Cost Control and Cost Reduction Preparation Tasmeer Un Nazir [email protected]

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 ing Techniques Cost Control

Cost Reduction

relies on ing techniques

not using of ing techniques

SUCCESSFUL Cost Control

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Firm should have definite plan of organization

Costs should be collected for each of responsibility Report should draw management’s 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 istrative 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

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Reducing overall operating costs Improved management of utility contracts and relationships Reducing the waste across all departments

Folks, that is all, seriously!