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Management control system


Management control system

Q.1 (a)"In an organization, control involves a variety of functions. What are these functions ? Briefly describe he there-tier spectrum of organizational

planning and control.

(b) "The concept of responsibility is a logical extension oil the idea of delegation of responsibiiity and authority for elective management control," Explain. Whale carp he three key principles elective control and management of operations ?


Q.2 (a) What different concepts of profit could be considered in the measurement of performance of profit canters ? Which one would you recommend and why ?

(b) Explain Negotiated Price and Opportunity Cost as bases for determining transfer pricing. What are their merits and demerits from the practical point of view ?


Q.3 (a) Discuss the scope of Flexible Budgeting, pointing out its merits and demerits.

(b) What basic factors should gutted in designing performance evaluation reporting system ? Explain.


Q.4 (a) What shirred be the objectives of Management Control System in a Bank ? Discuss some of the indicators of performance in a Bank.

(b) What pricing methods could be used in a nonprofit organization ? Why should a non-profit organization have a reasonable pricing policy ?


Q.5 write  shod notes on the following :

(a) Elements of a control system

(b) Profit centre as motivational tool

(c) Return on Investment Approach

(d) Performance Budgeting


Q.6 Discuss the need for MIS in an organisation and explain  the important considerations in designing Management information System {MlS) for the purpose of Management Control


Q.7 Growing geographical reach and exploration of new markets has necessitated increased delegation and ideation of responsibility censes. Elaborate this statement giving

reasons and examples,

Q.8 Write short notes on the following :

(i) Flexible bustling

(ii) Balanced Score Card

(iii) Total Quality Management (TQM)

(iv) Management by Objectives (MBO)


Q.9 Explain in detail the different! types of risks Iced by the banks and describe horn can these be contained by designing proffer management control system.

Q.10 Explain in detail the main elements of Management Control System in development organisations.


Q.11  (a) What changes have to be afflicted so that Responsibility Centres meet the requirements of a decentralized organization ?

(b) "Responsibility Accounting forms a vital component of MCS in an organization." Explain the concept of Responsibility Accounting and highlight its role in MCS.


Q.12 (a)Why are profit centres established ? What purposes do they sewer ?

(b) Distinguish between ROI and RI in the context of measurement of performance of investment centres. Which of the two retools, do you think, is superior and why


Q.13  What are the main purposes of applying Network Analysis in preparing budgets ? Explain the distinct stages in preparing budgets based on Network Analysis'


Q.14 (a) Explain the characteristics of a project organization from the viewpoint of Management Control.

(b) Examine the problems related to measuring the output in non-profit organizations. Suggest some of the ways in which these problems can be resolved.


Q.15 Explain any three of the following :

(a) Transfer pricing and Corporate policy

(b) Purpose and process of preparing cash budget

(c) Management control in hospitals

(d) Performance budgeting

(e) Myths about MIS


Q.16 (a)How can TQM be helpful in Management Control ? Illustrate your answer.

(b) Why are behavioural aspects important in Management Control ? How can the understanding of different styles of management be helpful in Management Control ?


Q.17 (a) Examine the merits and demerits of profit centres.

(b) Discuss the issues of corporate policy that are concerned with Transfer Pricing.


Q.18 (a) Explain the process of preparing Flexible Budgets' What are the limitations of flexible budgets ?

(b)How would you install and operate an Activity Based Cost System ? What are its likely benefits ?


Q.19  (a)What are different types of risks that the banks ace ? Examine the role of Management Control System in containing these risks.

(b)What problems do the SMEs generally face ? What are the implications of such problems on Management Control of SMEs.


Q.20 Explain any three of the following :

(a) Ethics and MCS

(b) Transfer pricing in actual practice

(c) Business Process Reengineering (BPR)

(d) Overriding objectives of reward and compensation sYstem

(e) Characteristics of service organizations and their implications for MCS


Q.21 Compute the change in Residual Income (RI) from the following new investment


Total original cost of investment

Rs. 2,00,000

Additional net cash flow per year

Rs.    50,000

Minimum required rate of return


Life of the equipment

10 years


Assume straight-line depreciation and no salvage value.


Q.22(a) Management control system is guided by controllability Principal “Explain.

(b) The ultimate purpose of management control is to achieve goal congruence. Comment.


