Karnataka 2nd PUC Business Studies Question Bank Chapter 8 Controlling
You can Download Chapter 8 Controlling Questions and Answers, Notes, 2nd PUC Business Studies Question Bank with Answers Karnataka State Board Solutions help you to revise complete Syllabus and score more marks in your examinations.
2nd PUC Business Studies Controlling Text Book Exercises
2nd PUC Business Studies Controlling Multiple Choice Questions With Answers
Question 1.
An efficient control system (helps to)
(a) accomplishes organisational objectives
(b) boosts employee morals
(c) judges accuracy of standards
(d) All of the above
Answer:
(d) Efficient control system helps to accomplish objectives, boosts employee morals, judges accuracy of standards and analyses deviations.
Question 2.
Controlling function of an organisation is
(a) forward looking
(b) backward looking
(c) forward as well as backward looking
(d) None of the above
Answer:
(c) Controlling is forward looking because it does not end only by comparing past performance with standards. Controlling is backward looking because it postmortems all past activities to set future standards. Thus, controlling is both forward as well as backward looking.
Question 3.
Management audit is a technique to keep a check on the performance of
(a) company
(b) management of the company
(c) shareholders
(d) customers.
Answer:
(b) The purpose of management audit is to review the efficiency and effectiveness of management of the company.
Question 4.
Budgetary control requires the preparation of
(a) training schedule
(b) budgets
(c) network diagram
(d) responsibility centres
Answer:
(b) Budgetary control is a technique in which all operations are planned in advance in the form of budgets.
Question 5.
Which of the following is not applicable to responsibility accounting?
(a) Investment centre
(b) Accounting centre
(c) Profit centre
(d) Cost centre
Answer:
(b) Accounting centre is not applicable to responsibility accounting.
2nd PUC Business Studies Controlling Short Answer Type Questions With Answers
Question 1.
Explain the meaning of controlling.
Answer:
Controlling means ensuring that activities in an organisation are performed as per the plans Controlling also ensures that an organisation’s resources are being used effectively and efficiently for the achievement of desired goals. Controlling is, thus a goal oriented function.
Controlling is a very important managerial function. Because of controlling, a manager is able to compare actual performance with the planned performance. In order to control the activities at all levels, a manager needs to perform controlling function.
Question 2.
“Planning is looking ahead and controlling is looking back”. Comment.
Answer:
Planning and controlling are inseparable. Planning is the primary function of every organisation. It is the thinking process, which means looking ahead or making plans that how the desired goal is achieved in future. Thus it is called a forward looking function. On the other hand, controlling is a systematic function which measures the actual performance against the planned performance. It compares and analyses the whole process of an organisation and takes correcting actions.
Thus, it is a backward looking function. But the statement “Planning is looking a head and controlling is looking back” is only partially correct because it should be understood that planning is guided by past experiences and the corrective action initiated by control function which aims to improve future performance. Thus, planning and controlling are both backward looking as well as forward looking functions.
Question 3.
‘An effort to control everything may end up in controlling nothing’. Explain.
Answer:
It’s a well known fact that “Jack of all, master of none”. When we start controlling everything it results in control of nothing because it is not possible at one time to control various activities as this process may neither be economical nor easy. Control thus focuses on KRAs (Key Result Areas). It means instead of controlling all activities, control where the critical points go wrong and by which organisation suffers. Thus, KRAs are set as critical points and one should be aware what one has to control.
Question 4.
Write a short note on budgetary control as a technique of managerial control.
Answer:
Budgetaiy control is a technique of managerial control in which all operations are planned and this will help us in knowing how much we have to spend in order to achieve the desired result. It compares the actual result with budgetary’ standards. This comparison reveals the necessary actions to be taken so that the organisational objectives are accomplished.
Budgeting offers the following advantages
- Budgeting focuses on specific and time bound targets.
- Budgeting standards is a source of motivation to the employees. They set the standards against which their performances will be appraised and thus, enables them to perform better.
- Budgeting helps in optimum utilisation of resources by allocating them according to the requirements of different departments.
- It helps the management in setting standards.
Question 5.
Explain how management audit serves as an effective technique of controlling.
