Effective Management Control Systems for Business Success
1. Introduction to Management Control
Management Control is the process by which managers ensure that resources are obtained and used in the most efficient way to achieve the organization’s goals. Therefore, it is a tool for assessment defined within an established timetable.
- It involves:
- Strategy definition: mission, external analysis, internal analysis, company goals, strategic plan.
- Organization: hierarchy and responsibility.
- Management Control System: Identify Key Performance Indicators (KPI), measure
Understanding Quantity and Price Standards in Management Accounting
What are Quantity and Price Standards?
A standard is a benchmark or “norm” used to measure performance. In management accounting, two types of standards exist:
- Quantity standards specify how much of an input should be used to make a product or provide a service.
- Price (cost) standards specify how much should be paid for each unit of the input.
Actual quantities and costs are compared to these standards. Deviations from standards deemed significant are brought to the attention of management, a practice
Read MoreBudgeting and Deviation Analysis of General Manufacturing Costs
Forms to Budget the General Manufacturing Costs (GMC)
There are three ways to budget the GMC:
- Unit Budget: This involves establishing a budget for manufacturing overhead recorded for each product or for each type of product. This way, you get the budget of GMC for the manufacturing order simply because of its composition.
- Individual Budget: This consists of performing a budget of GMC for each particular production order.
- Joint or Global Budget: In this case, there is a budget of GMC for the entire