Which of the following statement is incorrect regarding techniques of controlling?
Answer & explanation
Correct answer: option 4
The correct answer is Option (4) → Budgetary control is a technique in which all operations are not planned.
Option (1) Personal observation method enables the manager to create psychological pressure on the employees to perform well. — A true statement (Incorrect). This is true. It creates a psychological pressure on the employees because they know they are being observed.
Option (2) The statistical reports method allows one to form charts, graphs, tables, etc. — A true statement (Incorrect). This is true. Statistical information is presented as charts, graphs and tables.
Option (3) Break-even analysis is a technique used by managers to study relationship between costs, volume and profits. — A true statement (Incorrect). This is true. These are the textbook’s own words.
Option (4) Budgetary control is a technique in which all operations are not planned. — A false statement (Correct). Budgetary control is a technique in which all operations are planned in advance in the form of budgets. So the statement is false.
Note: The current NCERT book (2026-27) only gives the names of these techniques of control. What each technique means is explained in the pre-rationalised NCERT, from which the extracts below are taken. NCERT (Pre-rationalised Edition): “Personal Observation This is the most traditional method of control. Personal observation enables the manager to collect first hand information. It also creates a psychological pressure on the employees to perform well as they are aware that they are being observed personally on their job. …” “Statistical Reports Statistical analysis in the form of averages, percentages, ratios, correlation, etc., present useful information to the managers regarding performance of the organisation in various areas. Such information when presented in the form of charts, graphs, tables, etc., enables the managers to read them more easily and allow a comparison to be made with performance in previous periods and also with the benchmarks.” “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. …” “Budgetary Control 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. …” |