Class 12 Business Studies Chapter 8 Controlling

Key Concept: Basic Concept Understanding

b) Gross profit ratio

[Solution Description] Quantitative standards are benchmarks that can be measured numerically, allowing for straightforward performance assessment. Examples include financial ratios and production metrics.

Key Concept: Cost of Controlling

c) The balance between costs and benefits

[Solution Description] Managers need to ensure that the costs associated with controlling external factors do not surpass the benefits gained from such actions.

Key Concept: Definition Recall

c) To ensure activities conform to plans

[Solution Description]

The primary purpose of controlling in management is to ensure that activities conform to the plans set by the organization. This involves setting performance standards, measuring actual performance, and taking corrective actions to align them with the plans.

Key Concept: Basic Concepts

b) Planning is a prerequisite for controlling

[Solution Description] Planning sets the goals and objectives, while controlling ensures that these goals are being met by monitoring performance and taking corrective actions if necessary.

Key Concept: Basic Concept

b) Assigning additional resources

[Solution Description] Corrective actions are employed to bring a project back on track when deviations exceed the set limits. Examples include assigning additional resources, providing employee training, or revising performance standards.

Key Concept: Function Identification

c) Controlling

[Solution Description] Controlling is one of the functions of management that ensures activities within an organization are performed according to the established plans. It involves setting performance standards, measuring actual performance, and taking corrective actions if needed.

Key Concept: Quantitative Standards

b) Cost to be incurred

[Solution Description] A quantitative standard refers to a measurable criterion such as cost, time, or units produced. Hence, “Cost to be incurred” is a quantitative standard.

Key Concept: Interconnected Limitations Analysis, Advanced Cause-Effect Analysis

b) Both Assertion and Reason are true, but Reason is NOT the correct explanation of Assertion.

[Solution Description]

The assertion suggests a chain reaction starting with governmental regulation changes leading to both employee resistance and increased costs related to control system implementation. This requires understanding that external factors like regulatory changes compel organizations to amend their operations, potentially incurring additional costs to comply with these regulations. Simultaneously, such amendments might be perceived by employees as restrictive or threatening, thus fostering resistance.

Analyzing the reason: It explains how government regulations necessitate procedural changes and identifies the root cause of employee resistance—fear regarding autonomy and job security. While correct, it doesn’t cover the aspect of increased costs directly. Thus, although the assertion and reason are true individually, the reason does not fully explain the entire assertion as it misses connecting to the cost increase part. Therefore, it’s clear that both statements are accurate but lack complete explanation linkage between each other.

Key Concept: Advantage Identification

b) Saves managerial time and effort

[Solution Description] One advantage of Management by Exception is that it saves managerial time and effort by letting managers concentrate only on significant issues rather than routine matters.

Key Concept: Strategic Coordination, Interdepartmental Coordination

d) By aligning marketing forecasts with production schedules

[Solution Description] Controlling can facilitate interdepartmental coordination by aligning departmental objectives and ensuring that both departments work towards common organizational goals. This can involve synchronizing marketing forecasts with production capacities and timelines.

Key Concept: Setting Standards

b) It allows for adaptation to changing circumstances

[Solution Description]

Flexibility in setting performance standards allows organizations to adapt to changes in the business environment. This adaptation is crucial because static standards might not accommodate unforeseen changes, such as market fluctuations or technological advancements. By being flexible, an organization can adjust its benchmarks and maintain relevancy and competitiveness.

Key Concept: Quantitative Standards

d) Gross profit ratio

[Solution Description] Quantitative standards refer to measurable criteria that can be expressed numerically. Gross profit ratio is a numerical value used in assessing financial performance, making it a quantitative standard.

Key Concept: Efficiency Analysis

b) Adjusting processes based on standards

[Solution Description] Controlling minimizes resource spoilage by continuously monitoring activities and making necessary adjustments to align with set standards. This ensures processes are carried out efficiently, thus preventing spoilage.

Key Concept: Scenario Analysis

c) Computer monitoring

[Solution Description] The effectiveness of a controlling method in minimizing dishonest behavior relies on its ability to monitor employee activities closely. Computer monitoring is particularly effective because it can track actions in real-time, providing comprehensive oversight and reducing opportunities for dishonest behavior.

Key Concept: Techniques

c) ROI (Return on Investment)

[Solution Description] Modern techniques of managerial control include advanced methods such as Return on Investment (ROI), Management Information Systems (MIS), and ratio analysis. These are distinguished from traditional methods like personal observation.

Key Concept: Corrective Measures

b) To ensure events conform to plans

[Solution Description] Corrective measures are crucial in controlling as they ensure that actual performance conforms to planned standards. When deviations from plans are detected, corrective actions are initiated to address and rectify these discrepancies, ensuring alignment with organizational goals. This function allows for adjustments within the system to meet expected outcomes.

Key Concept: Simple Cause Identification

c) Adequate resources

[Solution Description] Adequate resources are not a cause of deviation; rather, resource inadequacy could lead to deviations from expected standards.

Key Concept: Coordination through Control

c) By aligning departmental goals with organizational objectives.

[Solution Description]

A good control system facilitates coordination by aligning departmental and individual goals with the overall objectives of the organization. It ensures all parts of the organization work towards common targets and helps in maintaining clear communication channels and standards across different departments, reducing conflicts and redundancies.

Key Concept: Resource Utilization

a) Both Assertion and Reason are true, and Reason is the correct explanation of Assertion.

[Solution Description] Both the assertion and reason are true as controlling plays a significant role in managing and optimizing resources within an organization. By setting specific standards, it helps in monitoring processes and reducing inefficiencies such as wastage and spoilage. Furthermore, when activities are aligned with these standards, resource usage becomes more effective and efficient. This confirms that not only does controlling ensure efficient resource utilization, but it also achieves this through adherence to set standards.

Key Concept: Managerial Decision

d) That costs do not exceed the benefits.

[Solution Description] Managers must make sure that the costs associated with installing and operating control systems do not surpass the benefits derived from them. This ensures that the resources are utilized efficiently and justifiably.

Key Concept: Techniques of Control

c) Budgetary control

[Solution Description] Budgetary control is considered a traditional technique of managerial control used for planning financial resources and expenditures.

Key Concept: Quantitative vs Qualitative

c) Cost per unit

[Solution Description] A quantitative performance standard is one that can be measured numerically or expressed in terms of quantities. Examples include cost, revenue, number of units produced, etc. In this context, an example of a quantitative standard is “cost per unit,” which can be objectively measured and tracked over time.

Key Concept: Control Tools

d) Closed Circuit Televisions

[Solution Description] Employees may resist tools like Closed Circuit Televisions (CCTV) because they feel constantly monitored and under surveillance.