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Math 12 ABM Org Mgt Q2-Week 6

Marketing Management (Cebu Technological University)

Studocu is not sponsored or endorsed by any college or university

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APPLICATION OF CONCEPT AND

NATURE OF DIFFERENT CONTROL
METHODS AND TECHNIQUES IN
ACCOUNTING AND MARKETING
for Organization and Management
Senior High School (ABM)
Quarter 2 / Week 6

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FOREWORD

This Self Learning Kit for Organization and

Management is an innovative tool crafted exclusively for
the ABM students in the Senior High School. It assists ABM
students to fully understand organizational concepts
specifically in identifying the different control methods,
systems, techniques, and their application to other fields
such as accounting and marketing.
It is aligned with the BEC of the Department of
Education following the prescribed MELCs. It has the
following features proven to be valuable aids to learning
Organization & Management even at home.
What happened
This section contains pre-activities like a review of the prior
knowledge and a pretest on what you have learned in their
previous discussions.
What I Need To Know (Discussion)
This section contains definitions of terms, examples, and the
corresponding analysis of the different control methods, systems,
and their application in accounting and marketing. It also contains
the different formula in financial control ratios used to interpret and
measure a firm’s growth.
What I have Learned (Post Test)
The exercises contained in this section are guaranteed to
build learner’s organizational comprehension, skills, and
competence. These serve as a tool to identify your areas of
strengths and difficulties

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APPLICATION OF CONCEPT AND NATURE OF

LESSON DIFFERENT CONTROL METHODS AND
TECHNIQUES IN ACCOUNTING AND MARKETING

OBJECTIVES:
K: Explain the different control methods, concepts,
and its application in accounting and marketing;
S: Describe and interpret the different control
methods used in accounting and marketing;
A: Appreciate the importance of control methods
and its benefits towards success of an organization.

LEARNING COMPETENCIES:

Apply the concept and nature of different control

methods and techniques in accounting and
marketing.

I. WHAT HAPPENED
You are now done analyzing how important motivation, leadership, and
communication work in an organization. These three areas in an organization
play a vital role in leading a certain organization. Now let us process to another
important area in an organization, and this is controlling. Together, let us
discover it!
A luxurious car without gasoline is
similar to a viable business without
carefully managed funds. Who needs a
nonrunning vehicle that is good for
display only? How can a business be
successful without the well-managed
funds required for its operation and
expansion? This is where controlling
comes in. Essentially, controlling is all
about the acquisition of money and its
useful disbursement. It requires identification and reinforcement of the firm’s

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priorities and understanding how its operations are going to ascertain where
improvement is needed.

PRE-TEST:
Direction: Read each item carefully and choose the letter of the best answer.
Write your answer in your activity notebook.

1. It is the control that makes use of balance sheets, income statements,

and cash flow statements to analyze and examine financial statements.
a. Control Methods c. Strategic Control
b. Management Control d. Quantitative Control
2. These are techniques used for measuring an organization’s financial
stability, efficiency, effectiveness, production output, and members’
attitude and morale.
a. Macroeconomic Environment c. Benchmarking
b. Strategic Control d. Control Methods
3. The following are all financial control ratios except ________.
a. Budget Ratio c. Leverage Ratio
b. Profitability Ratio d. Activity Ratio
4. It is an approach or process of measuring a company’s services or
practices against those of recognized leaders in the industry to identify
areas for improvement.
a. Strategic Benchmarking c. Operational
Benchmarking
b. Management Benchmarking d. Benchmarking
5. A control method which refers to the overall control of performance
instead of only those of specific organizational process.
a. Strategic Method c. Non-quantitative Method
b. Quantitative Method d. Management Method

II. WHAT YOU NEED TO KNOW

DISCUSSION

Controlling is a management function involves ensuring the work

performance of the organization’s members are aligned with the
organization’s values and standards through monitoring, comparing, and
correcting their actions.
Control methods are techniques used for measuring an
organization’s financial stability, efficiency, effectiveness, production
output, and organization members’ attitude and morale.

