Chaithra A 20WJCMD012 Final Soft

“STUDY ON COST CONTROL AND COST REDUCTION BY USING COST BENEFIT
ANALYSIS AS A TOOL AT ROHITH INDUSTRIES”
CHAPTER-I: INTRODUCTION
1.1 TOPIC SELECTED FOR THE STUDY
“Study on cost control and cost reduction by using cost benefit analysis as a tool at Rohith Industries”.
1.2 INTRODUCTION ABOUT THE TOPIC
The current business environment, which affects all businesses, big and small, is extremely
competitive. A hasty response in the current situation would be to just reduce costs to the absolute
minimum. To decrease needless discretionary and non-value-adding costs while still maintaining
an organization's competitive position, every part of its cost structure must be carefully analysed.
The majority of groups in any business organisation strive to maximise profit. The demand for
expanding sales will develop because management is concerned with profitability, one of the
metrics used to assess business success, particularly in a manufacturing organisation. This will
eventually cause an increase in production capacity, which will lead to an increase in cost.
In a market where prices for goods and services have an impact on demand, cost control and cost
reduction are thus necessary to maximise profit. The majority of businesses strive to maximise
profits, which can be done by reducing production costs. Management employs two effective
techniques, namely cost control and cost reduction, for this goal. Cost control is a technique that
provides the management with the essential data to determine if real expenses are in line with
budgeted costs or not. We employed the cost-reduction technique to reduce the product's unit cost
without sacrificing its quality.
The goal of cost control is to lower the entire cost of production. However, cost reduction tries to
lower a product's per-unit cost. Cost reduction is a more long-term process than cost containment,
which is swift by nature. When the needed objective is reached, the cost control process is complete.
Businesses utilise a cost-benefit analysis as part of a systematic procedure to determine which

options to take and which to ignore. The cost-benefit analyst adds up the potential benefits
anticipated from a circumstance or course of action before deducting the overall expenses related to
DEPT OF DBIMSCA - MBA 1

that course of action. Some consultants or analysts may create models to put a monetary value on
immaterial things, such the advantages and disadvantages of residing in a specific location.
Prudent managers perform a cost-benefit analysis to assess all the costs and profits that a company
might produce from the project before starting a new project or building a new factory. The analysis's
findings will determine if the project is financially feasible or whether the business should move
forward with a different initiative.
In competitive industry, there is need to incur reasonable cost and management has to ensure careful
and efficient use of resources so as to achieve the set of standard. Cost control is the process of
established a standard and maintaining the performance according to standard. Therefore, cost control
and reduction are important in an organization in order to regulate and reduce unwanted expenses
and it also helps to bring about increase in market demand in term of competitive market. The
significance of cost reduction and cost control derived from its function in profit maximization. Any
organization that is successful using cost reduction and cost reduction can sell its product at a lower
rate than its competitors without reducing its quality.
The main difficulty encountered by organizations recently is the increase in the cost of operation that
could lead to inevitable cost control and reduction scheme which makes it difficult for most
organizations to operate at the cost efficient frontier. Every organization that wants to survive and
maintain its consumers must seek to improve on its product. Therefore, in order not to exceed their
budget and not to run at loss, as well as not to reduce the quality of their products, organization needs
to control costs and reduce their cost to the lowest minimum. For this reason, the study investigates
the extent of application of cost control and cost reduction technique and the degree of their impact
on the operational efficiency in an organization.
In any business organization, the goal of most organizations is to achieve maximum profit. Since
management is concerned with the profitability which is one of the tools to evaluate the business
performance especially in a manufacturing company, the need of increasing sale will arise and this
will eventually lead to increase in production capacity and as a result lead to increase in cost. Thus,
the need for cost control and cost reduction is required to achieve maximum profit in competitive
market where demand is affected by the price of goods and services.

Asaolu and Nassar define cost reduction as the term used for planned and positive approach to the
improvement of efficiency. It can be viewed in many ways, such as increasing productivity, and
elimination of waste. Lucey (1996) refers to cost reduction as a concept which has the aim of reducing
cost from a previously accepted norm or standard without reducing the effectiveness or performance
of the project or services.
Differences Between Cost Reduction and Cost Control
Cost control implies controlling the costs at the given level. The emphasis is to stick firmly to the
Predetermined standard and ensuring that the cost does not go beyond the said standard budget.
Nevertheless, cost reduction is a vigorous and purposeful activity which tries to minimize cost
irrespective of the level they belong. Observation is carried out on each element cost, each process is
properly checked and each method is evaluated to show the manners and means of minimizing costs.
There is difference between cost reduction and cost control in terms of method. Cost is considered
for each cost centre separately for which the budget is arranged in advance in order to avoid the
certainty of rewarding effects of favourable differences against unfavourable ones. This makes cost
control to be effective. Cost reduction on the other hand is successful when cost is minimized and
considered in total for the entire entity. At the point of minimizing, it may lead to a considerable
amount when summed at the corporate level. In addition, cost reduction does not involve a onetime
practice. It involves the manner of mind, pattern, and philosophy. Minimizing of cost is essentially a
real function of cost consciousness on the part of individuals involved. Hence, the principle way of
establishing cost consciousness is to minimize cost at all the levels and highlighting the role and
responsibility of every employee in every part of the organisation.
Meaning of Cost Resources must be sacrificed for any organization to achieve its objectives. To an
accountant, cost is defined as a resource forgone to achieve a specific goal. This can be expressed as
the monetary amount which must be paid to acquire goods and services. ACCA Study Text (n.d.)
defines cost as the amount of expenditure incurred on, or attribute to a specific thing or activity cost
of anything ordinarily is money spent to acquire that things.
Control Effective control depends upon allocation responsibility to competent manager and
supervisors for each activity or functions, providing them with operating statement on time, with
details of the standard, actual expenses and the various, together with recommendation.

Cost Reduction Cost control aims at reducing the actual to the targets, cost reduction aims at reducing
the targets themselves. In other words, the aim of cost reduction is to see whether there is any
possibility in bringing about a saving in cost incurred material, labour, overheads, etc. According to
the Terminology of Cost Accountancy of the Institute of Cost and Management Accountants London,
Cost reduction is to be understood as the success of real and unchanging reduction in the unit costs
of goods manufactured without impairing their suitable for the use intended.
Thus, the term cost reduction denotes real or genuine saving in production, administration, selling
and sharing costs resulting to the elimination of wasteful and inessential elements from the design of
the product and from the techniques and practices carried out in connection therewith. The necessity
for cost reduction arises when the profit margin has to be increased without an increase in the sales
turnover i.e. for the same volume of sales, the cost should be reduced.
Differences Between Cost Reduction and Cost Control Cost control implies controlling the costs at
the given level. The emphasis is to stick firmly to the Predetermined standard and ensuring that the
cost does not go beyond the said standard budget. Nevertheless, cost reduction is a vigorous and
purposeful activity which tries to minimize cost irrespective of the level they belong. Observation is
carried out on each element cost, each process is properly checked and each method is evaluated to
show the manners and means of minimizing costs.
There is difference between cost reduction and cost control in terms of method. Cost is considered
for each cost centre separately for which the budget is arranged in advance in order to avoid the
certainty of rewarding effects of favourable differences against unfavourable ones. This makes cost
control to be effective. Cost reduction on the other hand is successful when cost is minimized and
considered in total for the entire entity. At the point of minimizing, it may lead to a considerable
amount when summed at the corporate level. In addition, cost reduction does not involve a onetime
practice. It involves the manner of mind, pattern, and philosophy. Minimizing of cost is essentially a
real function of cost consciousness on the part of individuals involved. Hence, the principle way of
establishing cost consciousness is to minimize cost at all the levels and highlighting the role and
responsibility of every employee in every part of the organisation.

