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MANAGEMENT ACCOUNTING TECHNIQUES (MAIN TECHNIQUES (PAYBACK PERIOD…

- - - - As regulation by executive action of the costs of operating an undertaking. Cost control aims at achieving the target of sales. Cost control involves setting standards
    - - (i) Planning
        Initially a plan or set of targets is established in the form of budgets, standards or estimates:
        
        (ii) Communication
        The next step is to communicate the plan to those whose responsibility is to implement the plan:
        
        (iii) Motivation: After the plan is put into action, evaluation of the performance starts. Costs are ascertained and information about achievements is collected and reputed. The fact that the costs are being reported for evaluating performance acts as a prompting force.
        
        (iv) Appraisal:
        Comparison has to be made with the predetermined targets and actual performance. Deficiencies are noted and discussion is started to overcome deficiencies
        
        (v) Decision-making
        Finally, the reported variances are received. Corrective actions and remedial measures are taken or the set of targets is revised, depending upon the administration’s understanding of the problem:
    - - :pencil2:
        It helps the firm to improve its profitability and competitiveness.
        :pencil2:
        In the absence of cost control, profits may be drastically reduced despite a large and increasing sales volume
        . :pencil2:
        It is indispensable for achieving greater productivity
    - - :red_flag:ExternalExternal
        standards are applied for comparing performance with other organisations. The external standards are used for comparing the cost performance with the other firm take the shape of a set of cost ratios.
        :red_flag: Internal
        Internal standards, on the other hand, are used for the evaluation of intra firm cost elements like materials, labour, etc.
  - - - :check: Planning
        :check: Co-ordination
        :check: Recording
        :check: Control
        :check: Corrective Actions
    - - :checkered_flag:Budgetary control integrates and brings together all activities of the enterprise right from planning to controlling.
        
        :checkered_flag:Budgetary control provides a yardstick against which actual results can be compared.
        
        :checkered_flag: Budgetary control provides a clear definition of the objectives and policies of the concern.
    - - :forbidden:The effectiveness of the budget depends largely on the dedication and co-ordination of the top management.
        :forbidden:Budgetary control system requires a lot of paper work which the technical personnel always resent.
        :forbidden:The budgetary programme takes a long time to develop a reasonably good system of budgetary control.