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ASSIGNMENT
Course Code MS-43
Course Title Management Control Systems
Assignment No. 43/SEM-I/2015
Assignment Coverage All Blocks
Note: Answer all questions. Kindly note that answers for 10 marks questions should be
approximately of 400 words. Each question is followed by evaluation scheme.
Question.1. Discuss the interlinkages between some of the new
management techniques such as TQM, JIT and Activity Based
Costing, with the conceptual foundations of Management Control
Systems.
Answer:Management Control: we will acquaint you with various conceptual foundations and
frameworkof ManagementControl Systems(MCS).The main focus of this unit is on the nature and
purpose of managementcontrol systems, elements of management control systems, interlinkages
between strategic the inking, management control and operational controls. During the recent
years, a number of new management techniques have emerged. These include Total Quality
Management (TQM), Activity Based Costing (ABC), Enterprise Resource Planning (ERP), Total
Knowledge Management (TKM), etc. In this unit we provide a brief outline on linkages of these
managementtechniqueswithManagementControl Systems. We close this unit by highlighting the
implications of ethical dimension in signing and operating
Question.2. Select any Organization of your choice and study in
detail whether Responsibility Centers are essential for that
Organization or not? If you think the Responsibility Centers are
essential describe how the Organization should go about it.
Answer:Performance assessment is crucial to management of any companies who wants to make
sure that itsoperation is under control. To be able to go into deeper and more details assessment,
theywouldneedtoviewthe companyin segments—divided into several unit of operations, in the
form of responsibility centers.

2. Using financial and non-financial control system, each center is assessed to get insight how’s each
unit(responsibilitycenter) of the companygoing,orwhy plans were not achieved—in a worst case,
and make the appropriate adjustment.Basedonthe resultof the assessment, they then are able to
take necessary decision for their operation going forward (in short or long-run.)
Financial control summarizes the financial results of operation (in each responsibility center) and
comparesthemto plannedresults.Whencompanies(ororganizations) use asingle index to provide
a broad assessment of operations, they frequently use a financial number, such as revenue, cost,
profit, or return on investment. That is why each responsibility center is called
“revenue/cost/profit/investment center”. By
Question.3. A Fertilizer company has given the following budget
expense for the production of 10,000 bags of a particular product.
Per unit
Direct materials Rs. 60
Direct labour 30
Variable overheads 25
Fixed overheads (Rs. 1,50,000) 15
Variable expenses (direct) 05
Selling expenses (10% fixed) 15
Administrative expenses(Rs. 50,000 rigid
for all levels of production)
05
Distribution expenses (20% fixed) 05
Total cost of sale per unit 160
Prepare a budget for production of 6,000; 7,000 and 8,000 bags, showing distinctly marginal cost
and total cost.
Answer:
Question.4. Explain as to how a service organization is different
from that of a manufacturing organization? Do these differences
affect the control system design of these organization? If yes how.
Answer:There are five main differences between service and manufacturing organizations: the
tangibility of their output; production on demand or for inventory; customer-specific production;
labor-intensive orautomatedoperations;andthe needforaphysical productionlocation. However,
in practice, service and manufacturing organizations share many characteristics. Many

3. manufacturers offer their own service operations and both require skilled people to create a
profitable business.
Goods:The keydifference betweenservice firmsandmanufacturersisthe tangibilityof theiroutput.
The outputof a service firm,suchas consultancy,trainingormaintenance,forexample,isintangible.
Manufacturers produce physical goods that customers can
Question.5. Study the Brooke Bond (India) Ltd case given in Block –
5 and answer the questions given at the end of the case.
Answer: Questions
Question.1. What triggered the introduction of profit centre system
in BBI? Was the adoption of the profit centre structure, in your
view, at the right time? Should the BBI have waited for some more
years so that its recent diverse activities attained a level of maturity
before introducing the concept of profit centres.
Answer:Brooke Bond (India) Limited (BB1 ), a FERA company in the Unilever fold, has come a long
waysince it beganoperationsinIndiawaybackin1912. The 77 -year-oldcompanywasincorporated
in Calcutta under the name of Brooke Bond & Company (India) Limited with the twin objectives of
introducingpackagedqualityteastothe Indianconsumer and also of exporting bulk teas. The early
productslinesincludedBlackLabel,VioletLabel, Green Label, Red Label and the popular Kora Dust,
Brooke Bond (India) Ltd. has been described as the world's largest tea marketing company by its
executives. The company saw a period of growth and expansion during 1927-67 and it introduced
newproducts,includingcoffee in conventional powderform. The company's main products are tea,
coffee andinstant coffee. Tea accounts for well over 70% of the company's sales and profits. Apart
from tea and coffee which together accounted for an estimated 95% of the pre-tax profits of the
company for the year 1981-82, Brooke Bond managers are trying their best to establish other lines
of business - meat and leather exports, paper,
Question.2. What are your comments on the practices and
procedures regarding:
i) determination of profitability and RO1 of Profit (or Investment)
Centres, and
Answer:Ina competitive marketplace,abusinessownermustlearntoachieve a satisfactory level of
profitability. Increasing profitability involves determining which areas of a financial strategy are

