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explains briefly the various stages of management control process. Citing and criticality of each.
Generated by Unregistered Batch DOC & DOCX Converter 2010.2.406.1388, please register! Q.4 Explain briefly the various stages of management control process. Citing and criticality of each? ANS: The management control process for ongoing operating activities has the following four phases: (1) programming (2) Budgeting (3) Execution (4) Evaluation Control process in the of non operating activities such as project consist of the above phases except that two phases, programming and budgeting are combined into a single activity. Project planning, they are difference in the nature of a project and that are operating activities. A project generally has a single objective and ongoing operating activities have multiple objective. A project comes to an end when the objective is accomplished. An ongoing operating organization intends to operate indefinitely. In some process cases, the completion of project may result into an ongoing operating organization although this may involves complex management control problems. The discussion of the four phases of management control – Programming, budget preparation, Execution, Evaluation- are as follows: Programming : Programming is defined as making programs by top/senior management in terms of organization, goals and strategies and deciding the fund and resources needed to accomplish the programs. Programs can be made about development of new products, research and development activities, merger takeover, and other activities that are not related much with existing product lines. In service organizations, such as a hotel Chain management may draw programs for each hotel on each region where the hotels are to be set up. In decentralization, organization, for each segment or central, programming can be done. Programming is a long rang plan, covering period of approximately five future years. The reason is that if programming is made for shorter periods, the result and benefits of programming can not be realized within this period. Some organization like public utilities prepare long rang plans for even a periods of twenty years. Because of relatively long time plan, only rough estimates are possible for revenues, expenses and capital expenditure. Criticality (1) Its top management is convinced that programming is very important. Otherwise programming is likely to become a staff exercise that has little impact an actual decision making. (2) It is relatively a large and complex. In small, simple organization, an informal understanding of an organization future direction adequate for making decision about resources allocation, which a principles purpose of repairing programme. (3) Considerable uncertainty about the future exists, but organization has the flexibility to adjust to change the circumstances. In relatively stable organization. A program may be unnecessary; the future is sufficiently like the past so that the program would be only an exercise in extrapolation. If the future is so uncertain that reasonably reliable estimates can not be made, preparation of formal programme is a waste of time.
Generated by Unregistered Batch DOC & DOCX Converter 2010.2.406.1388, please register! Budgeting : Budgeting is formal financial plan for each year, know as short rang plan, is techniques of expressing revenues, expenses, physical target like production and sales, profit, asset and liabilities usually for periods of one future year. Budget has functions of motivating manager, coordinating activities, communicating to persons within an organization, providing standards for judging actual performance and acting as a control tool. Executing : After the budget preparation, budgeting is used as tool for coordinating the action of individual and department within the organization. In fact within the execution phase, task control is done to ensure the action and performance match with the and desire result. Which performing the manager’s goals is to achieve budgeted targets, however compliance to budget is not necessary if the plans given in the budget are found as not the best way of achieving the objectives. Adherence to budget is not necessary good, and departure from it is not necessary bad. Evaluation : The management control process ends with evaluation phase in which performance of manager is evaluated. Since it is an after event exercise, the evaluation does effect what has happened, however evaluation phase act like a powerful stimulus as employees know that their performance will be subsequently evaluated. Also on the basis performance evaluation, the future budget and plans are revised. Conclusion: The management control process is behavioral, manifesting itself in interaction among manager and between manager and their sub-ordinates. Because managers differ from another in technical ability, leadership style, interpersonal skill, experience, approach to decision making, affinity for member, and in many other ways, the details of the management control process vary from company to company and among the responsibility centre within company. The difference relate mainly to the way the control system is used. Programming, budgeting, executing and evaluation are not needed in small, relatively stable organization, and it is not worthwhile in organization that cannot make reliable estimates about the future or in organization whose top management does prepare to manage in this fashion. Q. 8(a)Describe the factor which impact on service organization. Introduction: For several reasons, management control in service industries is somewhat different from management control in service industries is somewhat different from management control in manufacturing companies. Some factors that have an impact on most service industries discussed as follows. These factors apply also to the management control of legal, research and development, and other service departments in companies generally. Factors which impact on services organizations ? Absence of Inventory Buffer ? Difficulty in controlling quality ? Labor intensive ? Multiunit organization ? Historical development
