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Master
of Business Administration
Paper
Code: MB FM– 205
Paper
Title: Management control system
Q.
1. Short answer type questions: Limit 100 - 150
Ques. a. Define the
scope of Management Control.
Answer: Scope
of managerial control is very wide. It virtually covers all the areas of
business, namely policies, procedures, men, money, machines and equipment,
public relations, human relations, research and development and so on.
Normally, managerial control is exercised by concentration on key areas of
business on which the success of the business depends. It is known as
“key-point control”. The key-points vary
Ques. b. Why effective
control system is required in Management?
Answer: Effective control systems tend to have certain common
characteristics. The importance of these characteristics varies with the
situation, but in general effective control systems have following
characteristics.
Ques. c. Differentiate
between PERT and CPM technique.
Answer:
1.
PERT is a project management technique,
whereby planning, scheduling, organising, coordinating and controlling
uncertain activities are done. CPM is a statistical technique of project
management in which planning, scheduling, organising, coordination and control
of well-defined activities take place.
2.
PERT
is a technique of planning and control of time. Unlike CPM, which is a method
to control costs and time.
3.
While
PERT is evolved as a research and development project, CPM evolved as a
construction project.
4.
PERT
is set according to events while CPM is aligned towards activities.
5. A deterministic model is used in CPM.
d. What do you mean by
Performance Budgeting?
Answer: Performance budget also referred to as
performance-based budgeting is a practice of preparing the budget based on the
evaluation of the productivity of the different operations in an organization.
Operations which are contributing the most to the profitability, the larger
share of the budget is allocated to that division. It leads to optimum
utilization of resources such as finance, skills of the staff, use of the
productive
Ques. e. What is meant
by „Transfer Pricing‟?
Answer: Transfer pricing can be defined as the
value which is attached to the goods or services transferred between related
parties. In other words, transfer pricing is the price which is paid for goods
or services transferred from one unit of an organization to its other units
situated in different countries (with exceptions).
Transactions subject to Transfer pricing
Ques. f. What is the function of a Cost
Centre?
Answer: A cost center is a unit or a division
in an organization that does not take in any income, but must spend money to
fulfill an important function. In other words, a cost center only adds to
costs. The 1-800 free help line of a consumer products manufacturer is a typical
example of a cost center. Such a division costs money to staff and operate, but
does not directly add to the revenue of the business.
Ques. g. What is the
Concept of Motivation? How does it affect individual behavior and performance?
Answer: Motivation plays an important role in
everyday tasks and is specifically essential in the corporate world. The level
of motivation of employees determine the success of an organization and shapes
the culture of a workplace. Motivation can be divided into extrinsic and
intrinsic motivation and both of these
Ques. h. How divisional performance is
measured in an organization?
Answer: Performance measurement is the
performance-based management process which is flowing from the organizational
mission and the strategic planning process. Divisional performance measurement
includes the objective and subjective assessments of the performance sub-units
of an organization
Ques. i. Discuss the importance of Internal Ahudit.
Answer: The benefits of internal audit to the business include –
1.Provides Objective Insight
Your work
cannot be audited without having a definite conflict of interest. The internal
auditor or the internal audit team, cannot have any operational responsibility
to achieve this objective insight. In smaller situations where smaller
businesses don’t have extra resources to devote to this, it is acceptable to
cross-train workers in different departments to be able to audit another unit.
2.Decide the Extent of Audit
The internal audit report may provide the effectiveness of various
systems in the company which may help the auditor in determining the
Ques. j. Discuss the
advantages of Participative Management
Answer: Advantages
of Participative Management
Job Satisfaction: In lots or organizations that employ
participative management, most of the employees are satisfied with their jobs
and the level of satisfaction id very high. This is specially when people see
their suggestions and recommendations being implemented or put to practice.
Psychologically, this tells the individual employee that, ‘he too has a say in
decision making and that he too is an integral component of the organization
and not a mere worker’.
Q.2 what is
the Concept of Management Control? Also discuss
the scope and importance
of Implementing adequate
Management Control.
Answer: An effective organization is one where managers understand
how to manage and control. The objective of control as a concept and process is
to help motivate and direct employees in their roles. Understanding managerial
control process and systems is essential for the long- term effectiveness of an
organization.
Q.3 SalesRs.2520000,CostofsalesRs.1920000,NetProfitRs.360000, InventoryRs.800000,
OtherCurrentAssetsRs.1440000,Fixed Assets Rs.1500000,DebtRs.900000,CurrentLiabilities
Rs.600000 and Net worth Rs.1500000
Calculate:
a. Current
Ratio
b. Net Profit Ratio
c. Debt. Equity
Ratio d. Return
on Investment
Answer: a. The current
ratio measures the ease with which current assets can be used in settling
current liabilities as they fall due, it is computed as the ratio of current
assets divided by current liabilities.
Current
ratio=current assets/current liabilities
current
assets=Inventory+current assets=800000+1440000=2,240,000
current
liabilities=600000
Q.4 “The aim of Responsibility
Accounting is
not
to place blame. Instead,
it is
to evaluate
performance and provide
feed back. So that future operations can
be improved.” Comment and Discuss
the various steps involved in
Responsibility Accounting.
Answer: Essential
Features of Responsibility Accounting:
An analysis of the definitions given above
reveals the following important features or fundamental aspects of
responsibility accounting:
1. Inputs and
Outputs or Costs and Revenues:
The implementation and maintenance of
responsibility accounting system is based upon information relating to inputs
and outputs. The
Q.5“Accounting
reports are a matter
of necessity
for
the Management”.
Elaborate
and explain the different
types
of reports that are used for the internal management of
an enterprise.
Answer: Reporting can be defined
as communication of statements with related information between the two
parties. The process of providing information to the management is 88 known as
management reporting. These reports are provided to the various levels of Reporting
to Management 89 management on regular basis to keep the management abreast
about the effectiveness of their respective responsibility. Reporting is an
important
Q.6 Prepare a
Cash Budget from April to June for ABC Co. Ltd.
With the help of
following information :
|
Month |
Sales(Rest.) |
Purchases(Rest.) |
Wages(Rest.) |
|
February |
180000 |
124000 |
12000 |
|
March |
192000 |
144000 |
14000 |
|
April |
108000 |
243000 |
11000 |
|
May |
174000 |
246000 |
10000 |
|
June |
126000 |
26800 |
15000 |
b. 50% of the credit
sales
are realized
in the
following month
sales
and remaining 50% sales for
in
The second
following month.
c. Creditors are paid in
the following
month
of Purchase.
d. Cash
at Bankas on 1st April Rs.25000.
Answer:
Explanation:
In the books
of Cash Budget
Particulars
April
may
June
Opening balance
25000 (223000)
(581000)
Recipts
Collection from
debtors 150000
141000
150000
Dear
students get fully solved assignments
Send
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or
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us at : 08263069601
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