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A Project Report
On
“A Study of Cost Control and Cost Reduction Techniques”
For
“Shaikh & Associates Tax Consultants & Certified Auditor.”
By
“Mr. Mateen Mubeen Sayed Kadri”
Under the guidance of
“Mrs. Payal Samdariya”
Submitted to
“University of Pune”
In partial fulfillment of the requirement for the award of the degree of
Master of Business Administration (MBA)
Through
AKI Poona Institute of Management Sciences and Entrepreneurship,
Pune - 411001
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Acknowledgement
I would like to express my special thanks of gratitude to my teacher Mrs. Payal Shreepal
Samdariya as well as our principal Dr. G.M Nazeruddin who gave me the golden
opportunity to do this wonderful project on the topic cost control and cost reduction,
which also helped me in doing a lot of Research and i came to know about so many new
things
I am really thankful to them.
Secondly i would also like to thank my parents and friends who helped me a lot in
finishing this project within the limited time.
I am making this project not only for marks but to also increase my knowledge.
THANKS AGAIN TO ALL WHO HELPED ME.
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CERTIFICATE
This is to certify that Mr. Mateen Sayed Kadri has completed the Summer Project Titled
“Cost Control and Cost Reduction Techniques” to my satisfaction and as per the
requirements of the two year full-time MBA programme.
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INDEX
Sr. No. Title Page Number
I Executive Summary
II Company Profile
III Objectives of the Study
IV Research Methodology
V Project work undertaken
VI Analysis and interpretation of data
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VII Suggestions and Conclusion
VIII Bibliography
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EXECUTIVE SUMMARY
Introduction
Finance is the study of funds and management. Its general areas are business finance,
personal finance, and public finance. It also deals with the concepts of time, money, risk,
and the interrelation between the given factors. It is basically focused on how the money
is spent and budgeted. It is one of the most important aspects in handling business.
Finance addresses the methods wherein business entities used their financial resources on
a certain period of time. It is the application of a set of techniques used by organizations
in managing their financial affairs. The income and expenditure are emphasized in
finance and its differences can easily be indicated. Nowadays, loans have been packaged
for resale. This means that the debt has been bought by an investor from the bank. These
bonds are sold to investors by financial corporations who have exceeded beyond their
expenditures. The investor can now collect all the interests and be sold again through a
secondary market. Banks serve as facilitators to companies in the provision of credit and
mutual funds. Investments are managed carefully under a financial risk management to
control gambling chances of these financial assets. Financial instruments are also used to
secure these assets on securities exchanges such as stock exchanges and bonds. A bank
provokes the activities of both borrowers and lenders. Lenders pay deposits to banks on
which it pays the interest rates. The central banks are the last resorts that handle the
monetary funds. These banks affect the interest rates being charged such as an increase in
the money supply will result to a decrease in the interest rates.
Financial capital is a monetary resource allows businesses to purchase items that will
create goods for production and other services. The budget is the documentation of the
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entire entrepreneurship. The outline includes the objectives of the business, the target
sets, resulting costs, required investment, planned sales, growth, financing source, and
financial results. It can be directed on long term or on a short term basis. The capital
budget is mainly concerned with the proposed fixed asset requirements. The financing of
the expenditure is also indicated in the capital budget. A detailed plan of all the sources
and cash usage is emphasized in the cash budget. It has six main sections such as the
beginning cash balance, cash collections, cash disbursements, cash excess, cash
deficiencies, financing, the ending cash balance, and the management of current assets. A
credit comes in various forms such as of open accounts, installment sales, credit cards,
and supplier credits. The advantages of a credit trade are gaining loyalty and goodwill
amongst costumers, drawing in more customers than cash trades, stimulates agricultural
and industrial production, and increases rates. But there are also disadvantages to credit
trades as well such as risks of bad debt, high administration expenses, necessitates more
working capital, risks of bankruptcy declaration, and leading to purchasing nonessential
items. An effective credit control may lead to increase in sales, increase in profits,
reduces bad debts, builds costumer loyalty, and increases company capitalization. The
information on creditworthiness is acquired through credit agencies, bank references,
credit agencies, chambers of commerce, and credit application forms. Taking legal
actions is one part of the many duties of the credit department.
A personal finance is related to how much money is needed by an individual. It is
concerned on financial resources and its usage. Tax policies and family assets will
certainly affect personal decisions. It will also identify the credit score of the lender and
the actual financial standing. Planning for a secured financial future within the
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environments economic stability is one primary concern of the personal finance as well.
There are various factors that affect decisions in handling personal finance which are
financing durable goods, paying for education, monthly bills, secured loans, minimal debt
obligations, and health insurance, and retirement plans. Meanwhile, a corporate finance
holds a task in providing financial resources for certain organizations and balances risks
and profitability. It is referred as SME finance for small enterprises. Managerial finance
maximizes a company’s wealth and it also values the stocks. Bonds are long-term funds
created by ownership equity and long-term credits. Short-term funding comes from a line
of credit given by banks as a working capital.
Studying finance will lead you in wiser decisions making on your financial funds. It can
help you identify risks and benefits if you are planning to put up your own business.
Finance discipline requires you certain abilities and trainings which can be developed
over a period of time. Finally, it will give you optimum control over your financial assets
which will certainly help you in attaining a financially secured life.
