The jotting down of costs for the means of evaluation is the first step that may lead to a successful cost control plan. The various cost incurred is recorded, and the information about them is collected. When the execution part of the plan starts, it is also the time to start monitoring and evaluating the performance. Related: Marketing mix of Indigo Airlines #3 Monitoring They need to be pulled out from theory and put in practice.
Nothing will happen if the initial plans and targets just remain limited to papers. If planning was the first step, communicating it to the staff marks the second. You need to make a plan and set aside targets in estimates, budgets, and standards. The first and foremost thing in starting the process of cost control is planning. We are discussing some of the steps that can lead to an efficient cost control system #1 Planning Role of Cost Control in various Aspects of ManagementĬost control has various parts, and several aspects of the management have to come together for a successful implementation of cost control. The cost control function can be defined as a preventive one. The method seeks to have the lowest possible rates when it comes under the conditions that exist in the company. This method can be easily applied to things that have certain standards. The method of cost control puts the main focus on the present as well as the past of the company. The deviations that happen in the performance of the company due to these standards can be easily analyzed and then reported as well to make sure that the executives can take some corrective actions for the company. In most cases, however, the actual cost would either be close to the budgeted cost or may exceed the budgeted costs. However, you do need to check whether the accounting and budgeting systems have skipped to record a source of expense. If the costs incurred in reality are lower than the budgeted costs (this rarely happens), it is good for the business. So, Cost Control is an integral part of the Cost Management System. By having a budget in place, the business owner can make a comparison between the actual cost incurred, and the cost accounted in budgets. This is how a company can start making more profits.Ĭost control begins with the creation of a budget.
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