Previous Year Short and Long Questions With Answers: Controlling | Business Studies (BST) Class 12 - Commerce PDF Download

Very Short Answer Questions

Q1: Kothari Sweets is a renowned name for quality sweets since 2000. Adarsh the owner of Kothari Sweets was worried as the sales had declined during the last five months. When he enquired from the Sales Manager, the Sales Manager reported that there were some complaints about the quality of sweets. Therefore, Adarsh ordered for sample checking of sweets. Identify the step taken by Harsh that is related to one of the functions of management.
Ans: In this situation, Adarsh is carrying out the step of measuring actual performance under the function of controlling. By ordering sample checks he is obtaining information about current quality so it can be compared with the required standards and corrective action can be taken if necessary.

Q2: What is the formula for Return on Investment?
Ans: The formula for Return on Investment (ROI) is:
ROI = Net profit / Total investment
It is often expressed as a percentage: ROI = (Net profit / Total investment) × 100.

Q3: What do you understand by Key Result Areas( KRAs)?
Ans:Key Result Areas (KRAs) are the critical areas of activity that are essential for an organisation's success. These are the aspects of performance on which management must concentrate most - for example, sales growth, product quality, or customer service. KRAs help focus control and evaluation on what matters most.

Q4: What should be done while 'taking corrective action' in process of controlling, when especially in the important areas deviations go beyond the acceptable range?
Ans: When deviations in important areas exceed acceptable limits, managers should take prompt and structured corrective action. This includes:

• identifying and analysing the root cause of the deviation;
• allocating additional resources or ensuring availability of inputs (e.g. raw material, manpower);
• providing training or guidance to employees where skill gaps exist;
• revising procedures or standards if they are unrealistic; and
• monitoring the results of corrective measures to ensure the problem is resolved.

These steps ensure deviations are corrected and recurrence is minimised.

Q5: Why is planning an empty exercise without controlling function?
Ans: Planning sets objectives and standards, but without controlling, there is no way to check whether those plans are actually implemented. Controlling provides measurement, feedback and corrective action. Without it, plans remain paper targets and cannot be translated into achieved results.

Q6: Which two steps in the process of controlling are concerned with compelling events to conform to the plan?
Ans: The two steps are:

• Comparison of actual performance with standards - this shows whether events are following the plan.
• Taking corrective actions - this compels activities to conform with the plan by removing causes of deviation.

Q7: If you want to control everything you may end up controlling nothing. Explain.
Ans: This refers to the principle of management by exception. Attempting to control every minor detail consumes time and resources and dilutes managerial focus. Effective control concentrates on important deviations and KRAs so that management can apply effort where it matters most. Trying to monitor everything may lead to oversight and poor control overall.

Q8: Define Management Audit.
Ans: Management audit is a systematic and comprehensive appraisal of the performance of the management of an organisation. It examines policies, procedures, decisions and managerial effectiveness and suggests improvements to strengthen management functions.

Q9: Why is controlling considered to be backwards-looking?
Ans: Controlling often involves analysing past performance to detect deviations from standards. By reviewing what has already happened, management identifies causes of failure and decides corrective measures. However, control also provides feedback to improve future plans, so it is not exclusively backwards-looking.

Q10: Name two types of profitability ratios?
Ans: Two common profitability ratios are:

• Gross profit ratio - shows gross profit as a proportion of sales.
• Net profit ratio - shows net profit as a proportion of sales.

Q11: What do you call the sales volume at which there is no profit, no loss?
Ans: The sales volume at which there is neither profit nor loss is called the Breakeven Point (BEP).

Q12: Give 2 examples of Corrective Action.
Ans: Examples of corrective action:

• Providing required training to employees to bridge skill gaps.
• Revising the standards when initial targets prove to be unrealistic or outdated.

Q13: Give two examples of responsibility centres.
Ans: Two examples of responsibility centres:

• Cost centre - responsible for controlling costs (e.g. maintenance department).
• Revenue centre - responsible for generating sales revenue (e.g. sales department).

Q14: The marketing department comes under which type of responsibility center.
Ans: Revenue centre. The marketing (or sales) department is usually treated as a revenue centre because it is responsible for generating sales and revenue for the organisation.

Short Answer Questions

Q1: 'Planning is looking ahead, and controlling is looking back. Comment.
Ans: The statement is partially true. Key points:

• Planning looks ahead because it sets objectives and decides the course of action to achieve future goals.
• Controlling appears backwards-looking because it evaluates past and present performance by comparing actual results with planned standards to identify deviations.
• However, planning uses past data and experience to form realistic plans, and controlling provides feedback that helps improve future planning. Thus, both functions are interlinked - planning looks forward but is informed by the past; controlling looks back but guides future action.

Q2: Write a short note on budgetary control as a technique of managerial control.
Ans: Budgetary control is a technique of managerial control where plans are expressed in financial or quantitative terms called budgets. Main points:

• Budgets (e.g. sales, production, purchase budgets) define targets for a specific period.
• Actual performance is measured and compared with budgeted figures to find variances.
• It acts as a motivational tool by setting clear targets, and provides a basis for evaluating performance.
• Budgeting improves coordination among departments by aligning their plans and resources.
• Careful estimation and periodic review of budgets are necessary to keep them realistic and useful.