1.3 THEORETICAL BACKGROUND OF THE STUDY
Financial examination is additionally named as money related explanation investigation that is

worried about the strategy to judge this, past and anticipated execution of the firm. It’s an undertaking
to see significance of the undertaking budgetary articulation that is valuable for future destinations
of any firm.
It’s a movement anticipated by the experts in checking on the money related explanation utilizing
changed method like similar articulation, draft investigation and Depend examination utilizing
fluctuated trade benefits from the years.
Rise of Accounting,
According to the Institute of Cost a Works Accountants of India (ICWAI) was setup as an
organization constrained to ensure for the advancement of cost bookkeeping in India. The
fundamental motivation behind this to build up the cost bookkeeping as a calling. The support of cost
bookkeeping records becomes obligatory since 1965.
The Institute of Cost and Work Accountants of India has as of late gave cost accounting standards
(CAS) 1 to 4 likewise to comprehend the subject in a superior way as follows,
CAS 1 - Classification of cost
CAS 2 – Capacity confirmation
CAS 3 – Allocation and Division of overhead
CAS 4 – Cost of creation for prisoner wages
Cost Accounting
Due to the shortcomings of financial accounting, the field of cost accounting has developed. Cost
accounting is the act of categorizing, documenting, and appropriately allocating expenditures in order

to calculate the costs associated with the production of goods or services, as well as the presenting of
appropriately structured data for management control and direction.
It entails determining the price of each order, task, contract, procedure, service, or item as may be
necessary. It addresses the price of manufacturing, marketing, and distribution. Cost accounting
basically refers to the collection, classification, and determination of costs as well as their accounting
and control in relation to the numerous cost components. It establishes the budget, average cost,
actual cost, and study of variations, profitability, and social use of funds for activities, procedures,
departments, or products.
Features of Cost Accounting,
It is a process of accounting for costs.

It records the income and expenditure related to the production of the goods and services.
It provides the statistical data on the basis of which future estimates are been prepared and
quotations are submitted.
It is concerned with cost ascertainment, cost control and cost reduction.
It establishes the budgets and standards so that actual cost may be compared to find out the
deviations or variances.
It involves the preparation of right information to the right person at the right time so that it
might be helpful to management for planning, performance evaluation, decision making and
controlling.
Functions of Cost Accounting,
To ascertain the cost per unit of production in an organization.

Controlling of cost can reduce the wastage and will help in improving the efficiency of the
organization.
To serve as a tool for the planning and budgeting.
Cost accounting acts as a guide and helps in protecting the interest of the investors.
Cost accounting helps in comparing the performance of various divisions and departments.
It helps in preparation of financial statements.
Helps in determining the selling price.

Areas of Accounting
Financial Accounting.
Management Accounting.
Cost Accounting.
Financial Accounting;
Financial accounting is a special branch of accounting involving a process of recording, summarizing

and reporting the countless of transactions resulting from the business operations over a period of
time.
In simple terms, it is a practice of accounting of all the money going in as well as out of an
organization. It involves all the transactions related to the finance.
Management Accounting;
Management accounting is a process of identifying, measuring, analyzing and interpretation of

accounting information that helps the business leaders in taking the financial decisions and efficiently
manage their daily business operations.
Cost Accounting;
Cost accounting is a process of grouping, recording and fitting assignment of use for the judgments
of expenses of items and administrations and for the introduction of appropriate masterminded
information with a main goal of controlling and direction.
Advantages of Cost Accounting,
Activities that are profitable and unprofitable are disclosed.
Cost accounting gives a business the ability to measure efficiency, then sustain and boost it.

Cost accounting supplies the data on which it bases its estimates and offers.
Future manufacturing policies are influenced by cost accounting.
It contributes to the organization's earnings rising.
It makes it possible to periodically calculate earnings or losses without using stocktaking.
It aids in the facilitation of excise duty and income tax assessment as well as the creation of import,
export, industry, and taxation policies.
Cost accounting makes it possible for creditors and investors to comprehend the company's financial
health and creditworthiness.
The precise reason for a change in the profit or loss, whether it's up or down, can be identified.
Limitations of Cost Accounting,
There are several conventions, estimations, and adjustable aspects in cost accounting, including cost
classification, distributing materials at average or standard prices, designating overhead charges,
and dividing overhead expenses into fixed and variable costs.
Small and medium-sized businesses must follow numerous formalities in order to profit from cost
accounting, which significantly raises startup and ongoing costs.
Cost and Costing:
Cost is characterized as estimation, in monetary terms, of the measure of assets utilized with the end
goal of creations of products or rendering of administrations.
The Chartered Institute of Management Accounts (CIMA) of UK has characterized costing as, "the
methods and procedures of finding out expenses"
Whelson has characterized costing as, "the correct designation of consumption and includes the
assortment of expenses for each request, work, procedure, administration or unit.

Classification of Cost
COST
Product Cost Period Cost
Direct Material Direct Labour Overhead

Cost Cost Cost
Prime Cost Conversion Cost
Product cost
Product cost in accounting refers to where the total cost involved in producing or manufacturing a
goods and getting them ready for the sale is called as product cost. Product cost consisting of three
major types namely,
Direct Raw Materials Cost

Direct Labors Cost
Overhead Cost

Direct Raw Materials Cost
Direct material costs are those costs of raw materials that go directly into the manufacturing of the
products or goods.
Direct Labors Cost
Direct Labour Costs are those benefits such as wages, Insurance and other related benefits that are
paid by a employees to its employers who are directly involved in producing the products.
Overhead Cost
It represents all manufacture costs with the exception of those for direct work and direct materials,
for instance the cost of a book-keepers time in an association, devaluation on gear, power, fuel and
so forth.
Prime cost:
Prime Cost is a combination of direct material cost, direct work cost and direct expenses. Thus,
Prime cost = Direct material + Direct labour/work + Direct expenses.
Conversion cost:
Conversion Cost is an industrial unit cost minus direct material cost. It is the total cost of converting
a raw material into finished product.
Period Cost
period costs are those expenses which are not directly involved in the production of the products or
goods. It consisting of overhead expenses, sales and Administrative expenses, general expenses,
marketing expenses, CEO salary, rent expenses related to the corporate office.

