Cost Control and Cost Reduction
Cost Control and Cost Reduction
Cost Control and Cost Reduction
It Involves:
The determination of standard (planned) Cost. The recording of actual cost. The comparison between predetermined (standard Cost and
Actual Cost).
The finding out of variances. 6/23/12
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Object: The aim of cost control is to achieve the predetermined costs where as cost reduction aims at real or permanent reduction of costs by adopting new methods, technology etc. Method: Cost control is concerned with determination of standard costs, ascertaining actual costs, Click to edit Master standard with comparing with the subtitle style the actual costs, analyzing the variances and taking corrective actions for the future. On the other hand, cost reduction is not concerned with maintenance of performance according to predetermined standards. Nature: Cost control is static in nature in the sense that it is a routine exercise carried out to achieve the fixed predetermined standards, whereas cost reduction is a continuous exercise to reduce further on 6/23/12
Tools and techniques of cost reduction and techniques commonly used The various tools
3) Economic order quantity. 4) Production planning and control. 5) Standardization and simplification 6) Rationalization 7) Automation 8) Design Analysis 9)6/23/12 Quality control
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