18-01-2013, 04:35 PM
PROJECT ON ANALYSIS OF COST CONTROL AND REDUCTION
1ANALYSIS OF COST.doc (Size: 68 KB / Downloads: 108)
INTRODUCTION
Cost control and reduction refers to the efforts business managers make to monitor, evaluate, and trim expenditures. These efforts might be part of a formal, company-wide program or might be informal in nature and limited to a single individual or department. In either case, however, cost control is a particularly important area of focus for small businesses, which often have limited amounts of time and money. "In a small business, you are so busy serving your customers, you tend to get lackadaisical about what you're buying," business owner John Clark noted in Jane Applegate's Strategies for Small Business Success. Even seemingly insignificant expenditures—for such items as office supplies, telephone bills, or overnight delivery services—can add up for small businesses. On the plus side, these minor expenditures can often provide sources of cost savings.
The study of Cost Reduction is very essential in the present competitive world. Cost Reduction represents achievement of real and permanent reduction in the unit cost of goods manufactured or services rendered without improving the suitability for the use originally intended. It improves all standards and endeavors to better than continuously. The study of cost reduction is a corrective function. It operates even as efficient cost control system exists. It emphasizes bother the present and future. It helps maximization of profits of the organization to sustain for a longer period in this dynamic environment. It is useful for all types of Industries and institutions to have better control on the costs. It also benefits the consumers by increasing their purchasing power of the money.
SCOPE & METHODOLOGY
Scope:
Basic cost data proposed to be collected from the division costing section. This data covers material, labor & overheads. Again above data relates to 25% of the jobs. However, on account of the time constraint, two projects are proposed to be selected for the purpose of the project study.
For a particular period product costs on the above lines will be summarized and compared with the estimates for the purpose of control. Among other things the method of computing estimates costs will be ascertained for the purpose pricing.
Scope covers a minimum two financial years and a single significant division is selected for the purpose of the cost analysis.
Period of the Study:
The proposed project study will cover a suitable financial year 2003-04, 2004-05, 2005-06, 2006-07, and 2007-08, 2009 -10 depending upon the data availability.
Importance:
As already stated under objective, a critical cost analysis will help the Organization in taking right decision to achieve profitability and also for the Control of its operation. This has assumed importance in the light of several :
Important accounting standards introduced by institute of chartered accounting (Accounting standards 17- segment reporting) and institute of cost & works.
Accounting of Indian (cost accounting standards) for implementation in the organization.