Consider the following statements:
(A) Deviations in key areas of business need to be attended more urgently than deviations in insignificant areas.
(B) Under critical point control, control should focus on key result areas which are critical to the success of an organisation.
(C) Under critical point control, the key result areas are set as the permissible limits.
(D) In a manufacturing organisation, an increase of 5 per cent in labour cost may be more troublesome than a 15 per cent increase in postal charges.
Which of the statements given above are correct?
Choose the correct answer from the options given below:
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → (A), (B) and (D) only
(A) Deviations in key areas of business need to be attended more urgently than deviations in insignificant areas. — Correct. Deviations in key areas affect the business more, so they need attention sooner than those in minor areas.
(B) Under critical point control, control should focus on key result areas which are critical to the success of an organisation. — Correct. Critical point control puts attention on key result areas (KRAs), on which the success of the organisation depends.
(C) Under critical point control, the key result areas are set as the permissible limits. — Incorrect. The KRAs are set as the critical points. A permissible limit is the acceptable range of deviation used in management by exception.
(D) In a manufacturing organisation, an increase of 5 per cent in labour cost may be more troublesome than a 15 per cent increase in postal charges. — Correct. Labour cost is a key result area in a factory. So a 5 per cent rise there hurts more than a 15 per cent rise in postal charges.
NCERT (2026-27 Edition): “Step 4: Analysing Deviations: Some deviation in performance can be expected in all activities. It is, therefore, important to determine the acceptable range of deviations. Also, deviations in key areas of business need to be attended more urgently as compared to deviations in certain insignificant areas. …” “1. Critical Point Control: It is neither economical nor easy to keep a check on each and every activity in an organisation. Control should, therefore, focus on key result areas (KRAs) which are critical to the success of an organisation. These KRAs are set as the critical points. If anything goes wrong at the critical points, the entire organisation suffers. For instance, in a manufacturing organisation, an increase of 5 per cent in the labour cost may be more troublesome than a 15 per cent increase in postal charges.” |