"Only a 5% increase in labor cost may be more troublesome than a 15% increase in postal charges."Identify the concept pointed out in the statement.
- Deviation
- Critical point control
- Break-even analysis
- Critical path method
The Correct Option is B
Approach Solution - 1
"Only a 5% increase in labor cost may be more troublesome than a 15% increase in postal charges." This statement highlights the concept of Critical Point Control.
In business management, Critical Point Control refers to focusing on the areas of greatest significance where even small deviations can have substantial impacts on the overall performance and objectives of a business. It involves identifying and monitoring these critical areas to ensure control measures are implemented effectively. In this context, while postal charges may increase by a larger percentage (15%), their impact on the business might not be as significant as a 5% increase in labor costs. Labor costs could be a more critical point affecting the business's bottom line due to its potential impact on overall productivity and operational expenses.
Approach Solution -2
To identify the concept pointed out in the statement, let's analyze the statement and each option in detail:
Statement Analysis
The statement says, "Only a 5% increase in labour cost may be more troublesome than a 15% increase in postal charges." This suggests that there is a specific point (or threshold) at which a small change in one factor (labour cost) can have a more significant impact than a larger change in another factor (postal charges).
Options Analysis
Deviation (1)
Definition: Deviation refers to the difference between the actual performance and the set standards or expected performance.
Why Not: The statement is not about the difference between actual and expected performance but about the impact of changes in different factors.
Critical Point Control (2)
Definition: Critical point control is a concept in management where certain key points or thresholds in a process are identified and monitored closely. These points are critical because they can significantly affect the outcome.
Why Correct: The statement suggests that a small increase in labour cost (a critical point) can have a more significant impact than a larger increase in postal charges. This aligns with the concept of critical point control.
Break-even Analysis (3)
Definition: Break-even analysis is a financial tool used to determine the point at which revenue equals costs, resulting in no profit or loss.
Why Not: The statement is not about the break-even point but about the relative impact of changes in different costs.
Critical Path Method (4)
Definition: The critical path method is a project management technique used to determine the sequence of tasks and the minimum time required to complete a project.
Why Not: The statement is not about project management or the sequence of tasks but about the impact of changes in different costs.
The correct answer is: (2) Critical point control
The statement highlights the concept of critical point control by emphasizing that a small change in one factor (labour cost) can have a more significant impact than a larger change in another factor (postal charges). This suggests that certain points or thresholds in the cost structure are critical and need to be monitored closely.
Top Questions on Controlling
Piyush is the Production Manager of a shoe company called . He has 1000 workers working under him in his department. Piyush booked a special order for 300 pairs of gents shoes at an estimated cost price of Comforty < 500 per pair plus 20 percent profit margin. The order is to be completed within 10 days. After completion of the order, Piyush found out that the production cost of one pair of shoes was 600 Rupees. He tried to find out the reason but couldn't. He reported it to the Chief Executive Officer. The Chief Executive Officer appointed Abhay to find out the cause. Abhay was not only a specialized Cost Accountant, but also a qualified Human Resource Manager. After two days, Abhay reported that the set targets could be completed with the help of only 800 workers, which revealed that there was overmanning in the organization. The organization was not utilizing the human resources optimally, which had led to higher labour cost. The above case highlights one of the points of importance of an important function of management.
(i) Identify the function of management.
(ii) State any two points of importance of the function of management identified in part (i), except the one discussed in the above case.- Statement I : Controlling ensures that activities in an organization are performed as per the plans. Statement II : Controlling function of a manager is a pervasive function. Choose the correct option from the options given below :
- Sohan, Sales Manager of ‘Kriti Ltd’ is a good efficient manager who always motivated his team to perform to their best ability. Till the year 2023, he and his team were exceeding the targets. However, since the last six months, they were unable to meet their targets. On investigation it was found out that one of his team members had left the job and was offering the competitors’ product to some of the clients of ‘Kriti Ltd.’ at lesser price.
- Identify the function of management being referred to in the above case.
- Identify the step in the process of the above function of management which helped the management to find out the fall in performance.
- Suggest any 2 ways which can help management to achieve the desired target in future.
- ______ is the step in the controlling process where standards may have to be revised in case the deviation can not be corrected through managerial action.
- Nishtha runs a chain of famous restaurants, ‘Indian Kitchen’, in different parts of Delhi. The restaurant chain was known for good quality food and quick service. ‘Indian Kitchen’ was generating good revenue and had goodwill in the market. Nishtha would take a weekly report from all the Restaurant Managers and take necessary action to resolve the problems, if any. Nishtha noticed a sudden decline in sales in one of the restaurants. She questioned the Restaurant Manager who mentioned that the restaurant is seeing a gradual decrease in the number of customers, but could not provide a clear explanation for it. So, Nishtha formed a team to find out the causes of the declining customers as this is the key area for restaurant business and is critical to the success of business. By doing this, Nishtha is performing a step of the process of a function of management.
- [(i)] Identify and explain the function of management discussed above.
- [(ii)] Explain the step of the function identified in (i) above, followed by Nishtha to find out the causes of declining revenue.
- [(iii)] Explain the step Nishtha will take after she gets the report from the team formed to find out the causes of declining revenue.
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