Cost Control
Cost control is a process of identifying, eliminating and reducing the unnecessary business expenses
in order to increase the profitability position of the business. Cost control starts with the budgeting
process and it is a part of cost management and also step in the cost management process.
According to CIMA, London has characterized taken a cost control as, “the direction by management
stroke of the cost of working a responsibility mainly where activity is guided by cost book-keeping”.
Characteristics of Cost Control
Delegation of Authority.
Delineation of centres of responsibilities.
Helps in measuring the performance.
Relevance of cost control.
Cost reporting.
Constant efforts.
Policies and general objectives.
Delimitation of focus of duty.
Appointment of specialist.
Process of Cost Control
Planning
Planning is a set of targets or goals which are established in the form of budgets and standards and
facilitates in achieving these targets in a given set of time.
Communication
Communication is a second step in the cost control where planning need to be communicated for
those who are responsible to implement the plan in an organisation.

Motivation
Motivation is a process that motivates and guides the employees to maintain the goal oriented
behaviour in the organisation.’
Appraisal and Reporting
It is a process where the comparisation will be made between the actual performance and target given
by the organisation.
Decision Making
Decision making is a final step in cost control process where the corrective actions and measures will
be taken or the targets can be reduces based on the management understanding the problem of an
organisation.
Advantages of Cost Control
It helps in minimizing the cost and maximizing the profits of the organisation.
It increases the productivity from the available resources.
By cost control, consumers can buy the products at a reasonable price.
Helps in increasing the credit worthiness.
Continued employment and job opportunities for the employees.
Helps in managing the economic stability of a particular Industry.
Disadvantages of Cost Control
Reduces the quality and brand image of the business.

Demotivates in innovation.
Reduces the flexibility and process improvement in the company.

Cost Reduction
It is a process of decreasing the expenses of the business to increase the profits. It helps in
identifying and removing all the expenses that does not provide added value to the consumers.
Basically cost reduction focuses more on the increasing in short term savings of the business.
According to CIMA, London cost reduction is characterised as “the accomplishment of actual

and lasting diminishment in the unit cost of merchandise fabricated or administrations
rendered without weakening their reasonableness of utilization proposed”.
Characteristics of Cost Reduction
Cost reduction, which attempts to raise standards, is the end outcome of the cost control
process.
Cost reduction is a dynamic, creative process.
Cost cutting will continually search for measurements and cheaper options.
A corrective function is cost reduction
It is utilised in all of the organization's activities.

It brings analysis to action at all management levels.
Areas of Cost Reduction
Design.
Marketing.
Finance.
Production.
Labour and Equipment.
Utility services.

Advantages of Cost Reduction
Cost reduction helps in increasing the profitability position of the business.

Cost reduction helps in providing more funds for labour welfare scheme and development
related to the employees’ improvement.
It helps in making products at lesser cost and available to customers at cheaper price.
It helps to tackle the competitors effectively
Helps in increasing the productivity.
High profits will provide more revenues to the government by making way of taxation.
TOOLS AND TECHNIUES OF COST CONTROL AND COST REDUCTION:
Standard costing.
Budgetary control.
Inventory control.
Value analysis.
Quality control.
Production planning and control.
Standardisation and simplification.
Job evaluation and merit rating.
Work study.
Organisation and methods study
Automation.
Market research.
Design improvement.
Operational research and statistical techniques.

COST CONTROL AND COST REDUCTION – COMPARISION:
COST CONTROL COST REDUCTION
A system utilized for keeping up the expenses A system used to streamline the unit taken a toll
according to the set guidelines is known as cost without bringing down the nature of the item is
control. known as cost reduction.
Cost control is impermanent in nature. Cost reduction is lasting in nature.
Cost control prominence on earlier period and at Cost reduction prominence on at hand and
hand expenditure. prospect expenditure.
Cost control trimmings when targets are Cost reduction has no noticeable finish
achieved.
Cost control seeks to achieve tiniest potential Cost reduction recognizes no situation as
expenditure under active situation. lasting, since a vary will effect in inferior
expenditure.
Cost control is effective oriented. Cost reduction is investigated oriented.
Cost control seeks obedience to principles. Cost reduction is a dispute to the principles
themselves.
Cost control is a element of outlay book-keeping Cost reduction may be achieved even when no
task. expenditure book-keeping method is in process.
Cost control is apprehensive with Cost reduction is not alarmed with maintainance
predetermining overheads, comparing it with of concert according to prearranged targets. It is
real expenses, analyzing the variances and somewhat anxious with judgment out new
attractive remedial achievement. invention designs, methods etc.
Cost control lacks active advance to charge Cost reduction is a more active advance to
enhancement. outlay development and removal of misuse.
Cost control is a defensive purpose. Cost control is a remedial purpose.

CHAPTER-2: LITERATURE REVIEW AND RESEARCH DESIGN
2.1 REVIEW OF LITERATURE:
Sherif Mohamed Hafez & Remon.F.Aziz. (2015) “Human Resource Management 3(2015)17–26,
"Optimal Techniques for Cost Reduction and Control in Construction Sites," The main objective of
the study is to demonstrate the application of the ABC (Activity Based Costing) approach as an
alternative cost book-keeping framework to determine the true and precise cost of the undertakings.
Activity-based costing and target costing were the methodologies utilised for the analysis, and its
important findings included the need to switch from the first lowest bidder to the most precise
awarding method for contracts as well as the need of construction management and earned value
management.
P.G.Scholar, Badnera.M.S. (2013) “Effective Techniques in Cost Optimization of Construction

Project” International Journal of Research in Engineering and Technology 10(2013) 464-469, the
aim of the study is to complete the undertakings on time inside spending plan within budget and to
accomplish other venture targets. Time and Cost are the two major concerns in a construction and
they are utilized for the investigation were Quality control and Budgetary control and the key
discoveries of the analysis was that the time, cost and improvement and the requirement for
streamlining is considered.
Kabiru.I. Dandago and Abuh Adah (2013) “The Relevance of Variance Analysis in Managerial
Cost Control” Journal of Finance and Investment Analysis 1(2013) 61-67,
The objective of the study is to survey and examine writing to discover what constitutes proficient
standard in an assembling association with a view to uncovering sensible fluctuation for
administration cost control and in view of the audit and examination to evaluate the degree to which
cost change examination can enough be helpful in controlling expenses to accommodate enhanced
benefits and the instruments utilized for the investigation are standard costing, cost control and