Answer:
Management audit is a technique which helps measuring the efficiency and effectiveness of management. It is a comprehensive and constructive review Thus, we can say it is defined as the review of the functioning performance and to improve its efficiency in the future. Hence, it serves as an effective technique of control. The following points are proving the same.
- It helps to locate present and potential deficiencies in the performance of management functions.
- It helps to improve the control system of an organisation by continuously monitoring the performance of management.
- It ensures-updating of existing managerial policies and strategies in the light of environmental changes. This results in efficient controlling of management.
2nd PUC Business Studies Controlling Long Answer Type Questions With Answers
Question 1.
Explain the various steps involved in the process of control.
Answer:
Controlling is the continuous process of evaluating the actual performance against standard performance of an individual, group or department. Controlling is a dynamic process and action or people oriented.
Controlling process involves the following:
1. Setting performance standards: Standard refers to the target upon which the actual performance is measured. Different types of standards are used for measuring the performance of different individuals. Standards may be of two types, qualitative
standard and quantitative standard. Performance standards are mainly derived from the objectives, goals and expectation of the organization. The standards for control should satisfy the following requirement:
- It should be simple and easily understandable
- It should be flexible, not rigid
- It should be in accordance with the people responsible to achieve them,
- It should be consistent with the overall objective of the firm.
2. Measurement of Actual performance: Once these standards are fixed for desired performance, the next step is to measure the actual performance. Measurement of performance should be clear, simple, rational, relevant, and understandable without complaints and misinterpretation.
3.Comparing the actual performance with standards: It involves two steps
- Finding out the extent of deviations
- Identifying the causes of such deviations
While comparing the actual performance against the standards, the deviations are revealed. Once the deviations are noticed and causes for the same are determined, corrective measures are adopted.
4. Analyzing the deviations: Deviations means variations from the standards. Every deviation is analyzed to find out why it has occurred and who is responsible for the same. Deviations may be Negative, Positive or Zero,
- Negative Deviations: If actual performance is less than the standard, it leads to negative deviations.
- Zero Deviations: If actual performance is equal to the standard that leads to Zero deviations.
- Positive Deviations: If actual performance is more than the standard, it leads to Positive deviations.
5. Taking corrective actions: After finding what has gone wrong, where and why, management will initiate corrective action. The remedial actions may involve:
- Review and revision of goals or standards,
- Change in the assignment of tasks
- Provisions for additional resources or new facilities
- Improvement in the selection and training of worker or reform in the technique of direction.
Question 2.
Explain the techniques of managerial control.
Answer:
The various techniques of managerial control may be classified into the following broad categories.
1. Traditional Techniques: Those techniques which have been used by the companies for a long time now, are traditional techniques. However these have not become obsolete and are still being used by companies.
(a) Personal observation: Personal observation enables the manager to collect firsthand information. It also creates a psychological pressure on the employees to perform well as they are aware that they are being observed personally in their job.
(b) Statistical Reports: Statistical analysis in the form of averages, percentages, ratios, correlation etc. present useful information to the managers regarding performance of the organisation in various areas. Such information when presented in the form of charts, graphs, tables etc, enables the managers to read them more easily and allow a comparison to be made with performance in previous periods and also with the benchmarks.
(c) Break-even Analysis: It is a technique used by managers to study the relationship between costs, volume and profits. It determines the probable profits and losses at different levels of activity. The sales volume at which there is no profit, no loss is known as break-even point. It is a useful technique for the managers as it helps in estimating profits at different levels of activities.
(d) Budgetary Control: It is a technique of managerial control in which all the operations are planned in advance in the form of budgets and actual results are compared with budgetary standards. This comparison reveals the necessary actions to be taken so that organisational goals are accomplished. A budget is a quantitative statement for a definite future period of time for the purpose of obtaining a given objective. It is also a statement which reflects the policy of that particular period. It will contain figures of forecasts both in terms of time and quantities.
2. Modern Techniques: Modem techniques of controlling are those which are of recent origin and are comparatively new in management literature. They provide a new thinking on the ways in which various aspects of an organisation can be controlled
(a) Return on Investment: Return on Investment (ROI) is a useful technique which provides the basic yardstick for measuring whether or not invested capital has been used effectively for generating reasonable amount of return. It can be calculated as under. ROI provides top management an effective means of control for measuring and comparing performance of different departments. It also permits departmental managers to find out the problem which affects ROI in an adverse manner.