Q.23 The problems in the establishment of profit centre controls revolves areong the questions of measurement. Concept of profit to be used internal transfer price and the compensation based on evaluation. Discuss.


Q.24 Evaluate the ROI system of performance evaluation in relation to management control. Give appropriate examples.


Q.25 Discuss the factor/considerations involved in the management control multinational operasdtiosn including economic and political risks.


Q.26 Explain any two fo the following

(a) Characteristics of management control system.

(b) Transfer pricing and corporate policy.

(C ) Measuring and controlling performance in an MBO framework


Q.27 What considerations influence the design fo a management control system in business organisation? Explain with examples.


Q.28 Discuss the issue that are concerned with the identification of investment hase and the performance measurement of investment centres.


Q.29 There are certain important issue that need to be examined and sorted out before staring the detailed budged setting exercise. What are these issues? Discuss what kind of procedures does a progressive company generally adopt in relation to the budget setting exercise?

Q.30  What particulars issue may have to be faced in the management control system of a multinational enterprise? Discuss briefly with suggestion to resolve them.


Q.31 What planning and control techniques can be used in a project organisation? Discuss briefly.


Q.32 Defining the boundary conditions in profit centres is an important aspect of the design of profit centres explain


Q.33 What measures can be used or measuring performance of investment centres? Discuss their relative merits and dementias.


Q.34 (a) Managerial performance in a foreign subsidiary is different form managerial performance sin domestic division. Do you agree with the statement? Give reasons.

(b) what adjustments are commonly required to the profit or loss figure of a foreign subsidiary in order to arrive at the correct figure of profit or loss?


Q.35(a) In what ways is the management control in a non-profit organisation different form a profit organisation?

(b) Develop a programme structure of a hypothetical large non-profit organisation (describe it objective ad actinides) pointing out its outputs and indicators for measuring outputs.


Q.36 (a) Responsibility accounting without responsibility reporting is incomplete. Comment on the statement by fully explaining and illustrating the two terms.

(b) An investment centre is necessarily a profit centre but a profit centre may to necessarily be an investment centre” explain what are the different types of influences which an investment centre meager may exercise on their vestment decision realign to this Davidson?



Q.37   Assume that a company his profit centre based divisions structure. What package of criteria could the company adopt? What does each criterion purport to measure? How would you rank different criteria and why?


Q.38 It is often stated that management control makes the manager short term oriented. How can this tendency be misnamed? Explain briefly.


Q.39 All investment centres are profit centres, but all profit centres need not necessarily be investment centres Explain how what different types of influences may an invest met centres manager exercise on investment relating to his division?


Q.40 Distinguish between performance budgeting and zero-based budgeting. Which types of actives are more suitable for performance budgeting?


Q.41 What major management control issues are involved in project organization? Explain the indicators that could be used for measuring the progress of project.


Q.42 (a) Under what cordites can an expense/cost centre become a responsibility sector?

(b) Controllability is an important concept in Responsibility Accounting under what circumstances can an control liable item become controllable? Explain with examples.


Q.43 Write short notes on:

(a) Informal Management Control

(b) Flexible Budget

( C) Performance Evaluation of a Government Hospital


Q.44 Discuss the general characteristics of a management control system. In what ways is a management control system helpful  to a large industiral enterprise?


Q.45 The implementation of the profit centre concept necessitates the use of the transfer pricing mechanism. Disuses. Briefly explain some methods of transfer pricing and explain their merits and dements.


Q.46 What budgetary control? Discuss the role of (i) Zero base Budgeting (iii) Performance Budgeting and (iii) Flexible Budgeting in bucigetary control.


Q.47 In what ways does the management control system in a non profit organization differ form the one in an profit organisation? What king of control indicators could be used for measuring the performance of a non profit organisation?


Q.48 Explains any two of the following

(a) Management control in banks

(b) Controllability concept and Responsibility According

( C) ROI as a measure of performance for divisions of a company


Q.49 What is Responsibility Accounting and what are the essential requirement  for its effective function? Are responsibility Accounting and Responsible Reporting the same?


Q.50 What could be some of the bases for measuring performance of cost centres profit centres and investment centres? What are the merits and demerits of ROI as a method/measure of performance of investment centres? What alternative can be there and how does it take care of the demerits of ROI? Elucidate.


