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CMA Foundation · Fundamentals of Business Economics and Management · Introduction to Management

At Sharma Textiles, the finance head compares monthly actual expenses with the budget, finds that packaging cost exceeded the budget, and asks the purchase team to change the supplier. The step of asking for a supplier change is best described as:

Asking the purchase team to change the supplier is taking corrective action, the final step of the controlling process. Standards were the budget, performance measurement was recording actual expenses, and comparison revealed the overspend; the supplier change is the response intended to remove the deviation.

  1. ASetting standards
  2. BMeasuring actual performance
  3. CTaking corrective actionCorrect
  4. DForecasting future demand

Explanation

The control process runs: set standards, measure performance, compare, and take corrective action. The comparison revealed a deviation, and changing the supplier is the action to remove its cause. Measuring performance was the earlier step of recording actual expenses.

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