(b) Ratio Analysis: It refers to analysis of financial statements through computation of ratios. The most commonly used ratios are
“Ratios: Liquidity ratios are calculated to determinedly short term solvency of business.
“Ratios: Ratios which are calculated to determine the long term solvency of business are known as Solvency ratios.
“Ratios: These ratios are calculated to analyse the profitability position of a business.
“Ratios: They are calculated to determine the efficiency of operations based on effective utilisation of resources.
3. Responsibility Accounting: Responsibility accounting is a system of accounting in which different sections, divisions and departments of an organisation are set up as Responsibility Centres. The head of the centre is responsible for achieving the target set for his centre Responsibility centres may be of the following types.
(a) Cost Centre: A cost or expense centre is a segment of an organisation in which managers are held responsible for the cost incurred in the centre but not for the revenues e.g., production department.
(b) Revenue Centre: A revenue centre is held responsible for generating revenue, e.g.. marketing department.
(c) Profit Centre: A profit centre is responsible for both cost and revenue e.g., repair and maintenance department.
(d) Investment Centre: An investment centre is responsible not only for profits but also for investments made in the centre in the form of assets.
4. Management Audit: Management audit refers to systematic appraisal of the overall performance of the management of an organisation. The purpose is to review the efficiency and effectiveness of management and to improve its performance in future periods. It is helpful in identifying the deficiencies in the performance of management functions. The main advantages are given below.
(a) Helps to locate weaknesses.
(b) It helps to improve the control system.
(c) Ensures updating of existing managerial policies and strategies in the light of environmental changes.
5. PERT and CPM: Programme Evaluation and Review Technique and Critical Path Method are important network techniques useful in planning and controlling. These techniques are especially useful in planning, scheduling and implementing time bound projects involving performance of a variety of complex, diverse and inter-related activities. These techniques deal with time scheduling and resource allocation for these activities and aim at effective execution of projects within given time schedule and structure of costs,
6. Management Information System: MIS is a computer based Information system that provides information and support for effective managerial decision-making. A decision maker requires up-to-date accurate and timely information. MIS provides the required information to the managers by systematically processing a massive data generated In an organisation. Thus, MIS is an important communication tool for managers.
Question 3.
Explain the importance of controlling in an organisation. What are the problems faced by the organisation in implementing an effective control system?
Answer:
Control is an indispensable function of management. Without control, the best-of plans can go awry. A good control system helps an organisation in the following ways.
1. Accomplishing organisational goals: The controlling function measures progress towards the organisational goals and brings to light the deviations if any and indicates corrective action. It thus guides the organisation and keeps it on the right track so that organisational goals might be achieved.
2. Judging accuracy of Standards: A good control system enables management to verify whether the standards set are accurate and objective. An efficient control system keeps a careful check on the changes taking place in the organisation and in the environment and helps to review and revise the standards in light of such changes.
3. Making efficient use of Resources: By exercising control, a manager seeks to reduce wastage and spoilage of resources: Each activity is performed in accordance with pre-determined standards and norms. This ensures that resources are used in the most efficient and effective manner.
4. Improving employee motivation : A good control system ensures that employees know well in advance what they are expected to do and what are the standards of performance on the basis of which they will be appraised. It, thus motivates them and helps them to give better performance
5. Ensuring order and discipline: Controlling creates an atmosphere of order and discipline in the organisation. It helps to minimise dishonest behaviour on the part of the employees by keeping a close check on their activities.
6. Facilitating co-ordination in action: Controlling provides direction to all activities and efforts for achieving organisational goals. Each department implemented employee is governed by pre-determined standards which are well co-ordination with one another.
This ensures that overall organisational objectives are accomplished.
Although controlling is an important function of management. It suffers from the following limitations also
1. Difficulty in setting Quantitative Standards: Control system loses some of its effectiveness when standards cannot be defined in quantitative terms. This makes measurement of performance and their comparison with standards a difficult task. Employee morale, job satisfaction and human behaviour are such areas where this problem might arise.
2. Little Control on External Factors: Generally an enterprise cannot control external factors such as government policies, technological changes competition etc.
3. Resistance from Employees: Control is often resisted by employees often. They see it as a restriction on their freedom. For instance, employees might object when they are kept under a strict watch with the help of Closed Circuit Televisions (CCTVs).