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CONTROL METHODS AND SYSTEMS METHODS OF CONTROL

There are two (2) control techniques or methods that a firm may apply,
these are the following:

A.Quantitative Methods
➢ It makes use of data and different quantitative tools for monitoring and
controlling production output.

The chart is the most widely recognized quantitative. Charts used as control
tools normally contrast time and performance. The visual impact of a chart
often provides the quickest method of relating data. A difference in numbers
is much more noticeable when displayed graphically.

Two common quantitative tools are (1) Budgets and (2) Audits.
1. BUDGET
➢ It is considered the best-known control device. Budgets and control are,
in fact, synonymous. An organization’s budget is an expression in
financial terms of a plan for meeting the organization’s goals for a
specific period. A budget is an instrument of planning, management,
and control.

Budgets are used in two (2) ways:

a. To establish facts that must be taken into account during planning;
b. To prepare a description and financial information to be used by the
chain of command to request and manage funds.

1. AUDITS
➢ Internal auditing involves the independent review and evaluation of
the organization’s non-tactical operations, such as accounting and
finances.
➢ As a management tool, audit measures and evaluates the
effectiveness of management controls.

A. Non- Quantitative Methods

➢ These refer to the overall control performance instead of only those
of specific organizational processes.
➢ These methods use tools such as inspections, reports, direct
supervision, and on-the spot-checking and performance evaluation
or counseling to accomplish goals.

Types of Non-Quantitative Methods

1. FEEDFORWARD CONTROL
➢ A control method that prevents problems in a firm because managerial
action is taken before the actual problem occurs.

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2. CONCURRENT CONTROL
➢ It is a method that takes place while work activity is happening.
Example: Direct supervision or management by walking around.

3. FEEDBACK CONTROL
➢ It is a control that takes place after the occurrence of the activity. It is
disadvantageous because, by the time the manager receives the
information, the problem had already occurred.

Note: When the above three control methods are compared, managers
choose the feedforward method as the most desirable because of its
preventive action. The concurrent control’s advantage is that it can help
managers’ correct problems before they become too costly or damaging.
Feedback Control’s advantage is the exhibiting of variance between the
standard and the actual work performance. Little variance indicates that
planning is successful while significant variance may give managers an
idea of how to plan better.

4. EMPLOYEE DISCIPLINE
➢ It is a control challenge for managers, for enforcing discipline in the
workplace is not easy.
➢ This includes workplace privacy, employee theft, and workplace
violence, among others, are some of the concerns in employee
discipline.
➢ From simple monitoring of employees’ computer usage at work to
protecting employees at work from psychologically unstable workers
who may have hidden desires to harm them, managers need discipline
control to ensure that tasks can be efficiently and effectively carried out
as planned.

5. PROJECT MANAGEMENT
➢ It ensures that the task of getting a project’s activities done on time,
within the budget, and according to specifications, is successfully
carried out.
➢ Project Managers need technical and interpersonal skills to control the
implementation of the project efficiently and efficiently.

Project Planning Process Controls include the ff:

a. Defining objectives
b. Identifying activities & resources
c. Establishing sequence & estimating time for activities
d. Determining the project completion date
e. Comparing with objectives and determining additional resource
requirements.

