Senior High School

ORGANIZATION
AND MANAGEMENT
Quarter 2 Week 14
Apply appropriate control measure
for a specific business situation

Apply the concept and nature of different control methods and techniques in accounting
and marketing
K to 12 BEC CG (ABM_AOM11-IIf-h- 34 , ABM_AOM11-IIf-h- 35, ABM_AOM11-IIf-
h- 36, ABM_AOM11-IIf-h- 37)
Organization and Management
Grade 11
Self-Learning Module
Quarter 2-Week 14 – Apply appropriate control measure for a specific business
situation
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them.

SENIOR HIGH SCHOOL DEVELOPMENT TEAM OF THE MODULE

Author: Guia C. Sison, LPT, MBA

Content Evaluators: Sharon F. Sanchez, LPT, DBA
Rosemarie DC. Gonzales, LPT, DBA
Christian Paul C. Gutierrez, LPT, DBA
Maricel E. Sanchez, LPT, MBA
Junie J. Gale, LPT, PhD
Jemar P. De Vera, LPT, MBA, EdD
Critic Readers / Language Evaluators:
Ma. Leonor S. Ponce, LPT
Cristina D. Reyes, LPT, MAEd
Layout Evaluators: Rommel B. Ferrer, LPT, MIT
Emmanuel S. Malasan, LPT
Layout Artist: Niño Bert M. Suni

DIVISION MANAGEMENT TEAM:

Schools Division Superintendent-OIC: Ely S. Ubaldo, Ed.D., CESO VI
Assistant Schools Superintendent: Diosdado I. Cayabyab, Ed.D., CESO VI
Chief Education Supervisor, CID: Carmina C. Gutierrez, Ed.D.
Education Program Supervisor, ABM: Lalaine C. Rosario, Ed.D.
Introductory Message
For the facilitator:
Welcome to the Organization and Management – Grade 11 Alternative Delivery
Mode (ADM) on Apply appropriate control measure for a specific business situation
This module was collaboratively designed, developed and reviewed by educators,
evaluators and reviewers from public schools to assist you, the teacher or facilitator in
helping the learners meet the standards set by the K to 12 Curriculum while overcoming their
personal, social, and economic constraints in schooling.
The learning resource hopes to engage the learners into guided and independent
learning activities at their own pace and time. Furthermore, this also aims to help learners
acquire the needed 21st century skills while taking into consideration their needs and
circumstances.
In addition to the material in the main text, you will also see this box in the body of
the module

Notes to the Teacher

This contains helpful tips or strategies that will

help you in guiding the learners

As a facilitator you are expected to orient the learners on how to use this module. You
also need to track of the learners‟ progress while allowing them to manage their own
learning. Furthermore, you are expected to encourage and assist the learners as they do the
tasks included in the module.

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 HOW TO USE THIS MODULE?
Before starting the module, I want you to set aside other tasks that will disturb you
while enjoying the lessons. Read the simple instructions below to successfully enjoy the
objectives of this kit. Have fun!
1. Follow carefully all the contents and instructions indicated in every page of this module.
2. Write on your notebook the concepts about the lessons. Writing enhances learning, that
is important to develop and keep in mind.
3. Perform all the provided activities in the module.
4. Let your facilitator/guardian assess your answers using the answer key card.
5. Analyze conceptually the post-test and apply what you have learned.
6. Enjoy studying!

PARTS OF THE MODULE

 Expectations - These are what you will be able to know after completing the lessons in
the module.
 Pretest - This will measure your prior knowledge and the concepts to be mastered
throughout the lesson.
 Looking Back to your Lesson - This section will measure what learning and skills did
you understand from the previous lesson.
 Brief Introduction- This section will give you an overview of the lesson.
Activities - This is a set of activities you will perform with a partner.
 Remember - This section summarizes the concepts and applications of the lessons.
 Check your Understanding - It will verify how you learned from the lesson.
 Post-test - This will measure how much you have learned from the entire module

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 CHAPTER 7 Controlling
Lesson 1

EXPECTATION
As we study and immerse ourselves in “Organization and Management” in the process, it is
necessary to discuss the nature of controlling, and the different controlling methods. The
module is subjected to discuss Module 14 – Chapter 7 Controlling.

After going through the module, you are expected to:

1. Discuss the nature of controlling.
2. Describe the link between planning and controlling and;
3. Distinguish control methods and systems.

Let us start your journey in learning .