7. Costly Affair: Control is a costly affair as it involves a lot of expenditure, time and effort. A small enterprise cannot afford to install an expensive control system. It cannot justify the expenses involved. Managers must ensure that the costs of installing and operating a control system should not exceed the benefits derived from it.
Question 4.
Discuss the relationship between planning and controlling.
Answer:
Planning and controlling are inseparable, they are the twin pillars of management. A system of control pre-supposes the existence of certain standards. These standards of performance which serve as the basis of controlling are provided by planning. Once a plan becomes operational, controlling is necessary to monitor the progress, measure it, discover deviations and initiate corrective measures to ensure that events conform to plans.
Planning is clearly a pre-requisite for controlling. Controlling cannot be accomplished without planning. With planning, there is no pre-determined understanding of the desired performance. Planning seeks consistent, integrated and articulated programmes while controlling seeks to compel events to conform to plans.
2nd PUC Business Studies Controlling Application Type
Question 1.
Following are some behaviours that you and others might engage in on the job. For each item, choose the behaviour that management must keep a check to ensure an efficient control system.
- Biased performance appraisals.
- Using company’s supplies for personal use.
- Asking a person to violate company’s rules.
- Calling office to take a day off when one is sick.
- Overlooking boss’s error to prove loyalty.
- Claiming credit for someone else’s mom.
- Reporting a violation on noticing it.
- Falsifying quality reports.
- Taking longer than necessary to do the job.
- Setting standards in consultation with workers.
You are also required to suggest the management how the undesirable behaviour can be controlled.
Answer:
- To avoid biased appraisal, performance appraisal should be taken by a committee of experts.
- If the stationaries are not very expensive, it can be ignored with a stricter control.
- Strict and immediate disciplinary action should be taken.
- Mass bunking should not be allowed, –
- Secret suggestion box can be used to collect feedback about the boss for appraisal.
- Performance records of employees to be maintained.
- If minor, can be overlooked
- Strict quality control techniques should be used.
- Time and motion study should be used to fix a standard.
- The use of scientific techniques can help in fixing the most feasible and optimum standards.
2nd PUC Business Studies Controlling Case Problems
A company M limited is manufacturing mobile phones both for domestic Indian market as well as for export. It had enjoyed a substantial market share and also had a loyal customer following. But lately it has been experiencing problems because its targets have not been met with regard to sales and customer satisfaction. Also mobile market in India has grown tremendously and new players have come with better technology and pricing. This is causing problems for the company. It is planning to revamp its controlling system and take other steps necessary to rectify the problems it is facing.
Question 1.
Identify the benefits the company will derive from a good control system.
Answer:
When company starts following a good control on operations, it leads to derive benefits which are as given below.
- Helps in achieving desired goals.
- Judging accuracy of operations.
- Making efficient and effective use of resources.
- Improving employee morale.
- Ensuring proper flow of orders and that the whole system is in discipline.
- It facilitates the co-ordination and improves the performance of every individual.
Question 2.
How can the company relate its planning with control in this line of business to ensure that its plans are actually implemented and targets attained?
Answer:
Company relates its planning with control in this line of business by implementing effective control system as this will help in two aspects. Planning makes controlling effective and efficient whereas controlling improves future planning, as it is like a postmortem of past activities to find out deviations from the standards and in order to ensure that its plans are actually implemented and targets are attained they will take the help from controlling process as it is a systematic process and it leads to the following benefits.
1. Setting up of Standards: In this step, company sets some targets against which the actual performance are measured.
2. Measuring of Performance: In this step, company is able to measure the performance and evaluating what is actually done by the employees.
3. Compare Performance: After evaluating the actual result, company compares the actual performance with the planned one. This helps in knowing whether the desired goal is achieved or not.
4. Analysing Deviations: This refers to the difference between actual and desired performances. It helps the company in knowing whether the deviation is positive or negative. It needs focus on which part rather than analysing the whole.
5. Taking corrective measures: Final step is to know the type of operation and trying to remove this deviation and ensuring that in future it matches the plans.
Question 3.
Give the steps in the control process that the company should follow to remove the problems it is facing.
