Difference between Cost control and Cost reduction

1. WELCOME

2. Difference Between
Cost control
&
Cost Reduction

3.  Cost Control is defined as the “the
guidance and regulations by
executives action of the cost of
operating and undertaking .
cost reduction is defined as an
achievement of real and permanent
reduction in the unit cost of goods
manufactured or services rendered
without impairing their suitability for
the use intended.”

4.  The cost control represents
the efforts where
cost reduction represents
achievement. Cost reduction is
a continuous attempt towards
improvement.

5. Cost Control implies that cost
should not exceed the budgeted or
standard limits. If it exceeds,
investigation is necessary.
Cost reduction means waste
reduction, expenses reduction and
increased production.

6.  The process of cost control is to set
a target ascertain actual performance
and compare it with the target,
investigate the variances and take
remedial measures.
Cost reduction is not concerned with
maintenance of performance
according to the standards

7. Cost control assumes existence of
standards or which are not challenged
Cost reduction assumes the existence
of concealed potential savings in the
standards or norms which are,
therefore subjected to a constant
challenge with a view to improvement
by bringing out the saving.

8. Cost control is a preventive
function; costs are optimised before
they are incurred.
Cost reduction is a corrective
functions. It operates even when an
efficient cost control system exists.
There is room for reduction in the
achieved cost under controlled
conditions

9. THANK YOU