management control and all differences falling inside the pre characterized limit ought to be
researched and the report be satisfactorily actualized immediately to direct against future fluctuation.
to be researched and the report be satisfactorily actualized immediately to direct against future
fluctuation.
Adamu A. (2009)1, that intense competition on price and quality, attention is shifting from
standardization to customization of products and services. The traditional costing method has become
obsolete because various costs especially overheads are incorrectly allocated to products or services.
Examine the applicability of ABC in hotel industry in Nigeria using the hotels in Keffi as case study.
Questionnaires were administered to Managers and Accountants of the hotels, simple percentages
were used in analyzing their responses and it was found that most of the hotels in the study area do
not apply ABC system in their costing. It is recommended among others that hotel operators should
be educated on the need to have in place an efficient costing system to be in tune with current
practices around the globe.
Eshtaev A. (2011)2, The present accounting practice is analyzed and critically studied, the scientific
research done to show the advantages and disadvantages of using present methods of accounting, and
need to implementation of more responsive and innovative financial settings in today’s dynamic
business environment is proven. The methods of Cooper’s two stage implementation, Activity
Product Dependence matrix by Roztocki were used for Planet Tour Co. ABCM is recommended as
accurate cost management of products or services in tourism firms in Uzbekistan.
Asiegbu B, C and Ahaiwe J. (2011)3, this research work investigates the effect of cost drivers on
software cost estimation. Several models exist that provide one or more mathematical algorithms that
compute cost as a function of a number of variables or cost drivers. There are also several other tools
and techniques available to assist in creating software project cost estimates, they are still very
inaccurate. Several authors in software development have given varied suggestions for these
inaccuracies and ways to overcome some of them. All classes of technique are challenged by the
rapid pace of change in software technology. The purpose of this research is to determine the extent
to which software cost variables affect cost of software development.

Pember A. & Lemon M. (2012)4, Understanding an organization’s cost base has always been a
critical element of doing business. The rise of environmental social consciousness means that
organizations need to go beyond simply understanding their internal, line item costs of doing
business. There is now a need to understand that many company behaviors have impacts and real
costs related to the environment. The use of ABC/M to manage costs has matured to the point where
it is an accepted form of cost analysis. Many organizations already have ABC/M models in some
form. Extending these models to account for non-cost measures is a relatively simple process.
Vazakidis A., Karagiannis L. and Tsialta A (2010)5, that the basic principles and procedures of
Activity-Based Costing and to examine whether the implementation of this method is possible to a
PSO. They can also extend the method implementation to all its Divisions, targeting to create a full
image of the cost of the Prefecture and to apply corrective actions with the Activity-Based
Management. Then the actions to be taken are not an area for Activity-Based Costing but for its
improvement method Activity-Based Management.
Popesko B. (2011)6 in his research describes issues affecting the managing of service department
costs and their accurate allocation to the principal departments of companies. Accurate service
department cost allocation is considered the most important condition for precise product costing.
The activity-based costing method is considered the most beneficial for managing this group of costs.
In addition, there is an explanation on delineating the structure of activities in ABC, as well as how
to distinguish between primary and secondary activities.
Bruce R., James H., Moldauer E., Finch M. & Olson C. (2004)7, the fact that most Information
Technology (IT) services have varied degrees of intangibility makes it a challenge to measure the
costs of the services delivered. Activity-based costing (ABC), the alternative to the traditional cost
accounting systems, has been applied to manufacturing and service industries. Successful
implementations in the healthcare, insurance, and transport industries have been reported over the
last few years, but few publications relate ABC to IT. They reported on a cost management project
using ABC modeling focused on an IT division of a publicly held software development firm.

Carles G. (2001)8, emphasized that it is very difficult (and not always recommended) to develop a
pure ABC model because the particular characteristics of a single third -party logistics company
entailed the use of slightly different ways to allocate several costs in some instances, which a purely
ABC approach would not be able to do. Despite this fact, the final model for both sides of the third-
party company operations (warehouse and transport operations) has been mainly described by taking
ABC analysis into account. And also, recommended that such a model should be developed by using
a spread sheet because it fulfills the needs of the company, it is a model developed may be capable
of performing what -if analysis in order to stimulate actual or potential situations the third-party
company might face.
Djordje Kalicanin and Vladan Knezevic (Apr. – 2013)9, have stated that the Activitybased costing
(ABC) provides an information basis for monitoring and controlling one of two possible sources of
competitive advantage, low-cost production and low cost distribution. On the basis of cost
information about particular processes and activities, management may determinetheir contribution
to the success of a company, and may decide to transfer certain processes and activities to another
company.
Oyerogba Ezekiel Oluwagbemiga and SolomonAdeoluwa Zaccheaus (2014) Manufacturing

Organizations' Firm Performance and Cost Management Practices 2014's International Journal of
Economics and Finance, Volume 6, Pages 234 and 239 The analysis was based on subpar data that
was taken from the firms' examined financial statements. The keywords used for the analysis are cost
organisation and developed association, and it is suggested that a cost reduction plan with emphasis
on production overhead cost and administration overhead cost should be set out upon if their benefit
amplification and gainfulness are considered. Direct material cost, Direct labour cost, production
overhead cost, and administration overhead cost are taken as sovereign cost organisation factors, and
gainfulness is considered to be a necessary variable signifying.
Andy Neely and Ken Platts (2015) The paper, "Performance measurement system design,"
appeared in International Journal of Operations and Production Management 1(2015) 38–62. It
focuses on the importance of execution estimates and the framework plan's execution estimating
technique rather than the specifics of individual measurements. Academics and professionals from

a variety of useful orders have long recognised the importance of execution estimation. The main
findings of the study that need to be analysed in this paper are focused method, manufacturing
businesses, action-based costs, operations, and creation management.
Singh, Pooja and Priyanka (2016) State Bank of India's Training and Cost-Benefit Analysis
Practices with Particular Reference to Varanasi. to determine the State Bank of India's training
methods. • To research random sampling and cost-benefit analysis in SBI. Chi square test It is
discovered that cost-benefit analysis procedures are used to inform employees of their performance,
compare it to what is expected of them by their supervisor, and pinpoint any areas where training is
necessary.
Ajitha and Panchana tham 2015 Impact of Cost benefit analysis on Attitude of Employees in
New Private Sector Banks in Karur, Taminadu, To study cost benefit analysis in unscheduled
cooperative, banks, To measures the effect of cost benefit analysis on organisational performance,
It is found that the cost benefit analysis is working properly in measuring performance of
employees.
Jayarama n and Sriniwasa n(2014) Cost benefit Analysis System of Banks in India – An
Evaluation of 360 degree approach  To study 360 degree approach of cost benefit analysis  To
360 degree approach of cost benefit analysis  Random sampling method  Chi-square test The 360
degree approach provides a comprehensive efficiency index for banks as well as a reasonable way
of ranking the banks.
Krishna, Thulasi (2014) Linkage of Cost Benefit Analysis Rating to Rewards: A Study of Selected
Public and Private Sector Banks to study cost benefit analysis system • To determine the
relationship between public sector and private sector banks cost benefit analysis system Chi-square
test The appraisal system of private sector banks is capable of locating individuals' hidden talents
and potential. only included workers in the private sector.