Thru a Pre-test

Good luck!

PRE-TEST

Directions: Read the following sentences carefully. Write the letter of your answer on the
space provided.

__ 1. It refers to management function that involves ensuring the work performance of the
organization‟s members.
a. Controlling
b. Leading
c. Organizing
d. Planning

___ 2. It means any established measure of extent quantity, quality, or value.

a. Motivation
b. Standard
c. Staffing
d. Controlling

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___ 3. It means makes sure that the firm‟s operating cash flow is sufficient, efficient, and if
possible, profitable when invested.
a. Managing
b. Leading Management
c. Management control
d. Management Planning

___ 4. It refers to accounting strategy of some firms which requires the preparation of two
different accounting reports
a. accounting
b. Liquidity
c. Dual entry
d. Double entry accounting

___ 5. It involves a thorough process which essential to the creation and refinement of a
blueprint or its integration with other plans that may combine forecasting of
development in preparation for future scenarios.
a. Planning
b. Controlling
c. Accounting
d. leading

LOOKING BACK

As we go further, let us try to recall our lesson about the nature of leading or directing.
 Leading- a management function that involves inspiring and influencing people in the
organization to achieve a common goal.
 Managing- the process of working with and through others to achieve organizational
objectives efficiently and ethically amid constant change.
 Personality pertains to the unique combination of physical and mental characteristics
that affect how individuals react to situations and interact with others, and if
unhealthy or not fully functioning could cause conflicts/problems among individuals.
 Maslow‟s Hierarchy of Needs Theory (Five Human Needs)
 Physiological Needs refer to the human needs for food, water, shelter, and other
physical necessities.
 Safety Needs refer to the human needs for security and protection from physical and
psychological harm.
 Social Needs pertains to the human desire to be loved and to love, as well as the need
for affection and belongingness.

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  Esteem includes the human need for self-respect, self-fulfillment, and become the best
according to one‟s capability.
 Self-actualization Needs are the final needs in Maslow‟s hierarchy.
 McGregor‟s Theory X and Theory Y proposed by Douglas MCGregor.
 Herzberg‟s Two Factor Theory proposed by Frederick Herzberg
 McClelland‟s Three Needs Theory proposed by David McClelland
 Alderfer‟s ERG Theory developed by Clayton Alderfer 1960‟s
 Leadership then processes of inspiring and influencing a group of people to achieve a
common goal.
 Communication-the exchange of information and understanding
 Verbal Communication- refers to oral and written communication
 Non-Verbal Communication- refers to communication through body movements,
gestures, facial expressions, eye contact, or body contact
 Types of Communication Networks
 Chain network- where communication flows according to the usual formal chain of
command, downward and upward
 Wheel Network- where communication flows between a leader and other member of
their group/team.
 All-Channel Network- where communication flows freely among all members of a
team.

ENJOY READING!!!

BRIEF INTRODUCTION

In earlier times, controlling was associated with the concept of just of being a corrective
action. Present-day management, however, applies it as a foreseeing activity that sets
standards in determining actual performance to correct previous decisions or actions.
Therefore, management must focus on management control and the control process.
Controlling does not focus on financial alone but also to human resources.

Definition of terms:
Controlling a management function involves ensuring the work performance of the
organization‟s member are aligned with the organization‟s values and standards
through monitoring, comparing, and correcting their actions
Standard any established measure of extent quantity, quality, or value.

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Importance of management control
Management control make sure that the firm‟s operating cash flow is sufficient, efficient, and
if possible, profitable when invested.
Working capital, when properly controlled, must be adequate enough for daily operations
such as financing, inventories, credit payments to suppliers, reinvestment of cash surplus, and
salaries of employees, or in general, maintaining an acceptable capital structure. The decision
to seek funds should be appropriate, so as not to incur expenses since borrowing would be
subjected to payment of interest.
Spending without thinking of how it could be regained in the future could put any starting
business or even a well-established one in jeopardy. There should be a continuous monitoring
of the organization‟s activities. Followed by corrective actions based on previously planned
programs of action. Moreover, task should be completed with less errors. This could be
achieved by comparing task with previously set standards or with competitors standards or
standards prevailing in a particular industry setting.

The Control processes

Control techniques used for controlling financial resources, office management, quality
assurance, and others are essentially the same. The typical control process involves
establishing standards, measuring, and reporting actual performance, and comparing it with
set standards, and taking action.

