COST CONTROL VS.COST REDUCTION Presented by AMIYA KUMAR SAHOO PGDM,1St year student INNOVATION-The B School At-Muktapur,Po-Khurda
COST CONTROLExecutive Action by given members of an undertaking to maintain the cost with budget and/or standards established.According to CIMA “ it is the regulation by an executive action of the costs of operating an undertaking particularly where such action is guided by cost accounting.Requires close monitoring and management
Cost Control Process1) Establishment of a Budget and/or standards.2) Appraisal of performance3) Corrective Action4) Planning Again
Importance of cost controlEnables firm to achieving defined objectiveProper utilization of firm’s resourcesGrowth and survival of a firmMake the organisation efficient
Cost Reduction• It is a systematic effort to improve profit margins by eliminating all forms of waste and unnecessary expenses without, at the same time, impairing the generation of revenue.
Importance of cost reductiona) Improves the competitive capabilities and ensures survival, growth and prosperityb) Optimum utilization of the resourcesc) Provides reasonable prices to consumersd) Preservation of the nations scarce resourcese) Keeps the price under control charges to consumerf) Helps govt in controlling inflation.
DifferenceCOST CONTROL COST REDUCTIONa. Prevention action(Tries to a. Corrective keep costs confined to the Action(permanent limits set by norms) reduction in the unit cost of goods mfg.)b. It is the means to an end, b. It begins where cost control namely cost reduction endsc. Emphasis the present and c. It emphasizes partly on past behavior of cost present costs and mainly ond. Lack of dynamism future costs d. It is a dynamic concept
Contd…Cost control Cost Reductione)Establishing budget and/or e)Establishing by improving standard and initiating upon the standards and the remedial action where there methods of production is a deviation of actual resultsf)Limited applicability f)Universal applicabilityg)Tools of technique-budgetary g)Tools of technique-value control, standard costing engineering, work study, operation research
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