Mishra, Lalita (2013)11 A Research Study on Cost Benefit Analysis A Case of Hong Kong and
Shanghai Banking Corporation (Hsbc Bank)  to study the overall system of Cost Benefit Analysis
for the HSBC Bank  Random sampling  It is found that the management of the company has to
participate with the work force so as to achieve the objectives and goal of the organization.

2.1 Need of the study
 To reduce the unnecessary cost in the organization.

 To increase the profitability condition of the organization.
 To become more competent in the industry.
 To get the reasonable benefit.
2.2 Statement of the problem
Many companies are been using the advanced cost control techniques which can automatically
increase the profit of the company and reduce the risk. An attempt is made to find out the existing
cost structure and proposed cost structure of “Rohith Industries”.
2.3 Objectives of the study
 To predict the future cost structure of the organization.

 To study the various cost control and cost reduction techniques adopted by the “Rohith
Industries.”
 To understand the cost reduction techniques adopted by company and its impact on
performance.
 To suggest the best cost suitable cost control techniques to the “Rohith industries
2.4 Scope of the study
 To reduce the cost control and cost reduction.

 The study is limited to the 3 years data provided by the “Rohith Industries”.
 To minimize the cost and maximize the productivity of the company and to achieve the cost
leadership in the Industry.

2.5 Research Methodology
Analytical study is based on the secondary data. Secondary data includes;

 Annual reports of the company.
 The company websites.
 Cost related textbooks.
 The broachers of the company.
2.6 Tool Used
The tool used for the study is “Trend Analysis”
2.7 Limitations of the Study
 The analysis and interpretation is made by using a specific tools, hence the other researchers
can be used by other tools analyze and predict the results.
 The study has been restricted to a shorter span of time.
 The research work was confined only to a counter effort.
 The study is limited to cost control and cost reduction and hence conclusions can be
generalized with modification.
 Access to accounting equipment is not available easily.

“STUDY ON COST CONTROL AND COST REDUCTION BY USING COST BENEFIT ANALYSIS AS A TOOL AT ROHITH
INDUSTRIES”
CHAPTER- 3: COMPANY PROFILE
INTRODUCTION ABOUT THE COMPANY
Rohith industries has been came into existence in the year 2002 as a Karnataka Engineering Solutions,
but the firm Rohith Industries was been incorporated in the year 2010.
Rohith Industries was promoted by the group of Engineers with the super experience in the field on CNC
(Computer Numerical Control) machine enclosure, Electrical Cabinet, Sheet metal Fabrication and
pharmaceutical Air Filters components etc.
Basically Rohith Industries has been located in Balagaranahalli, Attibele Industrial Area, Bandapura road,
Bangalore- 562107 with a aim of manufacturing and giving the facilities that are specific requirements of
drawings and customers’ requirements.
Rohith Industries are dynamic and an upcoming company committed to provide the complete solutions
in the area of manufacturing of Engineering related tools and machines.
What Does Rohith Industries are Specialize in?
Rohith Industries are the firm which is involved in customs manufacturing activities including
manufacturing and supply of Sheet metal components, Designing and developing of CNC (Computer
Numerical Control) machine enclosure and Electrical Cabinet for sheet metal fabrication of production
process and assemblies as per specific requirements of drawings and customers’ requirements.
Customer centricity is at the core of the Rohith Industries in the Attibele Industrial Area, Bangalore and
it has a belief that it led the business to bulid the long term relationship with the customers.
COMPETITORS OF ROHITH INDUSTRIES
Prinson Technologies.
Sun Engineering.
Global Cric Hardware.
Premier Machine Tools.
Shakti Industrial Corporation.

INDUSTRIES”
Shivam Engineerings.
Krishna Engineerings.
Glory Technologies.
Silver Sign Technologies.
SWOT ANALYSIS
The SWOT (strengths, weaknesses, opportunities, and threats) analysis is a framework for assessing the
competitive position of a firm and for creating its strategic planning. The internal and external aspects, as
well as the present state and prospective future, are all included in the SWOT analysis.
A SWOT analysis was created to enable a practical and fact-based examination of the organization's
strengths and weaknesses within the industry. By avoiding preconceived notions or grey regions and
concentrating on the settings of actual life, the organization can maintain the accuracy of the study.
Companies should use it as a reference rather than a strict prescription.
STRENGHTS WEAKNESS
OPPORTUNITIES THREATS

INDUSTRIES”
Strengths
Strengths describes what at organization is good and what difference does it make from its competitors
such as a strong brand, loyal customer base, a strong balance sheet and also a unique technologies used
in the organizations.
Weakness
Weakness stops the organization from performing the new and different tasks at its optimum level. They
are the areas where the business needs to be developed or improvised to remain competitive.
Opportunities
Opportunities could be the external factor that could give the competitive advantage to an organization
which provides the organization a opportunities in various aspects to improve and remain competitive.
Threats
A threat refers to the factor that has the potential to harm the organization at a high level.
SWOT ANALYSIS OF ROHITH INDUSTRIES
Strengths
Established market spot in the manufacturing industry.
Has a huge customers base and a loyal customers
The pricing strategy of the Rohith Industries has been very reasonable.
Consumption of time to manufacture a machine is very less compared to other organizations.

INDUSTRIES”
Weakness
Demands for the machines are been comparatively less.

Raw materials to manufacture the machines are been little expensive.
Import of certain raw materials are been little expensive.
Opportunities
Introduction of Robotic machines in manufacturing sector.
Continuous increase in the demand.
Huge market potential in both the domestic as well as international market.
Threats
Lower cost of labors.
Competition from many unorganized sector.
Unavailability of the skilled labors.
Increase in the transportation cost.
Change in the customer priority.
INDUSTRY PROFILE
Manufacturing sector has been emerged as one of the highest growth sectors in the country. Prime
Minister of the India, Narendra Modi, has been launched the program called “MAKE IN INDIA” to place
India on the world map as a manufacturing hub and give the global recognition to the Indian economy.
The Government has an aim to create 100 million new jobs in the manufacturing sector by 2022.
MARKET SIZE
According to preliminary estimates of the gross domestic product for the first quarter of 2021–2022,
India's GDP, or gross domestic product, was USD 694.93 million at current exchange rates.
By 2030, India might become a major center for manufacturing and contribute more than USD 500 billion
yearly to the world economy.

