Difference between cost reduction and cost control

The two most important functions of cost accounting are cost control and cost reduction **Cost Control** is a technique which provides the necessary information to the management that actual costs are aligned with the budgeted costs or not. **Cost Reduction** is a technique used to save the unit cost of the product without compromising with its quality. **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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