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 Emphasis is given partly on the present
behavior of costs. 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 There is always assumed a scope for
incurred. 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 Adds thinking and analysis to action at all
management as to how to do a thing. levels of management.

It attempts to achieve best possible No condition is considered to be

results at under least cost under given permanent where a change will
condition. secure a lowest cost figure.
THANK U……