Generated by Unregistered Batch DOC & DOCX Converter 2010.2.406.1388, please register! Absence of inventory buffer Goods can be held in inventory, which is a buffer that dampens the impact on production activity of fluctuations in sales volume. Services can be stored. The airplane seat, hotel room, hospital operating room, or the hours of lawyers, physicians, scientist, and other professionals that are used today are gone forever. Thus, although, a manufacturing company can earn revenue in the future from products that are hand today, a service company cannot do so. It must try to minimize its unused capacity. Moreover, the cost of many services organizations is essentially fixed in the shorts run. In short, a hotel cannot reduce its costs substantially by closing off its rooms. Accounting firms, law firms, and other professional organizations are reluctant to lay off professional personal in times of low sales volume because of the effect on morale and the costs of rehiring and training. A key variable in most service organization, therefore, is the extent to which current capacity is matched with demand. Service organization attempts this matching in two ways. First they try to stimulate demand in off –peak periods by marketing efforts and price concessions. Cruise lines and resort hotels offer low rates off seasons. Second, if feasible, service organization adjusts the size of workforce to anticipated demand, if feasible, by such measures as scheduling training activities in slack periods and compensating for long hours in busy periods with time off later. The loss from unsold services is so important that occupancy rates and similar indications of success in selling available services are normally key variable in service organizations. Difficulty in Controlling Quality A manufacturing company can inspect its products before they are shipped to consumer, and their quality can be measured visually or with instruments(tolerances ,purity, weight, color, and so on).A service company cannot judge product quality until the moment the service is rendered, and then the judgment are often subjective. Restaurants management can examine the food in the kitchen, but customer satisfaction depends to a considerable extent on the way it is served. The quality of education is so difficult to measure that few educational organizations have a formal quality control system. Labor Intensive Manufacturing companies add equipment and automate production lines, thereby replacing labor and reducing costs. Most service companies are labor intensive and cannot do this. Hospitals do add expensive equipment, but mostly to provide better treatment, and this increase costs. A law firm expands by adding partners and new support personnel. Multi-Unit Organizations Some services organization operate many units in various locations, each unit relatively small. These organizations are fast-food restaurant chains, auto rental companies, gasoline services stations, and many others. Some of the units are owned; others operate under a franchise. The similarity of the separate units provides a common basis for analyzing budgets and evaluating performance not available to the manufacturing company. The information for each unit can be compared with system wide or regional averages, and high performance and low performers can be identified. However, because units differ in the mix of services they provide, in the resources that they use, and in other ways, care must be taken in making such companies.
Generated by Unregistered Batch DOC & DOCX Converter 2010.2.406.1388, please register! Historical Development Cost accounting started in manufacturing companies because of the need to value work in process and finished goods inventories for financial statement purposes. These systems provided raw data that were easily adapted for use in setting selling prices and for other management purposes. Standard cost systems, separation of fixed and variable costs and analysis of variances were built on the foundation of cost accounting system, separation of fixed and variable costs and analysis of variances were built on the foundation of cost accounting systems. Until a few decades ago, most texts on cost accounting dealt only with practices in manufacturing companies. Many service organizations (with the notable exception of railroads and both cost data. Their use of product costs and other regulated industries) is not having a similar impetus to develop cost data. Their use of product cost and other management accounting data is fairly recent –mostly since World War II. Nowadays, their management control systems are rapidly becoming as well as those developed as those in manufacturing companies.
doc_371075987.pdf
explains briefly the various stages of management control process. Citing and criticality of each.
Generated by Unregistered Batch DOC & DOCX Converter 2010.2.406.1388, please register! Q.4 Explain briefly the various stages of management control process. Citing and criticality of each? ANS: The management control process for ongoing operating activities has the following four phases: (1) programming (2) Budgeting (3) Execution (4) Evaluation Control process in the of non operating activities such as project consist of the above phases except that two phases, programming and budgeting are combined into a single activity. Project planning, they are difference in the nature of a project and that are operating activities. A project generally has a single objective and ongoing operating activities have multiple objective. A project comes to an end when the objective is accomplished. An ongoing operating organization intends to operate indefinitely. In some process cases, the completion of project may result into an ongoing operating organization although this may involves complex management control problems. The discussion of the four phases of management control – Programming, budget preparation, Execution, Evaluation- are as follows: Programming : Programming is defined as making programs by top/senior management in terms of organization, goals and strategies and deciding the fund and resources needed to accomplish the programs. Programs can be made about development of new products, research and development activities, merger takeover, and other activities that are not related much with existing product lines. In service organizations, such as a hotel Chain management may draw programs for each hotel on each region where the hotels are to be set up. In decentralization, organization, for each segment or central, programming can be done. Programming is a long rang plan, covering period of approximately five future years. The reason is that if programming is made for shorter periods, the result and benefits of programming can not be realized within this period. Some organization like public utilities prepare long rang plans for even a periods of twenty years. Because of relatively long time plan, only rough estimates are possible for revenues, expenses and capital expenditure. Criticality (1) Its top management is convinced that programming is very important. Otherwise programming is likely to become a staff exercise that has little impact an actual decision making. (2) It is relatively a large and complex. In small, simple organization, an informal understanding of an organization future direction adequate for making decision about resources allocation, which a principles purpose of repairing programme. (3) Considerable uncertainty about the future exists, but organization has the flexibility to adjust to change the circumstances. In relatively stable organization. A program may be unnecessary; the future is sufficiently like the past so that the program would be only an exercise in extrapolation. If the future is so uncertain that reasonably reliable estimates can not be made, preparation of formal programme is a waste of time.
