# Illustrations of control applications

The essentials and principles of any control system provide the foundation for developing oneâ€™s own style of applying them in personal life (controlling oneâ€™s weight) or in managerial life. The number of broad applications by managers is almost as extensive as the entire topic of management be it quality control, inventory control, financial control, marketing control, budgetary control, and so forth. With the limited space of this article we may not be able to give illustrations of all types of control. We offer three short examples: two in accounting control and one popular general purpose technique, management by objectives.

Standard costs are predetermined costs developed from past experience, motion and time study, expected future manufacturing costs, or some combination of these. They contrast with actual costs, which are the amounts actually incurred in the manufacturing process.

In standard costing, the unit cost of particular product would be computed as follows:

1. Calculate standard labor costs: From a motion and time study it is found that the normal labor time required to produce one unit is four; the expected hourly wage cost for those workers responsible for its production is known to be \$3.50. Thus, the standard labor cost is \$14.00 (4 hours at \$3.50 per hour).
2. Calculate Standard material Cost: From a study of materials flow and handling, it is estimated that no more than ten pounds of raw materials should be used in the production of one unit; the expected cost of raw materials, given reasonably efficient purchasing, is \$ 0.80 per pound. Thus, the standard material cost is \$8.00 (10 pounds at \$ 0.80 per pound).
3. Calculate Standard overhead costs: The Unit overhead cost depends upon the expected (budgeted) production. A relationship is determined between expected overhead cost and some indicator of activity (usually a relation between overhead and labor costs). Thus, assuming that expected overhead is to be 80% of expected labor costs (as shown by the budget), the standard overhead is \$11.20 (80% of \$14.00)
4. Add the Three Amounts: In this example, the standard unit cost of a hypothetical product is:

Standard labor cost \$14.00
Standard material cost \$ 8.00