INDUSTRIES”
The second quarter of FY22 saw capacity utilization in India's manufacturing sector rise to 72.0%,
according to a poll done by the Federation of Indian Chambers of Commerce and Industry (FICCI),
showing a considerable rebound in the industry.
Natural gas production rose by 11.7%, coal by 8.2%, steel by 2.8%, cement by 13.6%, oil refinery
production by 3.7%, and electricity by 0.5% in January 2022. However, production of fertilizers and crude
oil both decreased by 2% and 2.4%, respectively.
Between April 2021 and February 2022, exports of goods from the chosen industries—engineering,
petroleum products, gems and jewelers, medications and pharmaceuticals, and chemicals—totaled USD
374.05 billion.
Manufacturing Clusters
Maharashtra
Tamil Nadu
Gujarat
Telangana
Andhra Pradesh
Karnataka
Uttar Pradesh
Industry Contacts
India's Electronics Industries Association (ELCINA)
Association of Telecom Equipment Manufacturers (TEMA)
Council of Indian Chemical
India's Alkali Manufacturers Association
Association of Indian Specialty Chemical Manufacturers

INDUSTRIES”
Investments
With the aid of the Make in India initiative, the nation is moving toward becoming the center of high-tech
manufacturing as global giants like GE, Siemens, HTC, Toshiba, and Boeing have already established or
are in the process of doing so. These companies were drawn to India by its market of more than a billion
consumers and rising purchasing power.
The Department for Promotion of Industry and Internal Trade (DPIIT) estimates that from 2000 in April
to 2021 in June, cumulative FDI inflows into the manufacturing subsectors totaled USD 100.35 billion.
Government Initiatives
The Indian government has adopted a number of measures to encourage a healthy environment for the
development of the industrial sector in the nation. Several noteworthy projects and developments include;
A PLI (Product Linked Incentive) scheme for 16 facilities producing essential raw materials or medication
intermediates has been approved by the Indian government. A total of about USD 47.01 million would
be invested in the construction of these plants, which would also create more than 3000 employments
nationwide. In April 2023, commercial development of these plants is anticipated to start.
The extension of the ECLGS (Emergency Credit Line Guarantee Scheme) and an expanded guarantee
cover of USD 6.55 billion in the union budget for 2022–23 gave the MSME (Micro, Small and Medium
Enterprises) sector a boost.
Some of the Government Initiatives are,
India outlined a strategy in August 2021 to achieve its target of USD 1 trillion in exports of manufactured
products.
The Defense Ministry announced a USD 6.7 billion tender in July 2021 to build the six conventional
submarines under Project 75 India in order to support the Make In India initiative.
According to predictions, India's display panel industry will increase from USD 7 billion in 2021 to USD
15 billion in 2025.

INDUSTRIES”
For the welfare of tea workers, particularly for women and their children, USD 137.16 million has been
earmarked in the union budget for 2021–22.
Future Prospects
For foreign manufacturing investments, India has been a desirable location. Numerous brands of
manufactured goods, including those for luxury goods, automobiles, and mobile phones, have established
or are trying to develop production facilities in the nation.
By the end of 2025, the country's industrial sector might be worth USD 1 trillion. With a GDP of USD
2.5 trillion and a population of 1.32 billion, the country will become a common market after the Goods
and Service Tax (GST) is implemented, which would be very attractive to investors.
According to the Indian Cellular and Electronic Association (ICEA), India could increase its total capacity
for producing laptops and tablets to $100 billion by 2025 with the help of governmental changes.

INDUSTRIES”
CHAPTER- 4: ANALYSIS AND INTERPRETATION
The tool used for analysis and interpretation of the study is “Trend Analysis”.
Trend Analysis
Trend Analysis is a tool used in technical analysis that helps to predict the future price of the stock
movements based on the observed trend data. Trend analysis uses the past data, such as movement of
prices and trade volume to forecast the long term duration of the market sentiment.
HOW TREND ANALYSIS IS CALCULATED:
Trend analysis figures the rate change for one record over a timeframe of two years or more.
Select the base year.

For each detail, isolate the sum in each non-base year by the sum in the base year and increase by
100.

INDUSTRIES”
TABLE -4.1: SHOWING PROFIT AND LOSS ACCOUNT
Particulars 2018-19 Trend 2019-20 Trend 2020-21 Trend

(%) (%) (%)
Revenue 5768104698 100 5861319814 101.62 6960921806 120.68
Expenses 5593755555 100 5815446547 103 6858274450 122.61
Operating 74349143 100 45873268 61.69 102647356 138.06

Profit
(PBIDT)
CHART -4.1: SHOWING INCREASING AND DECREASING IN REVENUE AND PROFIT:
1/1/202 1/1/202
- 0 1
100 REVENUE
EXPENSES
-
-
400
INTERPRETTION:
From the above analysis, we can see that in the year 2019-20, the total revenue of the firm is 7,51,975
and in the year 2020-21, it is been reduced to ,67,408 due to low productivity. So that the company should
clearly monitor the cost aspect to increase more revenue and to reduce cost in the productivity of the
company.

INDUSTRIES”
TABLE -4.2: SHOWING DIVIDEND OF THE COMPANY
Particulars 2018-19 2019-20 2020-21
Dividend 34.06 41.41 43.46
Trend (%) 100 121 127
CHART- 4.2: SHOWING DIVIDEND OF THE COMPANY
420,25
3
370,62
5
COST OF
MATERIALS
CONSUMED
10 88.1
0 9
2019- 2020-
2020 2021
INTERPRETTION:
The above analysis shows that the cost of materials consumed in 2019-20 is 4,20,253 and in the year
2020-21 reduced to 3,70,625 because of reduce in the productivity and the demand for the product in a
manufacturing sector. Hence the cost of material consumed and cost of expenses will be decreased from
the utilization concept of cost control and cost reduction.

INDUSTRIES”
TABL 4.3: SHOWING OPERATION AND MAINTAINANCE EXPENSES
Years 2019-20 Trend 2020-21 Trend
(%) (%)
Operation & 20,302 100 14,371 70.79
Maintenance expenses
CHART 4.3: SHOWING OPERATION AND MAINTAINANCE EXPENSES
2500
0
2030
2
2000
0
1437
1 OPERATION AND
1500
0
MAINTAINANCE
EXPENSES
1000
0
500
0
10 70.7
0 9
2019- 2020-
2020 2021
INTERPRETTION:
The above table and chart shows that operating and maintaining expenses in the year 2019-20 is 20,302
and reduced to 14,371 in the year 2020-21 because of such operating and maintaining expenses are been
reduced

INDUSTRIES”
TABLE -4.4: SHOWING COMPANY TOTAL EXPENSES
Years 2019- Trend 2020- Trend
2020 (%) 2021 (%)
Total Expenses 7,32,804 100 6,77,690 92.48
CHART- 4.4: SHOWING COMPANY TOTAL EXPENSES
800,000
732,804
700,000 677,690
600,000
500,000 TOTAL
EXPENSES
300,000
TREND %
200,000
100 92.48
2019-2020 2020-2021
INTERPRETTION:
The above table and chart shows that total expenses of Rohith Industries in the year 2019-20 is 7,32,804
and in 2020-21 is 6,77,690 says compared to the revenue of the company is reduced along with expenses.