Generated by Unregistered Batch DOC & DOCX Converter 2010.2.406.1388, please register! Budgeting : Budgeting is formal financial plan for each year, know as short rang plan, is techniques of expressing revenues, expenses, physical target like production and sales, profit, asset and liabilities usually for periods of one future year. Budget has functions of motivating manager, coordinating activities, communicating to persons within an organization, providing standards for judging actual performance and acting as a control tool. Executing : After the budget preparation, budgeting is used as tool for coordinating the action of individual and department within the organization. In fact within the execution phase, task control is done to ensure the action and performance match with the and desire result. Which performing the manager’s goals is to achieve budgeted targets, however compliance to budget is not necessary if the plans given in the budget are found as not the best way of achieving the objectives. Adherence to budget is not necessary good, and departure from it is not necessary bad. Evaluation : The management control process ends with evaluation phase in which performance of manager is evaluated. Since it is an after event exercise, the evaluation does effect what has happened, however evaluation phase act like a powerful stimulus as employees know that their performance will be subsequently evaluated. Also on the basis performance evaluation, the future budget and plans are revised. Conclusion: The management control process is behavioral, manifesting itself in interaction among manager and between manager and their sub-ordinates. Because managers differ from another in technical ability, leadership style, interpersonal skill, experience, approach to decision making, affinity for member, and in many other ways, the details of the management control process vary from company to company and among the responsibility centre within company. The difference relate mainly to the way the control system is used. Programming, budgeting, executing and evaluation are not needed in small, relatively stable organization, and it is not worthwhile in organization that cannot make reliable estimates about the future or in organization whose top management does prepare to manage in this fashion. Q. 8(a)Describe the factor which impact on service organization. Introduction: For several reasons, management control in service industries is somewhat different from management control in service industries is somewhat different from management control in manufacturing companies. Some factors that have an impact on most service industries discussed as follows. These factors apply also to the management control of legal, research and development, and other service departments in companies generally. Factors which impact on services organizations ? Absence of Inventory Buffer ? Difficulty in controlling quality ? Labor intensive ? Multiunit organization ? Historical development
Generated by Unregistered Batch DOC & DOCX Converter 2010.2.406.1388, please register! Absence of inventory buffer Goods can be held in inventory, which is a buffer that dampens the impact on production activity of fluctuations in sales volume. Services can be stored. The airplane seat, hotel room, hospital operating room, or the hours of lawyers, physicians, scientist, and other professionals that are used today are gone forever. Thus, although, a manufacturing company can earn revenue in the future from products that are hand today, a service company cannot do so. It must try to minimize its unused capacity. Moreover, the cost of many services organizations is essentially fixed in the shorts run. In short, a hotel cannot reduce its costs substantially by closing off its rooms. Accounting firms, law firms, and other professional organizations are reluctant to lay off professional personal in times of low sales volume because of the effect on morale and the costs of rehiring and training. A key variable in most service organization, therefore, is the extent to which current capacity is matched with demand. Service organization attempts this matching in two ways. First they try to stimulate demand in off –peak periods by marketing efforts and price concessions. Cruise lines and resort hotels offer low rates off seasons. Second, if feasible, service organization adjusts the size of workforce to anticipated demand, if feasible, by such measures as scheduling training activities in slack periods and compensating for long hours in busy periods with time off later. The loss from unsold services is so important that occupancy rates and similar indications of success in selling available services are normally key variable in service organizations. Difficulty in Controlling Quality A manufacturing company can inspect its products before they are shipped to consumer, and their quality can be measured visually or with instruments(tolerances ,purity, weight, color, and so on).A service company cannot judge product quality until the moment the service is rendered, and then the judgment are often subjective. Restaurants management can examine the food in the kitchen, but customer satisfaction depends to a considerable extent on the way it is served. The quality of education is so difficult to measure that few educational organizations have a formal quality control system. Labor Intensive Manufacturing companies add equipment and automate production lines, thereby replacing labor and reducing costs. Most service companies are labor intensive and cannot do this. Hospitals do add expensive equipment, but mostly to provide better treatment, and this increase costs. A law firm expands by adding partners and new support personnel. Multi-Unit Organizations Some services organization operate many units in various locations, each unit relatively small. These organizations are fast-food restaurant chains, auto rental companies, gasoline services stations, and many others. Some of the units are owned; others operate under a franchise. The similarity of the separate units provides a common basis for analyzing budgets and evaluating performance not available to the manufacturing company. The information for each unit can be compared with system wide or regional averages, and high performance and low performers can be identified. However, because units differ in the mix of services they provide, in the resources that they use, and in other ways, care must be taken in making such companies.
Generated by Unregistered Batch DOC & DOCX Converter 2010.2.406.1388, please register! Historical Development Cost accounting started in manufacturing companies because of the need to value work in process and finished goods inventories for financial statement purposes. These systems provided raw data that were easily adapted for use in setting selling prices and for other management purposes. Standard cost systems, separation of fixed and variable costs and analysis of variances were built on the foundation of cost accounting system, separation of fixed and variable costs and analysis of variances were built on the foundation of cost accounting systems. Until a few decades ago, most texts on cost accounting dealt only with practices in manufacturing companies. Many service organizations (with the notable exception of railroads and both cost data. Their use of product costs and other regulated industries) is not having a similar impetus to develop cost data. Their use of product cost and other management accounting data is fairly recent –mostly since World War II. Nowadays, their management control systems are rapidly becoming as well as those developed as those in manufacturing companies.
doc_371075987.pdf