Thursday, June 18, 2009

Controlling Techniques

Control of business is done with different controlling techniques which can be useful for reducing the variance between actual performance and standard performance . There are following main techniques or method or controlling which can be classified into two head category .

A - Traditional Techniques

1. Observational techniques

Observational technique is traditional technique of controlling . Under this technique , manager appoint authorities who observes other employees . They also note the actual performance of employee and they report it to manager after manager decides whose performance is weak and how to improve it .

2. Statistical report

This is also technique of controlling . Under this technique company analysis the statistical data in the form of mean, median and mode also analysis the standard variation and correlation and find what are shortcoming in planning and try to control it .

3. Break even point analysis

This is the technique of controlling . Company sells their product up to the break even point because it is point where total cost equals to total sale value and company can get any loss . But sale below from this point means that total cost is more than total sale value and company will suffer losses . So , break even point is so important from controlling point of view . It is the reason that wise men have made it controlling technique and used in management .

4. Budgetary control :-

Budgetary control is that technique of controlling in which company managers make budget like production budget , sale budget , finance budget and research and development budget after this actual performance is measure with budget amount .

Modern techniques of Controlling

1. MIS

MIS means management information system . In this system , raw data is collected from direct or indirect sources and then after classification of data , different analysis is rendered by company managers and after this company managers provide information about favourable and unfavourable position of company's different plannings .

MIS is very important technique and it is used very high level after invention of computer and Internet .

2. Management audit system

This is very simple type of auditing which is done by chartered accountant and company manager can used it as technique of controlling management . Managers establish their relations with CA of company and after discuss they make system of internal management audit in which company CA and his staff audit at spot and check the efficiency and correctness of plan and its implementation on staff of company .

3. Return on investment

Return on investment meas capacity of earning profit on total investment which is invested by company . It is very scientific technique of controlling . Even Google is using also this technique for his google AdWords project control .

4. Responsibility accounting

Responsibility accounting is that controlling technique in which different responsibility centres are created by company managers and its name are cost center , profit center and investment center . After this every center is responsible for their cost . Main aim of making these centers is to increase profit , increase return on investment and decrease cost of production . Different budgetary cost are set in first and the each centre's actual cost is counted and recorded , if the actual cost of each center is less than budgeted cost , then it means that center has perform his duty better .

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