Answer:
The company should follow these steps in a systematic manner
- Setting performance standards
- Measurement of actual performance
- Comparison of actual performance against standards
- Analysing deviations
- Taking corrective actions
Question 4.
What techniques of control can the company use?
Answer:
The company should follow the modern techniques to control the system.
1. ROI (Return on Investment) : It is a useful technique of controlling overall performance of a company. It indicates how resources are being used,facilitates balanced, use effectively of capital employed, focuses on profits and relates them to capital Invested.
2. Responsibility’Accounting: Under this technique, organisation is divided into centres which are responsible for overall growth of the various departments. Responsibility cen-tres in the organisation are these.
(a) Cost Centre : Under this, one can check the production and operational cost.
(b) Revenue Centres : Sales or marketing departments come under this. This is responsible for generating revenue.
(c) Profit Centre : Profit = Revenue – Cost. It ensures the actual profit derived from the business.
(d) Investment Centre : This centre ensures the optimum use of assets and it makes use of return on investment.
3. MIS (Management Information System): It is a control technique which provides information and support for effective managerial decision making. It provides accurate information to the managers, helps in planning, controlling, provides cost effective information and many more.
2nd PUC Business Studies Controlling Additional Questions
2nd PUC Business Studies Controlling One Mark Questions and Answers
Question 1.
What do you mean by controlling?
Answer:
It is the continuous process of evaluating actual performance with standard performance of an individual, group or department.
Question 2.
What is control?
Answer:
It is the power or authority to direct or order to confirm the standard Performance.
Question 3.
What do you mean by standard in controlling?
Answer:
Standard is a yardstick consisting of a specific set of action relating to a particular job on which the actual results are to be evaluated.
Question 4.
Give the meaning of deviations in controlling.
Answer:
Deviation means variation from the standard. Deviation or variation may be negative, zero or positive
Question 5.
State any one importance of controlling.
Answer:
Controlling improves employee’s efficiency
Question 6.
State any one process of controlling.
Answer:
Standard setting
Question 7.
Which are the things includes in Quantitative Standards?
Answer:
Quantitative Standards: It includes Quantity, Quality, Cost, Time & etc.
Question 8.
Which are the things includes in Qualitative Standards?
Answer:
Qualitative Standards: It includes Employee morale, consumer satisfaction, Brand leadership etc.
Question 9.
What is standard setting?
Answer:
Standard refers to the target upon which the actual performance is measured.
Question 10.
Mention the types of standards.
Answer:
Standards may be of two types qualitative standard and quantitative standard.
Question 11.
What is negative deviation in controlling process?
Answer:
If actual performance is less than standard that leads to negative deviations.
Question 12.
What is Zero deviation in controlling process?
Answer:
If actual performance is equal to the standard performance, then it is called as Zero deviations.
Question 13.
What is Positive deviation in controlling process?
Answer:
f actual performance is more than standard that leads to Positive deviations.
2nd PUC Business Studies Controlling Two Marks Questions and Answers
Question 1.
Define controlling?
Answer:
Controlling is the measuring & correcting of activities of subordinates to ensure that events conform according to the plan
Question 2.
State any two importance of controlling.
Answer:
Controlling help for execution of plans, Controlling improves employee’s efficiency
Question 3.
State any two steps in controlling process.
Answer:
Standard setting, measurement of performance
Question 4.
State any two corrective actions when there is a deviation.
Answer:
The remedial actions may involve:
a. Review and revision of goals or standards.
b. Change in the assignment of tasks
2nd PUC Business Studies Controlling Four Marks Questions and Answers
Question 1.
Explain the importance of controlling.
Answer:
It is the continuous process of evaluating actual performance with standard performance of an individual, group or department.
Importance of planning are:
1. Controlling help for execution of plans: Control is the only means to ensure that the plans are being properly implemented. It regulates actual operation to ensure that the goals of the organizations are being achieved.
2. Controlling improves employee’s efficiency: A employee is likely to put better performance if he is aware that his performance will be evaluated as per the standard fixed. He will be rewarded according to the performance which will improve his efficiency.
3. Improve organizational efficiency & effectiveness: Through minimizing wastages, reduction of costs & proper utilization of available resource controlling ensures increase in organizational efficiency & effectiveness
4. Controlling is a basis for future action: control provides feedback & reveals shortcomings in plans Therefore, it helps in preparing better future plans and facilitates sound decision making in future.
