Working with Costs and Budgets, 5th Edition

Session CControlling andreducing costs

1 Introduction

There are two main ways of controlling costs: effective monitoring (for which good information is needed) and active control. In this session we shall look first at how information can be collected and used, so that the person who controls costs is involved in monitoring them, and thus becomes highly cost-conscious.

Once costs have been collected (in cost units and cost centres), variances can be calculated. Most organizations accept that some level of variance is inevitable. However, at some point an adverse variance becomes unacceptable, and its adverse effects must be reduced. The first ...