Page 292 - DCOM102_DMGT101_PRINCIPLES_AND_PRACTICES_OF_MANAGEMENT

Principles and Practices of Management

Notes 2. Standard Costing: The cost of production determines the profit earned by an enterprise.
The system involves a comparison of the actuals with the standards and the discrepancy is
called variance. The various steps involved in standard costing are:
(a) Setting of cost standards for various components of cost e.g.: raw materials, labour
etc.
(b) Measurement of actual performance.
(c) Comparison of actual cost with the standard cost.

(d) Finding the variance of actual from the standard cost.
(e) Findings the causes of variance.
(f) Taking necessary action to prevent the occurrence of variance in future.
3. Responsibility Accounting: Responsibility accounting can be defined as a system of
accounting under which each departmental head is made responsible for the performance
of his department.
4. Reports: A major part of control consists of preparing reports to provide information to
the management for purpose of control and planning.
5. Standing Orders, Rules and Limitations: Standing orders, rules and limitations are also
control techniques used by the management. They are issued by the management and
they are to be observed by the subordinates.
6. Personal Observation: A manager can also exercise fruitful control over his subordinates
by observing them while they are engaged in work.

Notes

1. Self-control: Each employee must exercise self-control and do what is expected at
work most of the time on most work related matters, as no enterprise can exist self-
control. Self-control stems from the employee's ego, orientation, training and work
attitudes.
2. Group control: It affects individuals both in output and behaviour. Group norms of
doing a good job exert pressures on the individual to perform and to follow work
rules.
3. Policies and procedures: They are guides to action for managers to use in controlling
behaviour and output of employees. They can, for example, protect the firms's
resources and equipment and require employee's presence for appropriate work
times.

16.5.1 Critical Path Method (CPM)

A critical path consists of that set of dependent tasks (each dependent on the preceding one),
which together take the longest time to complete. A CPM chart can define multiple, equally
critical paths. The tasks, which fall on the critical path, should be noted in some way, so that they
may be given special attention. One way is to draw critical path tasks with a double line instead
of a single line. Tasks, which fall on the critical path, should receive special attention by both the
project manager and the personnel assigned to them. The critical path for any given method
may shift as the project progresses; this can happen when tasks are completed either behind or
ahead of schedule, causing other tasks which may still be on schedule to fall on the new critical
path.

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