Cost Control and Cost

Reduction
Preparation
Tasmeer Un Nazir
tasmeer786@gmail.com
WHAT DO WE UNDERSTAND
Cost Control and Reduction are
Strategic processes and activities that help companies to
Cut down the incurred costs.
Increase productivity and efficiency.
Survive competition and gain market.
DEFINING
Cost Control
A process or activity controlling costs associated with an activity, process,
or company.
Typically includes procedures to
Investigate variance of actual costs from budgeted costs
Ascertain the cause(s) of variance, and
Realign actual and budgeted costs
DEFINING
Cost Reduction
Looking for, finding and removing unwanted expenses
Increase profits without reducing product quality
Periodic cost reduction drives making operations efficient and boost
profits
DIFFERENCE
Cost Control & Cost Reduction
1. Focus



Cost Control Cost Reduction
minimization of wastage minimization of cost
planning innovating

budgeting,
standard budget,
variance, & inventory, etc.

new production process,
improved plant layout,
scientific material handling, etc.
DIFFERENCE
Cost Control & Cost Reduction
2. Basis of Application



Cost Control Cost Reduction
routinely applied on a continuous basis
applied when an opportunity is identified
offering a competitive advantage for a
longer time
DIFFERENCE
Cost Control & Cost Reduction
3. Use of Accounting Techniques



Cost Control Cost Reduction
relies on accounting techniques not using of accounting techniques
SUCCESSFUL
Cost Control
Firm should have definite plan of organization
Costs should be collected for each of responsibility
Report should draw managements attention
Good performance should be rewarded
Proper setting of standards
SUCCESSFUL
Cost Reduction
Current expenditure in-depth audit
Data and market analysis
Reporting and detailing the findings and recommendations
Implementation of recommendations
Monitoring and implementing improved administrative procedures

Advantages
Cost Control
Achieving the expected return of capital
Increase in productivity of the available resources
Job opportunity
Economic use of limited resources of production
Advantages
Cost Reduction
Reducing overall operating costs
Improved management of utility contracts and relationships
Reducing the waste across all departments
Folks, that is all, seriously!