DEFFERENCE BETWEEN

COST CONTROL & COST REDUCTION

Contd….

An organized and intentional one-time or continuous initiative taken with the goal to reduce business costs from a current level to a desired lower level. An organized and intentional effort to limit the growth of costs within specific accounts.

Contd…

Cost control

Cost reduction

It involves: I. setting target, II. ascertaining actual performance with It is the final result in the cost control targets, process. III. investigating the variance, IV. taking corrective actions Cost control aims at achieving standards. cost reduction aims at improving the standards.

The main stress is on the present and past behavior of costs.

Emphasis is given partly on the present costs and largely on future costs.

Contd…

Cost control follows a conservative Continuous, dynamic and innovative in procedure and lacks dynamic approach. nature, looking always for measures and alternative to reduce costs.

It acts as a preventive function.

it acts as corrective function.

costs are optimized before they are incurred.

There is always assumed a scope for reducing the incurred cots under controlled conditions.

Contd…

It has limited applicability to those items It is universally applicable . It doesn’t of costs for which standards have depend on standards, though target already been set. amount may be set.

contains guidelines and directive of management as to how to do a thing.

Adds thinking and analysis to action at all levels of management.

It attempts to achieve best possible results at under least cost under given condition.

No condition is considered to be permanent where a change will secure a lowest cost figure.

THANK U……

Sign up to vote on this title
UsefulNot useful