Cost Control and Cost Reduction

Difference between Cost Control and Cost Reduction

To maximize the profit is the main concern of any business enterprise that is only possible by decreasing the cost.

Cost Control:- Cost control is the regulation of the cost by setting up the targets whereby actual cost is compared with predetermined cost i.e. standard cost.

Cost Reduction:- Cost reduction is the real and permanent reduction in cost of product or service. This is continuous effort to reduce cost through savings in cost of manufacture, administration and selling and distribution.

Basis	Cost Control	Cost Reduction
Meaning	It is a technique where actual cost is compared with predetermined cost i.e. target or standard cost.	It is a technique where continuous effort is made to reduce the cost of product.
Nature	Cost control is of a temporary nature.	Cost reduction is of permanent and real nature.
Emphasis	Cost control emphasizes on present and past behaviour of cost.	Cost reduction emphasizes on present and future cost.
Control	Control is possible through compliance with standards.	Cost is control through examination includes analysis and challenges.
Focus	It focuses on total cost of production.	It focuses on per unit of cost of production.
Approach	It is Less dynamic approach.	It is a fully dynamic approach.
Savings	Temporary savings in cost.	Realistic savings in cost.
Applicability	Limited applicable.	Universally applicable.
Product’s Quality	No guarantee.	Qualities and characteristics are retained.
Target	Yes.	No.
Function	Preventive.	Corrective.