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APPLICATION OF MANAGEMENT CONTROL IN ACCOUNTING AND MARKETING

CONCEPTS AND TECHNIQUES

ACCOUNTING/FINANCIAL CONTROL RATIOS

Management control in accounting and finance is the control that makes

use of the balance sheet, income statement, and cash flow statement to analyze
and examine financial statements in order to determine the company’s financial
soundness and viability, as well as financial ratios to determine the company’s
stability.
On the other hand, management control in marketing is the control that
makes use of projected sales or forecast, statistical models, econometric
modeling, surveys, historical demand data, and actual consumption of their
products.
Sales is considered to be the “lifeblood of the business”. No matter how
good the product is, it is not sold in the market, there is no way that business can
survive. Thus, the projected sales often guide the sales manager or the marketing
head on how much the target or the quota must be. In a way, this will also serve
as a guide for the operations manager in determining the number of units to be
produced. Excess production may mean cost, and unsold items may resort to
inventory expenses or worse, the obsolescence or degradation of the product.
Indeed, the sales forecast requires consideration.
A firm may generate a set of assumptions regarding the macroeconomic
environment to which all divisions must adhere as their guide, but forecast can still
be generated from the customer level and taken into account. Macroeconomic
Environment is a business environment that includes or considers economic
aggregates such as national income, total volume, total volume of savings, and
money supply.
Two (2) Sets of Forecast used by some firms:
a. Top-Down Sales Forecast – relies heavily on macroeconomic and
industry forecast with the use of statistical models thru econometric
modelling to achieve the firm’s grown target.
b. Bottom-Up Sales Forecast – it begins by talking with customers in a form
of survey or ‘traffic count’, by assessing the demand in the coming
periods.

The goal of business is to gain profit. To achieve this, managers need

accounting/financial controls. Managers must also analyze the organization’s
financial condition, which is done with the help of the following financial ratios.

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1. LIQUIDITY RATIO – test the organization’s ability to meet short term

obligations; it may also refer to acid tests done when inventories turn over
slowly or are difficult to sell.

current ratio = current assets / current liabilities

Example: Compute the liquidity ratio of a fast-food restaurant. Its

current assets amount to ₱ 3 million while its current liabilities are at
Php 2 million.
Solution:
current ratio = ₱ 3,000,000/₱ 2,000,000
current ratio = 1.5
Thus the restaurant’s liquidity ratio is 1.5 meaning the restaurant’s current
assets are higher than its current liabilities, and it shows that the firm can easily
pay all its current liabilities. That for every Php 1 of current liability, the company
has Php 1.5 of current assets available to pay for it.

2. LEVERAGE RATIO – determines if the organization is technically insolvent.

Meaning that the organization’s financing is mainly coming from
borrowed money or the owner’s investments.

debt-to-assets ratio = total debt / total assets

Example: Compute the leverage ratio of a fast-food restaurant. Its

Total debt amount to Php 60,000 while its total assets are at ₱ 300,000.
Solution:
debt-to-assets ratio = ₱ 60,000/₱ 300,000
debt-to-assets ratio = 0.2

Thus the restaurant’s leverage ratio is 0.2 meaning for every ₱ 1 total
asset of the company there is a ₱ 0.02 debt. This means the debt is not quite
high in Company Zing’s capital structure. That means it may have a solid cash-
inflow.

3. ACTIVITY RATIO – determines if the organization is carrying more inventory

than what it needs; the higher the ratio, the more efficiently inventory
assets are being used.

Inventory turnover = cost of goods sold / average inventory

Example: Compute the activity ratio of a fast-food restaurant. Its cost of goods
sold amounts to ₱ 3 million while its average inventory for the year is at ₱ 2
million.

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Solution:
Inventory turnover = ₱ 3,000,000/₱ 2,000,000
Inventory turnover = 1.5
Thus the restaurant’s inventory turnover is 1.5 which means that the
restaurant has very good inventory control and that at 1.5 Inventory
turnover shows how easily the firm turns its inventory into cash.

4. PROFITABILITY RATIO- determines the profits that are being generated;

Profit Margin Ratio= Net profit after taxes/ total sales

Example: Jinsha’s XYZ Shop is an outdoor fishing store that sells lures and other
fishing gears. Last year, Jinsha had a net profit after taxes of ₱ 300,000 and her
Total Sales is ₱ 1,000,000.

Solution:
Profit Margin Ratio = ₱ 300,000/₱ 1,000,000
Profit Margin Ratio = 0.3 or 30 %
Thus Jinsha converted 30% of her sales into profits or for ₱ 1
sale, there is ₱ 0.3 profit.
Or it measures the efficiency of assets to generate profits.

