These slides says about the methods and techniques of Cost Control and Cost Reduction

1. COST CONTROL AND
COST REDUCTION
PEPARED BY
MD SOHAIL PERWEZ
RUKSAR AHMAD
IRSHAD BHATTI
RIAZ AHMAD

2. CONTENTS
• Definition
• Key Areas Of Cost Control & Cost Reduction
• Comparison Chart
• Advantage Of Cost Control
• Disadvantage Of Cost Control
• Advantage Of Cost Reduction
• Disadvantage Of Cost Reduction
• Techniques Of Cost Control
• Techniques Of Cost Reduction

3. DEFINITIONS
• Cost Control is a process which focuses on
controlling the total cost through
competitive analysis.
• Cost Reduction is a process, aims at
lowering the unit cost of a product
manufactured or service rendered without
affecting its quality by using new and
improved methods and techniques.

4. KEY AREAS OF COST CONTROL
AND COST REDUCTION
Labor Material
Sale Energy

5. COMPARISON CHART
BASIS FOR COMPARISON COST CONTROL COST REDUCTION
Meaning A technique used for
maintaining the costs as
per the set standards.
A technique used to
economize the unit cost
without lowering the
quality of the product.
Savings in Total Cost Cost Per Unit
Retention of Quality Not Guaranteed Guaranteed
Nature Temporary Permanent
Emphasis on Past and Present Cost Present and Future Cost
Ends when The pre-determined
target is achieved.
No end
Type of Function Preventive Corrective

6. ADVANTAGE OF COST
CONTROL
I t h e l p t h e f i r m t o i m p r o v e
i t s p r o f i t a b i l i t y a n d
c o m p e t i t i v e n e s s .
It helps the firm in reducing its
costs and thus reduce its prices.
If the price of the product is
stable and reasonable ,it can
maintain higher sales and thus
employment of work force

7. DISADVANTAGE OF
COST CONTROL
Reduces the flexibility and process
improvement in a company
 Restriction of innovation
Requirement of skillful personnel to set
standards

8. ADVANTAGES OF COST
REDUCTION
Cost Reduction increases profit.
Provide more money for labor welfare schemes and thus
improve men.
Goods available to the consumers at cheaper rates.
It helpful in meeting competition effectively

9. DISADVANTAGE OF
COST REDUCTION
Quality may be sacrificed.
There may be a conflict between individual objective and
organizational objective.
Cost may not be real and permanent

10. TECHNIQUES OF COST
CONTROL
Budgetary Control
Standard Costing
Inventory Control
Ratio Analysis
Variance Analysis

11. TECHNIQUES OF COST
REDUCTION
Material Handling
Automation
Production Control
Work study
Design

12. Thank You
ALL