Chapter 1 nature

Friday, May 26, 2023 5:02 PM

1. Nature of control
Robbin (1991): controlling means monitoring activities to ensure that they are being accomplished as planned and
correcting any significant deviations
Role of control: help realise the objective of an organisation
2. Classification of control
a. By scope of control:
General control: control over many systems, many units, assets Specific control: control over specific units,
or individuals. General control focuses on general features of individuals, assets; focuses on specific features of
units, individuals, departments. units, individuals, departments.
Example: accounting for all types of assets to protect assets from Example: physical count of cash, inventories, etc.
being stolen, misused, appropriated surprise audit visits to cash at til
b. By the time of control and time of controlled action
Feedforward control: takes place in Concurrent control: takes Feedback control: takes place after the
advance of the actual and controlled place while an activity is in controlled action. Advantages: provide
activity. This is the most desirable progress. Advantage: managers information on how effective the planning
type of control as it prevents can correct problems before effort was; and feedback control can enhance
anticipated problems. E.g. approval of they become too costly. E.g. employee motivations. Disadvantage: by the
a chief accountant over payments direct supervision time the manager has feedback, the damage is
already done
c. By purpose of control
Preventive control: aims at preventing damages, losses, mistakes
Detective control: aims at detecting damages, losses, mistakes
d. By object of control
Output control: control over output of an activity, a department or an individual.
Behaviors control: control over behaviour of employees when conducting an activity
e. By content of control
Organisational control: control designed in Accounting control:
organisational structure of an organisation. - control using accounting information : compare actual
Controls are designed to be conducted by performance (accounting information) with budgets
different units. - control in accounting work (in preparing vouchers, posting
transactions in journals and ledgers, in preparing FS)
3. Compare MC vs task control
Criteria Management control Task controls
Feature • MC can never be reduced to a science Many TCs are scientific
• MC involves the behavior of managers, this Either human beings are not involved at all or the
can not be expressed by equations. interaction is b/w a manager and nonmanager
• Managers interact with other managers
Focus organisational units specific tasks
Requireme decide what is to be done within the constraint litlle or no judgement to perform
nt of strategies
4. FEATURES OF MANAGEMENT CONTROL
- MCS should be designed and operated following the principle of goal congruence. Goal congruence means that the goals
of an organisation’s individuals should be consistent with the goals of the organisation itself
- MCS is a tool for implementing strategy
- MCS has financial and non-financial emphasis
- MCS aids in developing new strategies
5. CRITERIA IN ESTABLISHING MANAGEMENT CONTROL SYSTEMS
- Strategic placement: MCS should focus on strategies
- Accuracy: MCS should provide reliable information
- Timeliness: MCS should provide timely information
- Understandability: controls that cannot be understood have no value
- Flexibility: to adjust to adverse change or to take advantage of new opportunities
- Emphasis on exception: MCS should focus on exception

Bài tập Variance

Budgeted Actual
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 Budgeted Actual
Sales 1.600.000 1.326.000 Revenue variance (274.000) Adverse
Sales Volume 4.000 3.400 Volume variance (240.000) Adverse -15,00
Sales price 400 390 Sale price variance (34.000) Adverse -2,13
Less: Fixed Overhead 150.000 123.250 Fixed overhead (26.750) Favorable -17,83
Less:Variable cost
RM 320.000 312.800 RM variance (7.200) Adverse
Sale production 4.000 3.400 Volume variance -48000 Adverse -15,00
quantity per shirt 1,6 2,0 Material efficiency variance 68.000 Adverse 21,25
price per met 50 46 Material price variance (27.200) Favorable -8,50
DL 240.000 224.400 DL variance (15.600) Adverse
Sale production 4.000 3.400 Volume variance (36.000) Adverse -15,00
hour to finish 1 shirt 0,5 0,6 Labour efficiency variance 40800 Adverse 17,00
wage rate 120 110 Wage rate variance (20.400) Favorable -8,50
VO 180.000 170.000 VO variance (10.000) Adverse
volumn 4.000,0 3.400,0 Volume variance -27000 -15,00
hour to finish 1 shirt 0,5 0,6 Var OH efficiency var 30600 Adverse 17,00
VO rate 90 83 Variable OH rate variance -13600 Favorable -7,56
Profit 710.000 495.550 Profit var (214.450) Adverse
(214.450)

Revenue variance = AP*AQ -BP*BQ

A further problem with sales variances is that the variances may arise from external factors and may not be controllable by
management. For example, changes in selling prices may be the result of a response to changes in selling prices of competitors.
Alternatively, a reduction in both selling prices and sales volume may be the result of an economic recession that was not
foreseen when the budget was prepared. For control and performance appraisal it may be preferable to compare actual
market share with target market share for each product. In addition, the trend in market shares should be monitored and
selling prices should be compared with competitors’ prices.
Sale price variance (AP - BP)*AQ
Reason Recommendation
Economic recession => low income, low demand Increase Quality control
Poor quality Add more benefit to product (innovate the product)
Competition
Outdate product
Sale volumn variance (AQ-BQ)*BP
Reason Recommendation
Economic recession => low income, low demand Increase Quality control
Poor quality Add more benefit to product (innovate the product)
Competition
Outdate product
Poor knowledge of staff
Poor marketing
Sale mix variance