Q.51 It is sometimes argued that the flexible budgetary control approach (to cost control approach (to cost control) in production  departments is obsolete. The main arguments seem to be that:

(a) Production costs are  tending to become more and more fixed policy costs. Outside the of the department manger.

(b) Because of (a) there is no point in flexing the cost budgets for ultimate comparisons with actual costs and that this is a meaningless and wasteful exercise

(C ) This mechanistic form fo control requires the involvement of managers in the selling of budgets and this they can hardly do because of the absence of necessary standard data.

Discuss these points separately and appraise the general argument.


Q.52  In what ways is the management control system in service organization different form the management contra systems air manufacturing organisation? What changes have taken place the service industry over the last decade or so and what implications do they have for management control.


Q.53 Briefly explain the following:

(a) Techniques for planning and control in a project organisations

(b) Transfer pricing and corporate policy


Q.54(a) What are the different concepts of profit that can be used for measuring performance of profit centres? Which concept would you recommend and why?

(b) Defining boundary conditions for profit centres is an important aspect in the design of profit centres Explain.



Q.55 (a) What is economic risk? What can a manager of an MNC subsidiary do to minimise the effect of such risk?

(b)  What factors make evaluation of an MNC subsidiary more difficult than evaluation of a domestic division of a company? Briefly discuss.


Q.56 (a) Every responsibility centre manger in an organization is an expense centre manager also. Do you agree with this statement? Explain your answer with suitable examples.

(b) Differentiate between fixed and flexible budges. What implication does flexible budgeting  have for management control?


Q.57 (a) What steps are involved establishing responsibility centres? Discuss.

(b) In designing an effective management control system some basic considerations should not be overlooked. What are these consideration? Explain


Q.58 Explain any two of the following

(a) Decision Support System

(b) Minimising the side effects of transfer pricing system

(c ) Measuring performance f investment centers


Q.59 One needs to keep some basic considerations in designing an effective management control system. What are these basic considerations? Explain by given examples.


Q.60  What methods could be used for measuring the performance of investment centres? Explain the methods by clearly bringing out the merits and deer its of each.


Q.61 One needs to keep some basic considerations n designing an effective management control system” what are these basic conservation ? explain by giving examples.


Q.62 What methods could be used for measuring the performance of investment centres? Explain the methods by clearly brining out merits and demerits of each.


Q.63 What criteria could be used for evaluating the performance of a foreign subsidiary? Which one of the criteria is commonly used? Whist factors could create complication  performance evaluation fo different subsidiaries?


Q.64 Explain any two of the following

(a) Issue involved in working out a transfer pricing system/

(b) Conditions that make it necessary for a company to create responsibility centres.

(C ) Major issue involved in management control in project organisations


Q.65 (a) Management control system is guided by controllability  Principle Explains

(b) The ultimate purpose of management control is to achieve goal congruence. Comment.


Q.66 the problems in the establishment of profit centre controls revolves around the question of measurement, concept of print to be used. Internal transfer price and the compensation based on evaluation. Discuss.


Q.67 Evaluate the ROI system of performance evaluation in relation to management control. Give appropriate examples.


Q.68 Discuss the factors/consideration involved in the management control of multinational operations, including economic and political risks.


Q.69 Explain any two of the following

(a) Characteristics of management control system

(b) transfer pricing and corporate policy

(c ) Measuring and controlling performance in an MBO framework


Q.70 (a) The three tiers of organisation planning and control correspond to the three levels of management found in most private sector organisations. Explain?

(b) Management control is usually bit around financial responsibility “Elaborate and illustrate.


Q.71 (a) What major steps are involved in the process of establishing responsibility centres? Discuss

(b) form management control point of view, profit centres are supposed to have motivational value. What arguments are usually advanced in support of this statement.


Q.72 What important issues need be identified examined and resolved before stating detailed budget exercise? Discuss:

(a) Explain the main dements/considerations of management control in professional firms

(b) Briefly discuss the different characteristics form manumit control pint of view between profit and non-profit organist ions/.


Q.73 Explain any two of the following

(a) Control indicators in multi project organisation.

(b) Methods of transfer pricing other than market or mart based prices

( C) Measuring the investment base under investment centres.

Advanced Strategic Management
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