The correct answer is option (3)- Breakeven Analysis.
The technique of managerial control that determines the level of activity at which the firm can earn its target profits is Breakeven Analysis.
Breakeven analysis is a technique used by managers to study the relationship between costs, volume and profits. It determines the probable profit and losses at different levels of activity. The sales volume at which there is no profit, no loss is known as breakeven point. It is a useful technique for the managers as it helps in estimating profits at different levels of activities after the breakeven point.
OTHER OPTIONS
- Budgetary control is a technique of managerial control in which all operations are planned in advance in the form of budgets and actual results are compared with budgetary standards. This comparison reveals the necessary actions to be taken so that organisational objectives are accomplished.
- Ratio analysis is a technique used in financial analysis to evaluate the financial performance and position of a company. By using key financial ratios derived from a company's financial statements (such as the balance sheet and income statement), ratio analysis helps assess the company's profitability, liquidity, solvency, and operational efficiency. These ratios provide insights for investors, creditors, and management to make informed decisions about the company's financial health.
- Return on Investment (ROI): ROI is a financial metric used to evaluate the profitability and effectiveness of investments. It measures the return or gain generated from an investment relative to its cost. ROI is a tool for assessing the financial performance of specific projects, investments, or assets and is not directly related to the management of cost centers and revenue centers.
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