MARATHA MANDIR'S

BABASAHEB GAWDE INSTITUTE OF MANAGEMENT STUDIES

MANAGEMENT CONTROL SYSTEM

Presented to : Prof. M.A.Ganachari
Presented by :
Roll Number

Name

A-18

Jagruti Kharat

A-19

Nikhil Kumbhar

A-21

Rohan Malusare

A-27

Affaan Shaikh

Q.1 Briefly describe overall framework of

management control.How does it relate to strategic
planning and Operations Control?
What is MCS
Framework of MCS
i. Strategic control
ii. Management Control
iii.Operation Control

Q.2 What is SBU?What are conditions required for

creating SBU.How is the performance of SBU
measured?What are the Advantages and
Disadvantages of creating SBU?

SBU- Strategic Business Unit

Criteria
Advantages
Disadvantages

Zero Based Budgeting

Free Cash Flow
Financial Audit
Internal Audit

Balance scorecard

The balanced scorecard is a strategic planning and management system that

is used extensively in business and industry, government, and nonprofit
organizations worldwide to align business activities to the vision and
strategy of the organization, improve internal and external
communications, and monitor organization performance against strategic
goals.

It was originated by Drs. Robert Kaplan (Harvard Business School) and

David Norton as a performance measurement framework that added
strategic non-financial performance to give managers and executives a
more 'balanced' view of organizational performance.

How can balance score card can be implemented in a

organization?

The learning growth perspective

The business process perspective
The customer perspective
The financial perspective

Case studyBirch paper company

a medium-sized, vertically integrated paper company,
producing white and Kraft papers and paperboard
has four producing divisions and a timberland
division, which supplied part of the companys pulp
requirements
If I were to price these boxes any lower than $480 a
gross, said James Brunner, manager of Birch Paper
Companys Thompson Division, Id be
countermanding my order of last month for our sales
force to stop shaving their bids and to bid full cost
quotations.

Situation

Northern and Thompson division together designed box for northern

division
Thompson division was reimbursed by northern division for its designing
and development
After finalizing, apart from two outside companies
Company policy where each division manager had full freedom and
discretion to buy from anywhere
Thompsons most materials from within company but sales mostly to
outsiders
If Thompson gets bid materials to be procured from southern division
70% of out of pocket of $400 were of above materials
This continued 60% of selling price

Bids (1000)
Thompson - $480
West paper company - $432
Eire paper company - $430

Which bid should northern division accept that is in best

interest of the company?

Thompson division: even though the bid from west paper seems at first to be the
best choice. Thompson actually has lowest cost associated with them.

cost involvedCosts for Thompson are a:- linerboard and corrugating medium: cost
$400*70%60%=$168 plus out of pocket: $400*30%=120, for a total cost of $288

Costs for west papers would be a total of $430

Costs for Eire papers would be $90*60=$54 (southern) plus $25 (Thompson), and
their supplies of $432-5-36=$312 for a total of $391

Should Mr. Kenton accept this bid?

Mr.kenton should not accept the bid from west because it is not the best
interest the company.

I believe he should accept the bid from Thompson because not only will it
result in the lowest cost, but also it will encourage buying within the
company.

How profit center different from investment center?

Profit center
In profit center managers have responsibility and authority to make decision for both
production and sales. They make decision about what products and services produce
however the managers is not have the authority to determine the level of capital investment
in their facilities
Methods of calculating profit center
Contribution margin
Direct profit
Controllable profit
Income before taxes
Net income
Investment center
An investment center is responsible for both profit and investment. The investment
centre manager has control over revenues expenses and the amount invested in the
center assets
Methods of judging their performance
Return on investment
Economic value added

How does a services organization is different from manufacturing

organization?
An Service industry made up of companies that earn revenue through
providing intangible products and services.
An manufacturing organization is in which the process of converting raw
Materials, components operate in to finished goods that meet a customer
expectations or specification
The major difference are
Goods
Inventory
Customers
Labor
How professional service organization is different from normal services
Organization?

How marketing and pricing is done by professional organization?

Marketing
The marketing and selection of professional-service providers may depend on factors
such as skill, knowledge, experience, reputation, capacity, ethics, and creativity.
Pricing
The selling price of work is set in a traditional way in many professional firms. If the
profession is one in which members are accustomed to keeping of their time fees
generally are related to professional time spent on the engagement. The belling rate
typically is based on the compensation of the grade of the professional plus a loading
for overheads costs and profit.
Transfer pricing is not an accounting tool. Comment?
The transfer price is nota n accounting tool because it is not shown
In book of accounts. It is behavioural tool that motivates managers to make
right decisions.

AUDITS

Cost Audit
Efficiency Audit
Management Audit
MCS In Matrix ORG.

SUMMARY

Industry Analysis
Company Position
Current Issues And Analysis
Analysis Of Alternatives
Recommendations

QUESTIONS:Q1. Is the capital investment proposal described in Exhibit 3 an attractive

one for
Quality Metal Service Center?

Q 2: Should Ken Richards send that proposal to home office for approval?

Q 3: Comment on the general usefulness of ROA as the basis of

evaluating district managers performance. Could this performance measure
be made more effective?

Thank you