Reason Recommendation
Economic recession => low income, low demand Pay for sale staff based on quantity
Time consuming when sell high price cuz product contain many benefit still not of high price product
visible to customer
Poor knowledge/attitude/skill of sale staff
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 Poor knowledge/attitude/skill of sale staff
Salaries to sale staff based on sale volume (tính hoa hồng theo số lượng kp %giá
sp nên họ ưu tiên bán hàng low prices vì dễ bán hơn
Fixed overhead variance: The difference may be due to a variety of causes, such as changes in salaries paid to supervisors, or
the appointment of additional supervisors
material price variance (SP - AP)* QP
An adverse price variance may reflect a failure by the purchasing department to seek the most advantageous sources of
supply. However, it is incorrect to assume that the level of the material price variance will always indicate the efficiency of the
purchasing department. Actual prices may exceed standard prices because of a change in market conditions that causes a
general price increase for the type of materials used. The price variance might therefore be beyond the control of the
purchasing depart ment. A favourable price variance might be due to the purchase of inferior quality materials, which may
lead to inferior product quality or more wastage. For example, the price variance for material B is favourable, but we shall see
in the next section that this is offset by excess usage. If the reason for this excess usage is the purchase of inferior quality
materials then the material usage variance should be charged to the purchasing department
Reason Recommendation
Inflation Adjust standard/budget,
Supplies shortage find substitute supplier
Collusion:supplier versus purchasing manager Fraud: internal control, increase internal audit and penalties
Urgent purchasing Replanning purchase
Small quantiites (transportation fee)
High quality of material

material usage variance (SQ - AQ)* SP

The material usage variance is normally controllable by the manager of the appropriate production responsibility centre.
Common causes of material usage variances include the careless handling of materials by production personnel, the purchase
of inferior quality materials, pilferage, changes in quality control requirements or changes in methods of production. Separate
material usage variances should be calculated for each type of material used and allocated to each responsibility centre.
Reason Recommendation
Poor skil Training
Poor quality increase quality control material purchased
Stolen Internal audit, increase supervision
Old machine Upgrade/replace machine
WAGE RATE VARIANCE (SR - AR)*AH
The wage rate variance is probably the one that is least subject to control by management. In most cases the variance is due to
wage rate standards not being kept in line with changes in actual wage rates, and for this reason it is not normally controllable
by departmental managers.
Reason Recommendation
Inflation Adjust standard/budget,
labor shortage Replace by machine, outsource
Collusion:accountant versus worker Fraud: internal control, increase internal audit and penalties
Urgent recuitment Replanning recuirment
High quality worker

LABOUR EFFICIENCY VARIANCE (SH - AH)*SR

The labour efficiency variance is normally controllable by the manager of the appropriate produc tion responsibility centre and
may be due to a variety of reasons. For example, the use of inferior quality materials, different grades of labour, failure to
maintain machinery in proper condition, the introduc tion of new equipment or tools, and changes in the production
processes will all affect the efficiency of labour. An efficiency variance may not always be controllable by the production
foreman; it may be due, for example, to poor production scheduling by the planning department, or to a change in quality
control standards
Reason Recommendation
Loose supervision Training
Supplies interupted (mất điện, thiếu NVL) increase quality control , increase supervision
Poor wage rate => no motivated Upgrade/replace machine
No machine , manual work, poor working condition Replaning production

Question 5: Thuy An is an international chain-operated general hospital set up and put into operation in 2012. Thuy An's
leadership defines the mission and vision of the hospital: to provide 4 health care services that are comprehensive,
professional leading based on modern technology; to be able to compete with hospitals in the ASEAN region and
internationally. Identify, analyze and evaluate the possible risks of Thuy An. What needs to be controlled by Thuy An to
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 internationally. Identify, analyze and evaluate the possible risks of Thuy An. What needs to be controlled by Thuy An to
response to risks
Intro
To some level, all actions there in healthcare supply chain are risky. Members of the healthcare supply chain engage in
procurement, storage, circulation, as well as inventory to ensure that all customers as well as consumers there in health sector
receive all of services they require.
Explanation
The healthcare supply chain's managing risk has improved over time. Information exchange, building relationships between
many supply chain members, building an efficient supply chain, close collaboration among healthcare suppliers, strategic risk
planning, trying to align initiatives, as well as risk sharing there in supply chain network have all been identified as risk
management enablers.
Knowledge regarding hazards in the healthcare supply chain, as well as continuous risk assessment as well as comparison of
different health SCM procedures, are further facilitators of healthcare SCRM.
Conclusion
Supply chain risks are indeed a possible issue that might arise as a result of this activity. Healthcare, like other businesses, is
not immune to both predictable and unanticipated supply chain interruptions, which have major economic and patient care
implications.