5. Controlling facilitates coordination: Controlling facilitates coordination among different departments and divisions by providing them the unity of direction. Coordination is the essence of management and is achieved through proper performance of all managerial functions.
Question 2.
What do you mean by standard in controlling? State the recruitment of good standard.
Answer:
Setting performance standards: Different types of standards are used for measuring the performance of different individuals. Standards may be of two types qualitative standard and quantitative standard. Performance standards are mainly derived from the objectives, goals and expectation of the organization. The standards for control should satisfy the following requirement:
a. It should be simple & easily understandable
b. It should be flexible not rigid
c . It should be in accordance with the people responsible to achieve them.
d. It should be consistent with the overall objective of firm.
e. It should be set scientifically with the help of time and motion studies.
f. It should be expressed in quantitative terms.
g. It should be set consultation with people who are responsible to achieve them.
Question 3.
Explain briefly the controlling process.
Answer:
Controlling is a dynamic process and action or people oriented.
Controlling process involves the following:
1.Setting performance standards: Standards may be of two types qualitative standard and quantitative standard. Performance standards are mainly derived from the objectives, goals and expectation of the organization. The standards for control should satisfy the following requirement: ‘
- It should be simple & easily understandable
- It should be flexible not rigid
- It should be in accordance with the people responsible to achieve them.
- It should be consistent with the overall objective of firm.
2. Measurement of Actual performance: Once these standards are fixed for desired performance the next step is to measure the actual performance. Measurement of performance should be clear, simple, rational, relevant, and understandable without complaints and interpretation.
3. Comparing the actual performance with standards: It involves two steps
- Finding out the extent of deviations.
- Identifying the causes of such deviations
While comparing the actual performance with the standards the deviations are revealed. Once the deviations are noticed and causes for the same are determined corrective measures are adopted.
4. Analyzing the deviations: Deviations means variations from the standards. Every deviation is analyzed to find out why it has occurred and who is responsible for the same. Deviations may be Negative, Positive or Zero.
- Negative Deviations: If actual performance is less than standard that leads to negative deviations.
- Zero Deviations: If actual performance is equal to the standard that leads to Zero . deviations.
- Positive Deviations: If actual performance is more than standard that leads to Positive . deviations.
5. Taking corrective actions: After finding what has gone wrong, where and why, management will initiate corrective action. The remedial actions may involve:
- Review and revision of goals or standards,
- Change in the assignment of tasks
- Provisions for additional resources or new facilities
- Improvement in the selection and training of worker or reform in the technique of direction.
2nd PUC Business Studies Controlling Eight Marks Questions and Answers
Question 1.
Define controlling. Explain the importance of controlling.
Answer:
It is the continuous process of evaluating actual performance with standard performance of an individual, group or department. Controlling is a dynamic process and action or people oriented.
Importance of planning are:
1. Controlling help for execution of plans: Control is the only means to ensure that the planes are being properly implemented. It regulates actual operation to ensure that the goals of the organizations are being achieved.
2. Controlling improves employee’s efficiency: A employee is likely to put better performance if he is aware that his performance will be evaluated as per the standard fixed. He will be rewarded according to the performance which will improve his efficiency.
3. Improve organizational efficiency & effectiveness: Through minimizing wastages, reduction of costs & proper utilization of available resource controlling ensures increase in organizational efficiency & effectiveness
4. Controlling is a basis for future action: control provides feedback & reveals shortcomings in plans Therefore, it helps in preparing better future plans and facilitates sound decision making in future.
5. Controlling facilitates coordination: Controlling facilitates coordination among different departments and divisions by providing them the unity of direction. Coordination is the essence of management and is achieved through proper performance of all managerial functions.
6. Delegation of Authority: An effective system of control facilitates delegation of authority. By controlling manger can ensure that the decisions taken at lower levels are according to the standards of the organization.
7. Controlling simplifies supervision: Control helps to simplify the tasks of supervisor by pointing out significant deviations from the standards of performance. It keeps the subordinates under check and brings discipline among them.
8. Controlling is responsible for ultimate performance: As controlling keeps the subordinates under check and bring discipline among them by taking complete responsibility to get the require standard of performance.