Return on Investment = net profit after taxes/ total assets

Note: The return on assets ratio measures how effectively a company

can earn a return on its investment in assets. In other words, ROA shows how
efficiently a company can convert the money used to purchase assets into net
income or profits.

Example: What is the return on investment if a jewelry store’s net profit after
taxes is ₱ 6,000,000 and its total assets are ₱ 100,000,000.

Solution:
Return on Investment = ₱ 6,000,000/₱ 100,000,000
Return on Investment = 0.06 or 6 %

Thus the jewelry store converted only 6% return on investments out of its
total assets of ₱ 100 million or for every ₱ 1 there is a 0.06 ROI.

STRATEGIC CONTROL
➢ It is systematic monitoring at control points that leads to change in the
organization’s strategies based on assessments done on the said
strategic plans.
➢ This control provides a chance for comparing the plan’s intended goals
with the actual organizational performance, and this becomes the basis
for modifications in the firm strategies.

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BENCHMARKING
➢ It is an approach or process of measuring a company’s services and
practices against those of recognized leaders in the industry to identify
areas for improvement.
➢ It is a widely used and well-accepted approach because it helps
organizations gather data and information against which performance
can be measured and controlled.

Three (3) Types of benchmarking according to Weihrich and Koontz

(2005):
1. Strategic Benchmarking
➢ It compares various strategies and identifies the key strategic elements
of success.
2. Operational Benchmarking
➢ It compares relative cost or possibilities for product differentiation.
3. Management Benchmarking
➢ It focuses on support functions such as market planning and information
systems, logistics, and human resource management, among others.

Many companies used benchmarking. Some prefer to benchmark only

the top 10% or the best companies in their particular industry. Other
benchmarks best global practices and go further away from their own industry
and reason out that their goal is competitive superiority and not just
competitive parity.
The benchmarking process begins with determining which company
functions are to be benchmarked and the key performance indicators to be
measured. Then, the best industry performers have to be identified. Data
gathering and analysis follow and these become the foundations for
performance goals. New programs are implemented, and during this step,
performance is measured at regular intervals. Corrective actions are taken to
close the gap between the organization and the best-in-class companies. The
monitoring of results must be continuous to ensure benchmarking success.

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III. WHAT HAVE I LEARNED

POST TEST:
A. Direction: Answer the following questions. Write your answer in your activity
notebook.
1. Name and briefly define the quantitative methods of control.
2. What are non-quantitative methods of control?
3. Define and compare feedforward, concurrent, and feedback
control methods?
4. What is the importance of management control in accounting and
marketing?

B. Direction: Compute the Financial Control Ratio of each of the following

problems, then give your analysis & interpretation of this ratio to the company
involved. Write your answer in your activity notebook.

1. XYZ Company had the following figures extracted from its books of
accounts. Compute the current ratio of XYZ Company. Analyze &
interpret your answer.
Current assets:
Cash and cash equivalents ₱ 83,000
Marketable securities 142,000
Trade and other receivables 167,000
Inventories 330,000
Prepayments 60,000
Total current assets ₱ 782,000
Non-current assets:
Long-term investments ₱ 300,000
Fixed assets 1,000,000
Total Non-current assets ₱ 1,300,000
TOTAL ASSETS ₱ 2,082,000
Current liabilities ₱ 337,000
Non-current liabilities 1,100,000
Stockholders' equity 645,000
TOTAL LIABILITIES & EQUITY ₱ 2,082,000

2. ABC Company is a growing construction business in the country. ABC’s

balance sheet shows total assets of ₱ 20,000,000. During the current year,
ABC’s company had a net profit after taxes of ₱ 15,000,000. Compute ABC
Company’s return on investment for the current year.