Long Answer Type Questions

Q1: "1-phone India Ltd." is a manufacturer of the advanced category of mobile phones. The company trained its engineers from Japan. It markets its mobile phones domestically as well as internationally. The company had a substantial market share and had a loyal customer following because of the quality of its i-phone. From the last financial year, the company had been unable to achieve its targets because of competition in the market. The company is planning to revamp its controlling system.
(i) Identify the concepts of management involved in the above para.
Ans:  Staffing (training engineers) and Controlling (revamping the controlling system to achieve targets).

(ii) State the steps of the revamped controlling process to be followed by the company to solve this problem.
Ans: The key steps the company should follow include:

• Measuring and comparing performance: Measure actual sales, production and quality against targets and standards to identify gaps.
• Analysing deviations: Determine causes of underperformance (e.g. competition, product features, pricing, distribution).
• Taking corrective action: Implement changes such as product improvements, marketing strategy revisions, pricing adjustments, or process improvements.

(iii) Also, state any one value, which the company wants to communicate to society.
Ans: Values communicated to society include:

• Serving society by providing quality products.
• Contributing to the growth and development of society.

Q2: State any five points that highlight the importance of controlling.
Ans: Controlling is an indispensable management function. Important points highlighting its significance:

• Helps achieve organisational objectives: Control monitors progress and signals deviations so corrective steps can be taken to meet goals.
• Tests the accuracy of standards: Control reveals whether standards are realistic and need revision in response to changing conditions.
• Improves employee motivation: By clarifying expected standards and providing feedback, control helps employees understand targets and strive to meet them.
• Ensures order and discipline: Control establishes rules and checks that create a disciplined work environment.
• Facilitates coordination: Pre-determined standards for departments ensure activities are aligned and coordinated towards common objectives.

Q3: Describe briefly the relationship between controlling and planning.
or
"Planning and Controlling are inseparable twins of management." How?
Ans: Planning and controlling are closely interrelated:

• Planning sets objectives, policies and standards which act as benchmarks for performance.
• Controlling measures actual performance against these standards and identifies deviations; thus, control depends on planning for standards to compare with.
• Control provides feedback about the feasibility and effectiveness of plans; this feedback helps revise and improve future planning.
• Without planning there would be no targets to control; without controlling, plans cannot be implemented effectively. Therefore, the two functions complement and reinforce each other.

Q4: A company was manufacturing solar panels for charging mobiles, which were in great demand. It was found that the target of producing 500 solar panels a day was not being met by the employees. On analysis, it was found that the workers were not at fault. Due to the non-availability of raw materials and shortage of workers, the company was not able to achieve the set targets and alternative arrangements were needed. To meet the increased demand the company assessed that approximately 66 additional workers were required out of which 6 would work as heads of different departments and 10 would work as subordinates under each head. The required qualifications and job specifications were also enlisted. It was also decided that necessary relaxation should be given to encourage women, persons from backward and rural areas, and persons with special abilities to assume responsible positions in the organization. All efforts were made to match the ability of the applicants with the nature of their work.
(a) Identify the functions of management discussed above.
Ans: The functions described are staffing (estimating manpower, recruitment and selecting suitable candidates) and controlling (identifying that production targets are not met due to non-availability of inputs and taking remedial steps).
Quote for staffing: “To meet the increased demand the company assessed that approximately 66 additional workers were required out of which 6 would work as heads of different departments and 10 would work as subordinates under each head”.
Quote for controlling: “It was found that the target of producing 500 solar panels a day was not being met by the employees. On analysis, it was found that the workers were not at fault. Due to the non-availability of raw materials and shortage of workers, the company was not able to achieve the set targets and alternative arrangements were needed”.

(b) State the two steps in the process of each function discussed in the above para.
Ans: Steps in Staffing Function

• Estimation of required manpower: Assess the number and types of employees needed. This includes workload analysis (how much work needs doing) and workforce analysis (how many employees are currently available).
• Recruitment/searching: Finding suitable candidates and inducing them to apply, followed by selection to match abilities with job requirements.

Steps in Controlling Function

• Measuring and comparing performance: Record actual output and compare it with set standards or targets (e.g. production of 500 panels per day).
• Analysing deviation: Identify causes of shortfall (e.g. lack of raw materials, worker shortage) and determine corrective measures.

c. List any two values which the company wants to communicate to society.
Ans: Values the company communicates:

• Use of environment‑friendly production methods.
• Women empowerment and inclusive employment practices.

Q5: Explain the various steps in the process of controlling
Ans: Controlling is the process of ensuring that organisational activities conform to plans. The main steps are:

• Setting standards: Establish clear, measurable benchmarks (both quantitative and qualitative) against which performance can be judged.

• Measuring actual performance: Collect accurate and reliable data on outputs, costs, quality and other relevant indicators at suitable intervals.

This measurement should be reliable and made at appropriate stages to allow timely comparison with standards.

• Comparing performance: Compare actual results with standards. If performance matches standards, control is effective; otherwise investigate deviations.

• Analysing deviation: Identify and study the causes of deviation. Use methods like critical point control (focus on KRAs) and management by exception (attend only significant variances).

Deviations may be due to unrealistic standards, process deficiencies or external changes; causes must be recognised before action is taken.

• Taking corrective action: When deviations are beyond acceptable limits, implement remedies such as revising standards, providing training, repairing machinery, arranging inputs or changing procedures. Finally, monitor to ensure corrective measures work.