1.3 Planning, Control and Decision Making
For Exams from September 2024 to June 2025 – (PM) Performance Management
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1.3 Planning, Control and Decision Making
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Planning, control, and decision-making encompass establishing
objectives and evaluating policies and actions required to
achieve them. Continue
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1.3.1 Planning 2.1 Scope of Traditional
Planning is the setting of goals and the selection of the means of Management Accounting
achieving these goals. As businesses become large, these
procedures need to be formalised.
Short-term plans, such as an annual budget, detail the intended
results for the forthcoming year.
Long-term plans, also called "strategic" plans, are usually
documents showing the long-term objectives of a business.
1.3.2 Control
Control means checking that an organisation is on track to meet its
long- and shortterm objectives and taking action to correct any
deviations from these.
Long-term control includes strategic performance evaluation,
which measures an organisation's performance against its
strategic objectives.
Short-term control focuses on comparing the budgeted results
with actual results.
This usually takes the form of an operating statement, which
breaks down the difference into parts (variances).
1.3.3 Decision Making
Decision-making usually involves using the information provided
by the costing system to make decisions.
For example, when an organisation decides the appropriate price to
charge for a contract, they are tendering for or whether it would
make financial sense to outsource the production of an essential
component.
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For Exams from September 2024 to June 2025 – (PM) Performance Management
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