or corrective actions:
Attention on critical activities:
Everything at right:
We Learn – A Continuous Learning Forum

10. Advantage of pert/cpm Making awareness of responsibilities:
Welingkar’s Distance Learning Division
Advantage of pert/cpm
Making awareness of responsibilities:
Securing co-operation:
Facilities decision-making:
Improved communication:
Simultaneous performance of works:
Advance control action:
Timely completion of a project:
We Learn – A Continuous Learning Forum

11. Limitations of pert/cpm
Welingkar’s Distance Learning Division
Limitations of pert/cpm
Error in estimation of time and cost
Application
Time consuming and expensive
We Learn – A Continuous Learning Forum

12. Distinction between pert and cpm
Welingkar’s Distance Learning Division
Distinction between pert and cpm
PERT
CPM
Three times estimation done
It gives importance to time
It gives importance to cost
It is suitable where activity timings are not known
It is suitable where activity timings are well known
It is event oriented
It is activity oriented
We Learn – A Continuous Learning Forum

13. Characteristics or features of control
Welingkar’s Distance Learning Division
Characteristics or features of control
Controlling process An Essence of
action
Universal Influencing factor
Forward looking Control involves
management
Dynamic
process
We Learn – A Continuous Learning Forum

14. Need of control Judging the accuracy of standards:
Welingkar’s Distance Learning Division
Need of control
Judging the accuracy of standards:
Minimize dishonest behavior:
Better performance:
We Learn – A Continuous Learning Forum

15. Advantages of control Adjustments in operation verification of policy
Welingkar’s Distance Learning Division
Advantages of control
Adjustments in operation
verification of policy
managerial accountability
Psychological pressure
Maintaining morality
Co-ordination
Efficiency
We Learn – A Continuous Learning Forum

16. Limitations of control
Welingkar’s Distance Learning Division
Limitations of control
Absence of perfect standards
Uncontrollable factors
Difficulty in fixing responsibility
Expensive process
We Learn – A Continuous Learning Forum

17. Types of managerial control
Welingkar’s Distance Learning Division
Types of managerial control
Standardizing control
preserving control
Delegation of authority control
Measurement control
Motivating control
We Learn – A Continuous Learning Forum

18. Budget & Definition of budget
Welingkar’s Distance Learning Division
Budget & Definition of budget
Budget is derived from the French word ‘Budgette’ which means small leather bag. Budget is a financial and quantitative statement.
“Budget is a plan for income or outgo or both, of money, personal, purchased items, sales items, or any other entity about which the manager believes that determining the future course of action will assist in the managerial efforts”
We Learn – A Continuous Learning Forum

19. Definition of budgetary control
Welingkar’s Distance Learning Division
Budgetary control &
Definition of budgetary control
“The term budgetary control is applied to a system of management and according control by which all operations and output are forecast as far ahead as possible and the actual results when known are compared with the budge t estimates.”
We Learn – A Continuous Learning Forum

20. Characteristics of budgetary control
Welingkar’s Distance Learning Division
Characteristics of budgetary control
The activities the organizations are presented department-wise or section-wise.
Budgets give the extent of expenditure though which cost control is achieved.
The co-ordination of various departmental activates helps to prepare the determined standards.
Clear-cut and specific requirement of the organization are expressed in quantitative terms.
We Learn – A Continuous Learning Forum

21. Characteristics of budgetary control
Welingkar’s Distance Learning Division
Characteristics of budgetary control
Determines the deviations by comparisons and causes of such deviations.
Recommends and implements the corrective actions when ever necessary.
The future is planned on the basis of past experience.
Recording the present performance for comparing purpose with the pre-determined standards.
We Learn – A Continuous Learning Forum

22. Advantages of budgetary control
Welingkar’s Distance Learning Division
Advantages of budgetary control
Promotion of
Tool for planning efficiency
The activities Better utilization of
resources
Thinking in advance Promoters
balanced activit
Co-ordination of Budgetary
Efforts
Achievements Criteria of Delegation of
Control of of goals examination authority
expenditure
Encourages Fixation of Ensures proper Solving financial
exchange of responsibility communication difficulties
information
We Learn – A Continuous Learning Forum

23. Disadvantages, Limitations or problems of budgetary control
Welingkar’s Distance Learning Division
Disadvantages, Limitations or problems of budgetary control
Inaccuracy
personal bias
Non-availability of Co-operation
Rigidity
Results are not attainable
We Learn – A Continuous Learning Forum

24. Disadvantages, Limitations or problems of budgetary control
Welingkar’s Distance Learning Division
Disadvantages, Limitations or
problems of budgetary control
Consistency
Time Consuming process
Ineffective budgetary control
Discourage the initiative
More paperwork
We Learn – A Continuous Learning Forum

25. Essentials of Effective budgeting system
Welingkar’s Distance Learning Division
Essentials of Effective budgeting system
Efficient organization
Preparing master budget
Quick reporting
Flexible
We Learn – A Continuous Learning Forum

26. Essentials of Effective budgeting system
Welingkar’s Distance Learning Division
Essentials of Effective budgeting system
Support of top management
Based on reasonable assumption
Reward and punishment
Appropriate authority
We Learn – A Continuous Learning Forum

27. Techniques of Control CONTROL Welingkar’s Distance Learning Division
Statistical control reports
Management information system
Gantt milestone chart
Critical path method
Personal observation
Zero-based budgeting
Cost accounting and cost control
Production control
CONTROL
Break-even analysis
Performance evaluation
Special control reports
Managerial statistics
Management audit
Standard costing
Internal audit
Return on investment
Responsibility accounting
We Learn – A Continuous Learning Forum

28. Types of Budgets Types of Budget
Welingkar’s Distance Learning Division
Types of Budgets
Master budget
Physical property budget
Sales Budget
Cash budget
Research and development budget
Time and material budget
Types of Budget
Production overhead budget
Selling and distribution cost budget
Production cost budget
Balance sheet budget
Supplies budget
We Learn – A Continuous Learning Forum

29. Budget can also be classified as
Welingkar’s Distance Learning Division
Budget can also be classified as
Fixed budget
Flexible budgets
We Learn – A Continuous Learning Forum

30. Preparation of a budget
Welingkar’s Distance Learning Division
Preparation of a budget
Sound forecasting
Developed accounting system
Fixation of responsibility centers
Formation of budget committees
We Learn – A Continuous Learning Forum

31. Preparation of a budget
Welingkar’s Distance Learning Division
Preparation of a budget
Clear definition of business policies
Statistical information
Support of top management
Budget period
We Learn – A Continuous Learning Forum