Establishing standards means setting criteria for performance. Managers must identify
priority activities that have to be controlled, followed by determining how these activities
must be properly sequenced. In doing so, managers will be able to set key performance
standards that need to be achieved.

Measuring and reporting actual performance and comparing it with standards is

essentially the monitoring of performance. To be able to do this, managers must develop
appropriate information systems which will help them identify, collect, organize, and
disseminate information. Managers are able to control facts and figures called data, and
information, which have been given meaning and considered to have value. Analyses of
data/information gathered measure actual performance and comparing it with set standards
serve as a means for detecting deviations. Deviations must be revealed as early as possible in
order to correct them.

Taking actions involve the correction of deviations from set standards. This activity clearly
shows the control function of management. Managers may rectify deviations by modifying
their plans or goals, by improving the training of employees, by firing inefficient
subordinates, or by practicing more effective leadership techniques.

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 Lesson The Link between Planning and Controlling
2

The relationship between planning and controlling could be easily established. Control is
integrated planning. Planning involves a thorough process which is essential to the creation
and refinement of a blueprint or its integration with other plans that may combine forecasting
of developments in preparation for future scenarios.
As one plans, the elements of control immediately take place to consider how very turnout of
the plan may be evaluated and rectified. On a periodic basic, it is useful to create a pro forma
financial statement which serves as forecast of the balance sheets, income statement, and
cash flow statement in order to make projections. This may be used as an aid to present plans
to creditors and future investors, but, primarily, it is used for internal planning and control
processes.

Definition of Terms:
Double entry accounting- accounting strategy of some firms which requires the
preparation of two different accounting reports, one for internal use and another for
external use
Dual entry- the process of journalizing with debit, and credit entries
Liquidity- the organization‟s ability to meet short term obligations

The Balance Sheet

Balance sheet is a financial statement which is defined by most accounting books as the
„snapshot” of any entity‟s financial condition because it presents the financial balances of a
particular period. It follows a pro forma accounting entry; A=L+C, or that the total assets (A)
must be equivalent to the aggregate summation of liabilities(L) and capital (C) or owners‟
equity.
Asset properties tangible or intangible owned by the organization
Liabilities records all the obligations to settle and actual capitalization of the firm
Capital owners‟ equity
Capital is all in cash.

Assuming you would purchase equipment to be used in the business

amounting to ₱100,000, you would now have:

Statement of financial Position

Assets Liabilities and Capital
Cash…………………….₱400,000 Owner‟s Capital…………………₱500,000
Equipment …………….₱100,000
Total Assets……………₱500,000 Total Liabilities and Capital….₱500,000

One has to note that it did not change the total amount of capital which is
₱500,000 since it was just deducted from cash. The pro forma accounting

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entry which is Assets=Liabilities plus Capital is still intact and balanced on
both sides.

Debit Cash …………………………………………₱500,000

Credit Owner‟s Capital………………………………₱500,000

Further, if you placed orders or suppliers on credit terms or for future payments amounting to
₱30,000

Assets Liabilities and Capital

Cash…………………₱400,000 Owner‟s Capital………………….₱500,000

Equipment………….₱100,000 Accounts Payable…………………₱30,000
Supplies……………..₱30,000
Total Assets…………₱530,000 Total Liabilities and Capital……....₱530,000

The presentation on the balance sheet would clearly state what had been the allocation of the
capital in its business operation. Thus, its appearance may depend on how the entity plans
progress, but through strict monitoring and recording, a simple control function is applied and
implemented. However, the account titles must be in accordance to its liquidity.

Income statement
The Income statement is also known as the profit and loss statement, revenue and expenses
statement, statement of financial performance, or earning statement. It displays the cost and
expenses charged to recognize revenues in a specific period. Basically, it shows whether the
company made money or lost money.
Any business entity in progress may incur expenses and later on garner income or profit. Its
pro forma statement may start on how many units of quantity it plans to sell in a given period.
For example, if the final product would cost ₱50 each for sale in the market and the projected
number of units to be sold would be 1,000, it would follow that the gross sale would be
₱50,000 for a particular period derived as ₱50 x 1,000 units.
If in its operation, there would be anticipation of expenses such as operating expenses
(OPEX) of ₱25,000 or administrative costs of ₱20,000, the gross income would then be
₱5,000

The income statement may appear to have an initial pro forma of:
Statement of financial performance
Gross Sales ₱50,000

Less: Operating Expenses ₱25,000

Administrative Costs ₱20,000 ₱45,000

Gross Income ₱ 5,000

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Cash Flow Statement
Without adequate cash for timely payment of obligations, funding operations and growth, and
for compensating owners, the firm will fail.
The statement of cash flow summarizes the inflow and outflow of cash during a given period.
Inflow activities are those that result in providing the firm with sources of funds, while
outflows result in cash leaving the firm due to disbursement or expenses that utilize cash.

