Cost control involves executive actions to maintain costs within established budgets and standards through close monitoring and corrective actions when needed, while cost reduction aims to permanently lower unit costs through eliminating waste and unnecessary expenses to improve profit margins and ensure business survival, growth, and competitiveness. The key difference is that cost control prevents costs from exceeding limits while cost reduction goes further to optimize resource use and lower costs over time.

1. COST CONTROL
VS.
COST REDUCTION
Presented by
AMIYA KUMAR SAHOO
PGDM,1St year student
INNOVATION-The B School
At-Muktapur,Po-Khurda

2. COST CONTROL
Executive 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

3. Cost Control Process
1) Establishment of a Budget and/or standards.
2) Appraisal of performance
3) Corrective Action
4) Planning Again

4. Importance of cost control
Enables firm to achieving defined objective
Proper utilization of firm’s resources
Growth and survival of a firm
Make the organisation efficient

5. 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.

7. Importance of cost reduction
a) Improves the competitive capabilities and
ensures survival, growth and prosperity
b) Optimum utilization of the resources
c) Provides reasonable prices to consumers
d) Preservation of the nations scarce resources
e) Keeps the price under control charges to
consumer
f) Helps govt in controlling inflation.

9. Difference
COST CONTROL COST REDUCTION
a. 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 ends
c. Emphasis the present and c. It emphasizes partly on
past behavior of cost present costs and mainly on
d. Lack of dynamism future costs
d. It is a dynamic concept

10. Contd…
Cost control Cost Reduction
e)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
results
f)Limited applicability f)Universal applicability
g)Tools of technique-budgetary g)Tools of technique-value
control, standard costing engineering, work study,
operation research