2. Planning and Control

Model expectations, diagnose differences and align behaviour

Planning and control form a loop:

Rendering diagram…

Chapter	Northstar question	Output
CVP Analysis	How fragile is profit to price, volume and cost?	Break-even and scenario chart
Budgeting and Variances	What caused the material and labour differences?	Flexible-budget diagnosis
Performance Measurement	Will the metric encourage value-creating behaviour?	ROI/RI and scorecard design

Control is not blame after the event. It is learning whether assumptions, execution or the model were wrong.

Variable and Absorption Costing

Explain profit differences through fixed production overhead in inventory

Cost–Volume–Profit Analysis

Turn price, cost and capacity assumptions into a transparent profit model