Is performed by comparing the actual performance with the performance standards set?
ControllingControlling involves ensuring that performance does not deviate from standards. Controlling consists of five steps: (1) set standards, (2) measure performance, (3) compare performance to standards, (4) determine the reasons for deviations and then (5) take corrective action as needed (see Figure 1, below). Corrective action can include changes made to the performance standards—setting them higher or lower or identifying new or additional standards. Performance standards are often stated in monetary terms such as revenue, costs, or profits but may also be stated in other terms, such as units produced, number of defective products, or levels of quality or customer service. Show The measurement of performance can
be done in several ways, depending on the performance standards, including financial statements, sales reports, production results, customer satisfaction, and formal performance appraisals. Managers at all levels engage in the managerial function of controlling to some degree. CostsFinancial costs—direct
(i.e., paying for an accountant for an audit) and indirect (i.e., people employed by the organization whose primary function is related to control—internal quality control, for instance). BenefitsCost and productivity control—ensures that the firm functions effectively and efficiently. KEY TAKEAWAYS The control function can be viewed as a five-step process: (1) Establish standards, (2) Measure performance, (3) Compare actual performance with standards and identify any deviations, (4) Determine the reason for deviations, and (5) Take corrective action, if needed. Check Your Understanding Answer the question(s) below to see how well
you understand the topics covered in this section. This short quiz does not count toward your grade in the class, and you can retake it an unlimited number of times. Licenses and AttributionsWhat is comparing performance to standards?The third step in the control process is the comparison of performance with established standards. You can base your comparison on the monitoring information you collected for services that you have provided or activities you have organised. Then you summarise the outcomes as planned versus actual results.
Is a process of comparing the actual performance with the set standards?Control Processes: Comparing Actual Performances with Standards.
What is actual and standard performance?The term used to indicate the difference between standard performance and actual performance is 'Deviation'. On comparing Actual performance with Standard performance, the 'deviations' are revealed.
When actual performance is compared with standard then it is called?Deviations is the difference between actual performance and standard performance.
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