Cost Control And Cost Reduction
Cost Control and Cost Reduction
A business enterprise must survive, grow, and prosper. Cost Control and Cost Reduction are activities necessary for ensuring that these objectives are fulfilled. With the liberalization of the Indian Economy and Globalization, there is now a cut throat competition from various concerns of the world. As a result there is now a race to secure a place for survival. This has increased the importance of cost control and Cost Reduction.
Cost Control
“Cost control is the regulation by executive action of the costs of operating an undertaking particularly where such action is guided by cost accounting.”
Cost Control is function, which makes sure that actual work is done to fulfill the original intention. It is a widely accepted notion that the actual costs for each cost element should be within the budget.
Cost control is thought of as a managerial effort to attain cost goals within a particular environment. Cost control is not a specific program. Rather, it is a routine activity to be frequently carried out. Cost must be controlled; otherwise, there will be wastage, misappropriation and embezzlement. Checking such wastage and misappropriation of resources is a continuous activity.
A firm exercising a better control last year does not mean that it has now been relaxed from the cost control function. Cost control relies heavily on accounting techniques. Some of the key cost control techniques are responsibility accounting control system, standard costing, budgetary control and cost management ratios. Therefore, cost control includes the routine management of the organizational activities, such as controlling of wastage, misappropriation, loss of work time, set up time etc.
The cost control definition suggests that a company should investigate good procedures for finding out the reason why the costs of the company are not as per the pre-decided or budgeted costs. Thus, cost control can help a company determine, if it is
A business enterprise must survive, grow, and prosper. Cost Control and Cost Reduction are activities necessary for ensuring that these objectives are fulfilled. With the liberalization of the Indian Economy and Globalization, there is now a cut throat competition from various concerns of the world. As a result there is now a race to secure a place for survival. This has increased the importance of cost control and Cost Reduction.
Cost Control
“Cost control is the regulation by executive action of the costs of operating an undertaking particularly where such action is guided by cost accounting.”
Cost Control is function, which makes sure that actual work is done to fulfill the original intention. It is a widely accepted notion that the actual costs for each cost element should be within the budget.
Cost control is thought of as a managerial effort to attain cost goals within a particular environment. Cost control is not a specific program. Rather, it is a routine activity to be frequently carried out. Cost must be controlled; otherwise, there will be wastage, misappropriation and embezzlement. Checking such wastage and misappropriation of resources is a continuous activity.
A firm exercising a better control last year does not mean that it has now been relaxed from the cost control function. Cost control relies heavily on accounting techniques. Some of the key cost control techniques are responsibility accounting control system, standard costing, budgetary control and cost management ratios. Therefore, cost control includes the routine management of the organizational activities, such as controlling of wastage, misappropriation, loss of work time, set up time etc.
The cost control definition suggests that a company should investigate good procedures for finding out the reason why the costs of the company are not as per the pre-decided or budgeted costs. Thus, cost control can help a company determine, if it is