COST CONTROL

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

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

Cost Control Process

1)
2)
3)
4)

Establishment of a Budget and/or standards.

Appraisal of performance
Corrective Action
Planning Again

Importance of cost control

Enables firm to achieving defined objective
Proper utilization of firms resources
Growth and survival of a firm
Make 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 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.

Difference
COST CONTROL

COST REDUCTION

a. Prevention action(Tries to
keep costs confined to the
limits set by norms)
b. It is the means to an end,
namely cost reduction
c. Emphasis the present and
past behavior of cost
d. Lack of dynamism

a. Corrective
Action(permanent
reduction in the unit cost
of goods mfg.)
b. It begins where cost control
ends
c. It emphasizes partly on
present costs and mainly on
future costs
d. It is a dynamic concept

Contd
Cost control
e)Establishing budget and/or
standard and initiating
remedial action where there
is a deviation of actual
results
f)Limited applicability
g)Tools of technique-budgetary
control, standard costing

f)Universal applicability
g)Tools of technique-value
engineering, work study,
operation research
Cost Reduction

Thank You