Key Differences Between Cost Control and Cost Reduction
The following are the major differences between Cost Control and Cost Reduction:
The activity of maintaining cost as per the established norms is known as cost control. The activity of decreasing per unit cost by applying new methods of production in such a way that it does not affect the quality of the product is known as cost reduction.
Cost Control focuses on decreasing the total cost while cost reduction focuses on decreasing per unit cost of a product.
Cost Control is temporary in nature. Unlike Cost Reduction which is permanent.
The process of cost control is completed when the specified target is achieved. Conversely, the process of cost reduction has no visible end as it is a continuous process that targets for eliminating wasteful expenses.
Cost Control does not guarantee quality maintenance, however, 100% quality maintenance is assured in case of cost reduction.
Cost Control is a preventive function as it ascertains the cost before its occurrence. Cost Reduction is a corrective action.
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