INDUSTRIES”
TABLE -4.5: SHOWING TOTAL TAX EXPENSES

Trend Trend
Years 2019-20 (%) 2020-21 (%)
Current tax 5178 100 1400 27.04
Tax Expenses Deferred tax 4735 100 (265) (5.6)
Total tax 443 100 1665 375.85
CHART- 4.5: SHOWING TOTAL TAX EXPENSES
200
0 166
1500 5
Total
44 Tax
3
50 10
0 375.8 TREND
0 5
2019-
2020
2020-
2021
INTERPRETTION:
The above table and chart shows that the total expenses in the year 2019-20 and 2020-21 includes the tax
expenses. basically the tax expenses is divided two namely current tax and deferred tax. In 2019-20, the
total tax of 443 and in 2020-21, the total tax of 1665 which shows the tax payment is increased to 375.85.

INDUSTRIES”
TABLE- 4.6: SHOWING ACTUAL COST SHEET

PARTICULARS AMOUNT
Direct Material 9767.37
Direct labour 6908.84
Factory overhead 22475.52
Administration overhead 10675.05
Selling and distribution overhead 3936.22
CHART- 4.6: SHOWING ACTUAL COST SHEET
ACTUAL COST
SHEET
22,47
2500 6
0
9767.3 10675.0
7 6908.8 5
4 3936.2
2
AMOUN
T
INTERPRETATION:
The above chart shows actual cost sheet which includes direct material, direct labour, factory
overhead, administration overhead and selling and distribution overhead. Where direct material amounts
to Rs.9767.37, direct labour amounts to Rs. 6908.84, factory overhead amounts to Rs. 22475.52,
administration overhead amounts to Rs. 10675.05 and selling & distribution overheads amounts to Rs.
3936.22.

INDUSTRIES”
TABLE -4.7: SHOWING PROJECTED COST SHEET

PARTICULARS AMOUNT
Direct material 10,565.45
Direct labour 7602.92
Factory overhead 28,552.58
Administration overhead 12,667.08
Selling & Distribution overhead 4167.22
CHART- 4.7: SHOWING PROJECTED COST SHEET
AMOUNT
12,6
10,5 67
65 7,60
3 4,16
20,0 7
00 AMOUNT
INTERPRETATION:
The above chart shows the projected actual cost where it includes projected direct material, projected
direct labour, projected factory overhead, projected administration overhead and projected selling and
distribution overhead. The amount of projected direct material is 10,565.45, projected direct labour is
7,602.92, projected factory overhead amounts to Rs. 28,552.58, projected administration overhead
amounts to Rs. 12,667.08 and projected selling & distribution overheads amounts to Rs.4167.2

INDUSTRIES”
TABLE- 4.8: TABLE SHOWING DIRECT MATERIAL COST.
SL.NO DIRECT MATERIAL VARIANCE VARIANCE
ACTUAL PROJECTED (%)
1 9767.37 10,565.45 798.08 8.17
CHART -4.8: SHOWING PROJECTED DIRECT MATERIAL
12,00 10,56
0 9,76 5
7
10,00
0
ACTUAL
8,00
0
PROJECT
ED
VARIANC
4,00
0
2,00 78
0 9 8.1
7
DIRECT
MATERIAL
INTERPRETTION:
The above chart includes actual and projected direct material cost. So the actual direct material cost was
Rs. 9767 and projected direct material cost is Rs.10565. The variance is identified by deducting projected
cost with actual direct material cost which amounts to Rs.789 and variance percentage is calculated as
variance divided by budget into 100 and it amounts to 8.17%.

INDUSTRIES”
TABLE- 4.9: SHOWING ACTUAL DIRECT LABOUR COST.
SL.NO PARTICULARS DIRECT LABOUR VARIANCE VARIANCE

(%)
ACTUAL PROJECTED
1 DIRECT 6908.84 7602.92 694.08 10.05
LABOUR
CHART- 4.9: SHOWING PROJECTED DIRECT LABOUR COST:
7,60
8,00 3
6,90
0 9
7,00
0
ACTUAL
6,00
PROJECT
0
ED
VRIANCE
2,00
0 69
1,00 4
10.0
0 5
DIRECT
LABOUR
INTERPRETATION
From the above chart it shows that there is an existence of actual and projected direct labour cost. The
actual direct labour cost amounts to Rs.6909 and projected direct labour of Rs. 7603 and variance of
Rs.694 and variance percentage of 10.05%.

INDUSTRIES”
TABLE 4.10: SHOWING FACTORY OVERHEAD COST
SL.NO PARTIULARS FACTORY OVERHED VARIANCE VARIANCE
ACTUAL PROJECTED (%)
1 FACTORY 22,475.52 28,552.58 6077.06 27.04
OVERHEAD
CHART- 4.10: SHOWING COMPAISION BETWEEN ACTUAL AND BUDGETED FACTORY

OVERHEAD
28,55
30,00 3
0
25,00 22,47
0 6
ACTUAL
20,00
0
PROJECT
ED
VARIANC
10,00 6,07
0 7
5,00
0 27.0
4
FACTORY
OVERHEAD
INTERPRETATION:
From the above chart it includes actual and projected factory overhead cost. Where actual factory
overhead cost amounts to Rs.22476, projected cost amounts to Rs. 28553and variance cost amounts to
Rs.6077 and variance percentage is 27.04%.

INDUSTRIES”
TABLE 4.11: SHOWING ADMINISTRATION OVERHEAD

SL.NO PARTICULARS ADMINISTRATION VARIANCE VARIANCE
(%)
OVERHEAD
ACTUAL PROJECTED
1 ADMINISTRATION 10675.05 12667.08 1992.03 18.66
OVERHEAD
CHART-4.11: CHART SHOWING COMPARISION OF ACTUAL AND PROJECTED

ADMINISTRATION OVERHEAD
14,000 12,667
12,000 10,675
10,000 ACTUAL
PROJECTED
8,000 VARIANCE
4,000 VARIANCE (%)

1,992
2,000 18.66
0
ADMINISTRATION OVERHEAD
INTERPRETATION:
From the above chart it includes actual & projected administration overhead. The actual cost was Rs.
10675 and projected cost was Rs.12667. The variance was Rs.1992 and variance percentage is 18.66%.

