Page 444 - F2 - MA Integrated Workbook STUDENT 2018-19
P. 444
Chapter 16
Cost control and reduction
Cost control involves the setting of targets for cost centre managers and then
monitoring performance against those targets. Performance can be measured using
standard costing and variance analysis.
Cost reduction is the reduction in unit cost of goods or services without impairing
suitability for the use intended i.e. without reducing value to the customer.
8.1 Cost reduction techniques
Value Analysis is the systematic interdisciplinary examination of
factors affecting the cost of product or service, in order to devise means
of achieving the specified purpose most economically at the required
standard of quality and reliability.
Value Engineering is the redesign of an activity, product or service so
that value to the customer is enhanced while costs are reduced or at
least increased by less than the resulting price increase.
Work study is a systematic examination of the methods of carrying out
activities in order to improve the effectiveness of resources and to set
up standards of performance for the activities carried out
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