Q6: Company A produces semiconductors, competing in a rapidly changing market for technology. What measures are
appropriate for the learning and growth perspective of A?
Answer :
A few years back, the global market for the semiconductor industry was stable and predictable. In a rapidly evolving change
scenario, the industry is plagued by different problems such as enhancing revenue growth and profitability, delivering new
products that match customer requirements, and ability to manage global operations effectively.
The following are identified as five top challenges the semiconductor supply chain is fraught with:
Data latency
Power, efficiency and task-based binning of wafer-die can lead to different co-products from the sane wafer. Different tasks,
each using varied planning parameters, triggers data latency issues since that data is stored in multiple disparate systems.
Customer-specific needs
Often, the same product contains varied material, site, shipment size, quality manufacturing. All such needs tend to be vary as
they are based on customer’s specific demands.
Front-end (FE) built output needs added manufacturing steps
FE outputs such as wafers need further manufacturing steps such as assembly and testing as well as a blended model. This
results in complexities across the supply chain, turning efficient capacity planning more difficult.
FE cycle times are much quicker than BE cycle times
The processing period of FE cycle is typically 6-8 weeks, whereas BE cycle times are mere 1-2 weeks only. This effectively
means deferring inventory at different manufacturing periods, which needs additional planning.
Restricted end-to-end supply chain visibility and planning
Abundant direct and indirect materials needed for manufacturing, and unrelated in-house and contractual manufacturing sites
and distribution centers, makes supply chain prominence tough, learning to excess inventory growth and inefficient customer
service.
Semiconductor industry wriggle out of supply chain issues to improve efficiency and profitability :
Enterprises in technology-based industries are prone to becoming obsolete if they do not address their biggest supply chain
challenges and apply perfect resources to deal with problems.
Semiconductor companies adopt a five-pronged approach to manage supply chain issues
• Cost reductions with giving due importance to product quality and delivering products to the market.
• Protection and security for equipment that needs specialized handling.
• Acceleration in the implementation of technology is double time quicker than what the Research Development takes.
These were the challenges that the company A should learn for growth perspective.

AC Ltd. produces three different types of products, namely textile, beverage, and materials for construction. Its products are
produced in large scales and sold in the Asean region. Required: Identify if AB should be organized in the functional model
or the business unit model?
AC Ltd should be organized in the business unit model because
- In this case, AC Ltd manufactured three different sorts of products: textiles, beverages, and construction materials.
These three categories of products are from three distinct fields. The qualities, production process, target customers,
and markets of these products vary. As a result, the management process and method for these three categories of
products would change significantly.
- The company's products are mass-produced and sold throughout the Asean region. Because of the massive size of
production, the firm procedure for manufacturing and marketing these products would be extremely complex and risky.
As a result, to establish efficient management policies, managers must have a thorough understanding of each type of
product and market
So :
Instead of being engaged in all areas, managers in a business unit model concentrate on skills and information relating to a
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 Instead of being engaged in all areas, managers in a business unit model concentrate on skills and information relating to a
certain product category. Managers may make sounder decisions in respect to the production process, selling process, or
marketing process if each unit has a good training ground.
In the fact that managers in a business unit structure oversee both planning and coordinating their unit's activities. Managers
would gain a better understanding of the markets for the items for which they are accountable. As a result, the unit will be
able to respond to any change or opportunity more quickly.
It is quite difficult to complete all tasks in each function for three unique goods if the organization is organized according to
the functional model. For example, the marketing department is unable to effectively construct three different marketing
strategies for each of the three items

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 Cost center:
- bp cung ứng (cost of sale - giá nhập kho)
- Bp sản xuất (cost of good sold - kq sx
Revenue center - bp bán hàng: selling expense
BSC: nếu theo giá thành thấp thì bỏ thước đo chất lượng, thêm productivity
Phân theo giai đoạn: cung ứng - sản xuất - tiêu thụ/bán hàng
Innovation: product innovation và process innovation, employee turnover thì chiến lược nào cx quan trọng
DN thực phẩm mỹ phẩm thì dù chiến lược như nào thì đề cao chất lượng sp
Xđ vấn đề then chốt trong KD + chiến lược
- Cty khai khoáng: worrking safety và an toàn ng lđ (bụi, tai nạn bảo hiểm)
- Cty tđ nhiều đến môi trường (sản xuất, hóa chất, bột giặt, thép. Xi măng) thì kiểm soát tđ đến môi trường
- Năng suất là của công nhân, công suất (có nhiều đơn hàng thì mới có công suất cao)

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