Difference Between Cost Control And Cost Reduction

Difference Between Cost Control And Cost Reduction

The main dissimilarities or difference between cost control and cost reduction can be pointed out as follows:

1. Meaning

Cost Control: An effort of maintaining costs as per the planned or budgeted level.

Cost Reduction: An effort to economize costs without reducing the utility and output.

2. Focus

Cost Control: It focuses on minimizing wastage, misappropriation and embezzlement.

Cost Reduction: It focuses on simplifying production process, introducing new technology, proper handling of material etc. 

3. Saving

Cost Control: It saves total cost

Cost Reduction: It saver per unit cost

4. Application

Cost Control: It is a continuous process and applied regularly

Cost Reduction: It is applied when there is an opportunity for cost reduction

5. Nature

Cost Control: Preventive in nature

Cost Reduction: Corrective in nature

6. Techniques Used

Cost Control: Responsibility accounting, standard costing, budgetary control etc are practiced

Cost Reduction: ABC Analysis, value engineering, standardization etc

7. Scope

Cost Control: Limited scope

Cost Reduction: Wider scope

Cost Control Vs Cost Reduction (Comparison Chart)

Basis For Difference	Cost Control	Cost Reduction
Introduction	Practice of maintaining operational costs as per the budget	Process of minimizing operational costs without reducing the output
Focus On	Minimization of wastage, embezzlement and misappropriation	Proper material handling, process simplification etc.
Saving	Total cost	Per unit cost
Applied	Continuously	When there is an opportunity
Nature	Preventive	Corrective
Techniques	Responsibility accounting, standard costing etc.	Standardization, value engineering etc.
Scope	Limited	Broader

I hope this post is helpful to understand the difference between cost control and cost reduction and to make comparison between them.