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REFERENCES

Cabrera,H. Altajeros,A., Benjamin,R., et al, 2016, Organization and

Management. Quezon City: Vibal Group, Inc.,.
MyAccountingCourse.com. 2020. www.myaccountingcourse.com/financial-
ratios (accessed November 13, 2020).

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DEPARTMENT OF EDUCATION
SCHOOLS DIVISION OF NEGROS ORIENTAL

SENEN PRISCILLO P. PAULIN, CESO V

Schools Division Superintendent

FAY C. LUAREZ, TM, EdD, PhD

OIC - Assistant Schools Division Superintendent
Acting CID Chief

NILITA L. RAGAY, EdD

OIC - Assistant Schools Division Superintendent

ROSELA R. ABIERA
Education Program Supervisor – (LRMS)

ARNOLD R. JUNGCO
Education Program Supervisor – (SCIENCE & MATH)

MARICEL S. RASID
Librarian II (LRMDS)

ELMAR L. CABRERA
PDO II (LRMDS)

CHRISTINE G. DE PADUA
Writer

LITTIE BETH S. BERNADEZ

Lay-out Artist
_________________________________

ALPHA QA TEAM
GIL . DAEL
MARIA SOLEDAD M. DAYUPAY
MARIA ACENITH DESPI
JEE LIZA INGUITO

BETA QA TEAM
RICKLEOBEN V. BAYKING
LITTIE BETH S. BERNADEZ
GIL . DAEL
MARIA SOLEDAD M. DAYUPAY
MARIA ACENITH DESPI
JEE LIZA INGUITO
MERCYDITHA D. ENOLPE
RONALD G. TOLENTINO

DISCLAIMER

The information, activities and assessments used in this material are designed to provide accessible learning modality to the
teachers and learners of the Division of Negros Oriental. The contents of this module are carefully researched, chosen, and evaluated to
comply with the set learning competencies. The writers and evaluator were clearly instructed to give credits to information and illustrations
used to substantiate this material. All content is subject to copyright and may not be reproduced in any form without expressed written consent
from the division.

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SYNOPSIS AND ABOUT THE AUTHOR

This self-learning kit will serve as a ANSWER KEY

guide for students taking up return rate.

ROI of ABC Company indicates healthy
Accountancy, Business& Management in return. Depending on the economy, this
evey ₱1.00 she invested, she gained ₱0.75
to identify the different control investment ratio is 75 %. In other words, in
As you can see, ABC Company’s return on
methods and systems in an Interpretation:

organization.
ROI= 0.75 or 75%
2. ROI =₱ 15,000,000/₱ 20,000,000
assets available to pay for it.
This SLK also covers the different liability, the company has ₱ 2.32 of current
other words, for every Php 1 of current
control methods and its application to 2.32 times larger than current liabilities. In
example, XYZ Company has current assets
the field of accounting and marketing. to settle its current liabilities. In the above
the company has adequate current assets
And explains why control methods are an amount greater than 1, it means that
If the current ratio computation results in
important in managing an Interpretation:
Current Ratio = 2.32
organization. 337,000
B. 1. Current Ratio = ₱ 782,000/ ₱
This SLK will also help learners CRITIQUE.
THE TEACHER’S STANDARD OR
understand the importance of IT WILL BE CHECKED ACCORDING TO
controlling an organization specifically DEPEND ON THE IDEA OF THE LEARNER.
A. ANSWERS WILL VARY FOR IT WILL
on its financial control by using the POST TEST:
1. B 2. D 3. A 4. D 5.C
different financial control ratios. PRE TEST:

AUTHOR
Writer: CHRISTINE G. DE PADUA. She graduated at Saint
Francis College-Guihulngan with a degree of Bachelor
of Science in Business Administration major in Financial
Management in the year 2012. She took her Continuing
Professional Education (CPE) units at Cebu
Technological University-Moalboal Campus in the year
2015. She is currently teaching ABM subjects at La
Libertad Technical-Vocational School (SHS), and at the
same time designated as the Teacher In-Charge of the
Senior High School Department.

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