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 Lesson
Control Methods and Techniques
3
Control Methods are techniques used for measuring an organization‟s financial stability,
efficiency, effectiveness, production, output, and organization members‟ attitudes and
morale.

Methods of Control
a firm may apply control techniques or methods which are either Quantitative or Non-
Quantitative.

Quantitative Control Methods- methods which make use of data and different tools expressed
in members for monitoring and controlling production output. Budget and audits are among
the most common Quantitative tools.
The most widely recognized Quantitative tool is the chart- 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.
Budget the budget remains the best-known control device. Budget 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.
Audits. Internal auditing involves the independent review and evaluation of the organization‟s
non tactical operations such as, accounting and finances.

Non-Quantitative Control Methods- refers to the overall control of performance instead of

only those specific organizational processes. These methods use of tools such as inspections,
reports, direct supervision, performance evaluation, and on-the-spot checking to accomplish
goals.
Other control methods include.
Feedforward control prevents problems because managerial action is taken before the actual
problem occurs.
Concurrent control takes place while work activity is happening.
Example: direct supervision or management by walking around.

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 Lesson Application of Management Control in
4 Accounting and Marketing

Feedback control is control that takes place after the occurrence of the activity. It is
disadvantageous because by the time the manager receives the information, then problem had
already occurred.
Employee discipline is a control challenge for managers. Enforcing discipline in the
workplace is not easy.
Project management control ensures that the task of getting a project‟s activities done on
time, within the budget, and according to specifications, is successfully carried out.
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 statement
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 forecasts, statistical models,
econometric modeling, surveys, historical demand data, and actual consumption of their
products.
Sales is the life blood of the business

Accounting/Financial Control Ratios

The goal of business is to gain profit. In order 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.
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

Leverage ratio- determines if the organization is technically insolvent, meaning that the
organization‟s financing is mainly coming from borrowed money or from the owner‟s
investments.

Debt-to-assets ratio=total debt ÷ total assets

Activity ratio- determines if the organization is carrying more inventory that what it needs;
the higher the ratio, the more efficiently inventory assets are being used.

Inventory turnover= cost of goods sold÷ average inventory

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Profitability ratio- determines the profits that are being generated.

Net profit after taxes ÷ total sales

Or it measures the efficiency of assets to generate profits.

Return on investment= net profit after taxes ÷ total assets

In addition, to the above ratios, asset management is also practiced to achieve organizational
goals. Asset management is the ability to use resources efficiently and operate at minimum
cost.

Inventory turnover = sales ÷ average inventory

Strategic Control
A systematic monitoring at control points that leads to change in the organization‟s strategies
based on assessments done on the said strategics plans.
Benchmarking is an approach or process of measuring a company‟s own services and practice
against those of recognized leaders in the industry to identify areas of improvement. Weihrich
and Koontz gave three types of benchmarking.
1. Strategic benchmarking which compares various strategies and identifies the key strategic
elements of success.
2. Operational benchmarking which compares relative costs or possibilities for product
differentiation; and
3. Management benchmarking which focuses on support functions such as market planning
and information systems, logistics, and human resource management.

INDIVIDUAL ACTIVITY

Directions: Write your answer on a separate sheet of paper

1. Is management control important for all types of businesses? Why or why not?
2. Why are sales considered as the “lifeblood of the business?

