Name any two traditional techniques of control.

Answer – Traditional techniques include personal observation, statistical reports, break-even analysis and budgetary control. Modern techniques include return on investment, ratio analysis, responsibility accounting, management audit, PERT and CPM, and management information systems.

• Personal observation gives first-hand understanding but is time-consuming and may be subjective.
• Statistical reports summarise performance through figures, averages, ratios and charts.
• Break-even analysis finds the output at which total revenue equals total cost: break-even units = fixed cost ÷ contribution per unit, where contribution = selling price − variable cost per unit.
• Return on investment relates operating profit to capital employed: ROI = EBIT ÷ capital employed × 100.
• Management audit systematically reviews managerial performance and policies to identify improvements.
• Management information systems provide timely, relevant and organised information for decisions and control.

Choose a technique according to the decision, the quality of information and the cost of monitoring.