4. workingandwhichonesneedimprovement.Understandingthe keyfactorsdeterminingprofitability
assists managers in developing an effective profitability strategy for their company.
Sales:Salesare an importantfactorindeterminingprofitability. The return on sales ratio measures
profitsaftertaxesbaseduponthe currentyear'ssales.If salesnumbersare high,acompany isbetter
preparedtohandle adverse marketconditionsandeconomicdowntrends.The gross profit margin is
a measure of gross profit earned on sales. An effective sales strategy is essential in increasing a
company's profitability.
Pricing: Price setting is a key factor in determining profit.
The Finance Directorof BBI thinksthat the financial healthof the companyisexcellent. According to
him "one important yardstick of gauging corporate performance is to take a look at a company's
post-tax returnonnetworth.It denotesthe moneyfordistributiontoshareholders and available to
the company for re-investment. The company
ii) measuring of the performance of Profit Centres.
Answer:Return on investment is a valid technique for measuring past profitability. In fact, it is the
onlytechnique thatallowsacompanytocompare profitabilityamongorganizations or investments.
But it isnot a validwayto setfuture objectives,becausethe historicalcostsof assets—on which it is
based—are meaningless in planning future action. Regardless of how much a company pays for a
groupof assetsor whatamount of differential cashflow itprojectsininvestmentproposals,the only
logical thing its managers can do—once the assets are in place—is to use the assets to maximize
future cash flowandto investinnewassetswhenthe returnfromthese assets is expected to equal
or exceed the company’s cost of capital. The
Question.3. Evaluate the strategy of the company and its recent
diversifications.
Answer:Diversification is a corporate strategy to enter into a new market or industry which the
businessisnotcurrentlyin,whilstalsocreatinganew productforthat new market.Thisismost risky
section of the Ansoff Matrix, as the business has no experience in the new market and does not
know if the product is going to be successful.
Diversification is part of the four main growth strategies defined by Igor Ansoff's Product/Market
matrix:

5. Question.4. Do you share the optimism of the Chairman of the
Company?
Answer:Brooke Bond & Company was founded by Arthur Brooke who was born at 6 George Street,
Ashton-under-Lyne, Lancashire, England in 1845. He opened his first tea shop in 1869 at 23 Market
Street, Manchester. Arthur Brooke chose the name because it was his 'bond' to customers to
provide aqualitytea,hence Brooke Bond.The firm expanded into wholesale tea sales in the 1870s.
In 1903, Brooke Bond launched Red Label in India.
The company opened a packing factory in Goulston Street, Stepney, London in 1911.
Brooke Bond'smost famousbrand is PG Tips, launched in 1930. By 1957, Brooke Bond was probably
the largest tea company in the world, with one third
Question.5. What are some apparent strengths and weaknesses of
BBI? Comment on the -
i) Direct Selling System of the Company (should it be changed in
favour of distribution through intermediaries?); and
Answer:Direct selling is the marketing and selling of products directly to consumers away from a
fixedretail location.Peddlingisthe oldestformof directselling.Moderndirectsellingincludes sales
made through the party plan, one-on-one demonstrations, and other personal contact
arrangementsaswell asinternetsales.[2] A textbookdefinitionis:"The directpersonalpresentation,
demonstration, and sale of products and services to consumers, usually in their homes or at their
jobs."
Industryrepresentative,the WorldFederationof DirectSellingAssociations(WFDSA),reportsthatits
59 regional member associations accounted for more than US$114 billion in retail sales in 2007,
through the activities of more than 62 million
Dear students get fully solved assignments
Send your semester & Specialization name to our mail id :
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or
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