Rubric: Individual activity

Criteria and Below Meets Excellent work Points
points expectations expectations (4) earned
assigned (1) (3)
Relevance of Answer is Answer is brief Answer is
answer to incomplete. with insufficient complete;
the question Excessive detail. Unrelated sufficient detail
discussion of issues were provided to
unrelated introduced support assertions;
issues and/or minor answer focuses

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 and/or errors in content. only on issues
significant related to the
errors in question; factually
content correct
Thoroughnes Serious gaps Most of the basic Deals fully with
s of answer in the basic details are the entire question
details included but
needed some are missing
Organization Weak Minor problems of Clear and logical
and logic of organization; organization or presentation; good
answer sentences logic; Needs work development of an
rambling; on creating argument;
ideas are transitions Transitions are
repeated between ideas made clearly and
smoothly
Total points (10
possible)

REMEMBER

 Controlling a management function involves ensuring the work performance of the

organization‟s member are aligned with the organization‟s values and standards through
monitoring, comparing, and correcting their actions
 Standard any established measure of extent quantity, quality, or value.
 Management control make sure that the firm‟s operating cash flow is sufficient, efficient,
and if possible, profitable when invested.
 Establishing standards means setting criteria for performance. Managers must identify
priority activities that have to be controlled, followed by determining how these activities
must be properly sequenced. In doing so, managers will be able to set key performance
standards that need to be achieved.
 Taking actions involve the correction of deviations from set standards. This activity
clearly shows the control function of management.
 Balance sheet is a financial statement which is defined by most accounting books as the
„snapshot” of any entity‟s financial condition because it presents the financial balances of
a particular period.
 Asset properties tangible or intangible owned by the organization
 Liabilities records all the obligations to settle and actual capitalization of the firm
 Capital owners’ equity
 Income statement is also known as the profit and loss statement, revenue and expenses
statement, statement of financial performance, or earning statement.
 statement of cash flow summarizes the inflow and outflow of cash during a given period.
member of their group/team.
 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

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 financial statement in order to determine the company‟s financial soundness and
viability.
 Sales is the life blood of the business
 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.
 Leverage ratio- determines if the organization is technically insolvent, meaning that the
organization‟s financing is mainly coming from borrowed money or from the owner‟s
investments.
 Activity ratio- determines if the organization is carrying more inventory that what it
needs; the higher the ratio, the more efficiently inventory assets are being used.
 Profitability ratio- determines the profits that are being generated.

POST-TEST

MULTIPLE CHOICE
Direction: Choose the letter of the best answer. Write your answer on the space
provided.

____1. It refers to a management function involves ensuring the work performance of the
organization‟s member are aligned with the organization‟s values and standards through
monitoring, comparing, and correcting their actions
a. Controlling
b. Management control
c. Sales
d. Extraversion

___2. It means setting criteria for performance.

a. Standard
b. Establishing standards
c. Controlling
d. Balance sheet

___3. It means to determines the profits that are being generated.

a. Activity ratio
b. Leverage ratio
c. Profitability ratio
d. Liquidity ratio

___4. It determines if the organization is carrying more inventory that what it needs; the
higher the ratio, the more efficiently inventory assets are being used.
a. Profitability ratio
b. Leverage ratio

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 c. Liquidity ratio
d. Activity ratio

___5. It determines if the organization is technically insolvent, meaning that the

organization‟s financing is mainly coming from borrowed money or from the owner‟s
investments.
a. Leverage ratio
b. Activity ratio
c. Profitability ratio
d. Liquidity ratio

___6. it is the life blood of the business

a. Capital
b. Sales
c. Liabilities
d. Assets

___7. It refers to 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.
a. Profitability ratio
b. Leverage ratio
c. Liquidity ratio
d. Profitability ratio

___8. These are properties that is tangible or intangible owned by the organization
a. Liabilities
b. Capital
c. Sales
d. Assets

___9. It is also known as the profit and loss statement, revenue and expenses statement,
statement of financial performance, or earning statement.
a. Income statement
b. Cash flows
c. Balance sheet
d. Controlling

___10. It is a financial statement which is defined by most accounting books as the

„snapshot” of any entity‟s financial condition because it presents the financial balances
of a particular period.
a. Cash flows
b. Balance sheet
c. Income statement
d. Capital

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 10. B 5. A
9. A 4. D
8. D 3. C
7. C 2. B
6. B 1. A
Post test
5. A
4. D
3. C
2. B
Answer may vary 1. A
Individual Activity Pretest
Key Answer

REFERENCES

Book: Organization and Management

Textbook for Senior High School
ISBN 978-971-07-3860-1
Copyright 2016 by Vibal group Inc. And Helena Ma. F. Cabrera, Anthony DC. Altajeros,
PhD, and Riaz Benjamin

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For Inquiries and Feedback, please write or call

Schools Division Office I Pangasinan

Alvear St., Lingayen, Pangasinan

Phone No.: (075)-522-2202

Email Address: pangasinan1@deped.gov.ph

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