INDUSTRIES”
TABLE 4.12: SHOWING SELLING AND DISTRIBUTION OVERHEAD COST

SL.NO PARTICULAR SELLING & VARIANCE VARIANCE (%)
S DISTRIBUTION
OVERHEAD
ACTUAL PROJECTED
1 SELLING & 3936.22 4167.22 231 5.87
DISTRIBUTIO
N
CHART- 4.12: SHOWING COMPARISION BETWEEN ACTUAL & POJECTED SELLING &
DISTRIBUTION OVERHEAD
4,16
4,50 3,93 7
0 6
4,00
0
3,50 ACTUAL
0
PROJCTED
3,00
0 VARIANCE
1,50
0
1,00 23
50 1 5.8
0 7
SELLING & DISTRIBUTION

OVERHEAD
INTERPRETATION:
From the above chart includes actual and projected selling and distribution overhead cost. The actual cost
was Rs.3936.22 and projected cost was Rs 4167.22. The variance cost was Rs.231 and variance
percentage is 5.87%.

INDUSTRIES”
CHAPTER -5: FINDINGS, CONCLUSIONS AND SUGGESTIONS
FINDINGS:
Revenues from operations have been reduced from 7, 51,975 in 2019-20 to 67,480 in the year
2020-21.
The cost of materials consumed to make the production has been reduced by 49,628.
Operating and maintenance expenses have been reduced by 29.21%.
Due to covid, the total expenses incurred in the Rohith Industries have been reduced by
7.52% which is a good sign for the company.
The gross profit and revenue of the company has been reduced due to the lockdown and stoppage
of businesses across the country.
The total expenses incurred in the year 2020have been increased compared to previous year which
is 375.85.
The growth ratio has been decreased when it is compared with to the previous year.
Company’s actual cost sheet has been compared to the projected cost sheet.
The company’s cost in direct material, direct labour, factory overhead, administration overhead
and selling & distribution overhead on actual & projected cost is computed nod percentage change
in variances is calculated.
The economic pressure has made Rohith Industries to reduce its cost in selling and administrative
expenses.
The cost incurred on direct labour has been increased to 694.08 (10.05%).
Factory overhead has been increased to 6077.06 (27.04%

INDUSTRIES”
SUGGESTIONS
The analysis has demonstrated that there has being a weight on organization due to a slight increment in
revenue and profits.
A portion of the cost control measures the organization can adjust to defeat the money related emergency,
they are as per the following:
The Rohith Industries ought to decrease the importing of raw materials from different states as it
incurs more transportation cost.
The company should approve the most recent equipment in invention of manufacturing the
machines which could reduce the human resources and increase the profits.
Rohith Industries should control employee bonuses and recompense correspondence once in a
particular year.
Introduce efficiency based payment: the creative hours they spend in the company, this may result
in salary.
The Rohith Industries has to control its employee travel costs and should withdraw free
snacks and food facility in canteen.
Reduce the overall budget of the company.
Strictly instruct the employees to turn off the monitor, when it is not in use, so that company can
eliminate unnecessary waste and can reduce its power consumption.
Clearly monitor the telephone bills to prohibit surplus payment.
Provide any regional vacations (like Christmas, Ramzan etc), during this time the company should
not pay the amount for the vacations.
Try to reduce phone calls and instruct the employees to undertake the interactions through e-mails.
Reduce postal charges by utilizing electronic media like internet.
Avoid unnecessary printing cost.
The Rohith Industries should adopt cost reduction and cost control a tool to eliminate unnecessary
cost in manufacturing the machines.

INDUSTRIES”
CONCLUSION
Based on the study made at Rohith Industries, on cost control and cost reduction, the accompanying
conclusion is made.
Cost control is a provisional agreement to reduce the cost which is because of the following
reasons they are:
The function of cost control is for diminutive era or may be for long period based on the below
situations.
Monetary weight.
Pecuniary disaster.
Market sluggish losing.
So cost assumes a foremost responsibility during the monetary weight which enables the
corporation to bring the cost down till the weight goes on.
Cost reduction is a practice applies which is approved out for achievement of functioning
competence. Cost reduction is a corrective function because it challenges the pre-determined costs
and seeks to improve the performance by reducing cost; it is a continuous function of self-analysis
for making more and more improvements in performance.
If Rohith Industries adopt this method, it can easily eliminate unnecessary cost in manufacturing
and administration activities.
The role of cost reduction is for a longer period of time and the reduction made in the services are
real in nature and will be playing a role by implementing innovative ideas from time to time which
is done as a continuous activity.
I am completely indebted to the company and learned a lot. It’s my immense opportunity to do project
report in Rohith Industries Bangalore.

INDUSTRIES”

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“STUDY ON COST CONTROL AND COST REDUCTION BY USING COST BENEFIT

ANALYSIS AS A TOOL AT ROHITH INDUSTRIES”

1.1 TOPIC SELECTED FOR THE STUDY

1.2 INTRODUCTION ABOUT THE TOPIC

Businesses utilise a cost-benefit analysis as part of a systematic procedure to determine which

DEPT OF DBIMSCA - MBA 1

DEPT OF DBIMSCA - MBA 2

Differences Between Cost Reduction and Cost Control

DEPT OF DBIMSCA - MBA 3

DEPT OF DBIMSCA - MBA 4

1.3 THEORETICAL BACKGROUND OF THE STUDY

Financial examination is additionally named as money related explanation investigation that is

CAS 1 - Classification of cost

CAS 2 – Capacity confirmation

CAS 3 – Allocation and Division of overhead

CAS 4 – Cost of creation for prisoner wages

DEPT OF DBIMSCA - MBA 5

Features of Cost Accounting,

It is a process of accounting for costs.

Functions of Cost Accounting,

To ascertain the cost per unit of production in an organization.

DEPT OF DBIMSCA - MBA 6

Financial accounting is a special branch of accounting involving a process of recording, summarizing

Management accounting is a process of identifying, measuring, analyzing and interpretation of

Advantages of Cost Accounting,

Activities that are profitable and unprofitable are disclosed.

DEPT OF DBIMSCA - MBA 7

Future manufacturing policies are influenced by cost accounting.

It contributes to the organization's earnings rising.

It makes it possible to periodically calculate earnings or losses without using stocktaking.

Limitations of Cost Accounting,

Cost and Costing:

DEPT OF DBIMSCA - MBA 8

Product Cost Period Cost

Direct Material Direct Labour Overhead

Prime Cost Conversion Cost

Direct Raw Materials Cost

DEPT OF DBIMSCA - MBA 9

Direct Raw Materials Cost

Direct Labors Cost

Prime cost = Direct material + Direct labour/work + Direct expenses.

DEPT OF DBIMSCA - MBA 10

Characteristics of Cost Control

Process of Cost Control

DEPT OF DBIMSCA - MBA 11

Appraisal and Reporting

Advantages of Cost Control

Disadvantages of Cost Control

Reduces the quality and brand image of the business.

DEPT OF DBIMSCA - MBA 12

According to CIMA, London cost reduction is characterised as “the accomplishment of actual

Characteristics of Cost Reduction

It is utilised in all of the organization's activities.

Areas of Cost Reduction

DEPT OF DBIMSCA - MBA 13

Advantages of Cost Reduction

Cost reduction helps in increasing the profitability position of the business.