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COMPANY PROFILE
SHAIKH & ASSOCIATES
History
Shaikh & Associates is located at Asha Complex, 414, Mangalwar Peth,
Pune - 411011. It was founded in the year 2000 and is a renowned Tax Consultancy &
Law Firm.
The Firm is associated in serving society with the Consultancy in relation
of Indian Laws and Tax related works such as Tax Payments, Consultancy about
Taxation, Accounts Writing, Return filing of various departments of Govt. viz Central
Govt., State Govt., Local body etc. and various financial service. It is also leading firm in
the field of Law.
Founders and Proprietor
The founder and proprietor of Shaikh & Associates ; Mr. Sameer I Shaikh
is a members of Maharashtra Bar Council, Sales Tax Practitioner Association and others.
He had started the firm with a small office at Nana Peth, Pune – 411002 as tenant then
afterwards he shifted his whole business in a self occupied office at Asha Complex, 414,
Mangalwar Peth, Pune – 411011.
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Organization Chart
New Projects
In future the firm is very much positive about its performance in the
concerned fields and looking forward for new projects.
H. K. Builder
H.K. Garden is the First project done by H.K. Builder in Pune. Mitha Nagar Sr. No 42
Kondwa Pune – 48. Basically H.K. Builder is from Mumbai. From Last 3 to 4 Year he is
in Pune. There is 4 to 5 Site Under construction in Pune of H.K.Builder.
Shaikh &
Associates
Legal Dept
Income tax
Dept
Sale Tax
Dept
Service
Dept ROC Dept
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Objectives of the Study
Cost control
Cost control means costs are regulated within the set parameters. Cost control implies
sustaining cost at a budgeted or some pre-determined level. The function of cost control
is to keep the costs within prescribed limits. The basic objective of cost control is to
ensure that actual cost conforms to the budgeted or pre-determined standards set by the
management. Management has to lay down cost standards or norms for all the elements
of cost as well as various segments of activity. Actual cost has necessarily to be
considered element-wise or segment-wise so as to pinpoint any deviation from standard
or norms laid down as benchmark.
Cost Control
To identify job costs which are not properly supported
To Determine the cost components for each billing and the amount charged for
each.
To enhance the quality of a final audit and decrease the amount of field work
required.
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Cost reduction
Cost reduction simply means bringing down the cost without sacrificing the costs without
sacrificing the utility of the product or service. Cost reduction question the reasons for
spending and try to eliminate wasteful or unproductive expenditure.
Cost Reduction:
• To reducing expenditure on various heads.
• To aims at reducing achieving the overall costs without corresponding loss of
efficiency.
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Research Methodology
Research Methodology is a method of collecting data and information relevant to the
project. It's a systemized way of getting knowledge and learning new things their
relations and casual explanation and the natural laws which governs them. Research
Methodology is a "Systemized effort to gain new knowledge".
Research Methodology is original contribution to the existing stock of knowledge making
for its advancement. It is the purist of truth with the help of study.
Observation, Comparison and Experiment. In short also covers the systematic method of
finding solution to a problem is research. It also covers the systematic approach
concerning generalization and the formulation of the theory. Different stages involved in
research consists of enacting the problem, formulating a hypothesis, collecting the facts
or data, analyzing the facts and reaching certain conclusion either in the form of solution
towards the concerned problem or in generalization for some theoretical formulation.
Collection of data was done by using questionnaire. A number of questions were typed in
a definite order and this set of questions were given to respondents, who were expected to
read and understand the questions on their own and answer in the space provided in the
questionnaire itself.
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In Research Methodology mainly Data plays an important role.
The Data is divided in two parts:
a) Primary Data.
b) Secondary Data.
(a) Primary Data is the data, which is collected directly by direct personal interview,
interview, indirect oral investigation, Information received through local agents,
drafting a schedule, drafting a questionnaire.
(b) Secondary Data is the data, which is collected from the various books, magazine
and material, reports, etc. The data which is stored in the organization and provide by
the HR people are also secondary data. The various information is taken out regarding
that subject as well other subject from various sources and stored.
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Scope of Cost Reduction
A cost reduction programme should be all pervasive because cost reduction is attainable
in almost all the area of business activities. There can hardly be any area of operation,
which cannot be improved. Cost reduction cover a wide range of area like product design,
plant layout, production methods, substitution, tool design reduction in wastes,
innovation in marketing, etc. we shall now study the critical area of application of cost
reduction method.
1) Product design
Product design offers the greatest scope for cost reduction of a permanent nature.
Designing bring the first step in manufacturing a product, the impact of a decision at this
stage is felt throughout the manufacturing or processing of the product in the factory.
Most costs are committed at the designing stage
2) Production Planning and control
Production planning and control (including material planning and control)
endeavors to achieve the best coordination among material, manpower and
manufacturing facilities so that delivery commitments are met without causing
waste of resources.
3) Plant layout and equipment
Plant layout is the floor plan which involves analysis and arrangement of
equipment, workstation and floor area to ensure most efficient utilization of
equipment plant facilities and plant service.
4) Factory organization
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A considerable cost reduction can be achieved by improving the factory organization.
Although cost reduction resulting from an improvement improve in the organization
cannot be measured.
5) Purchasing and material control
6) Direct labour
7) Marketing
8) Administration Finance
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EXAMPLE
Save up to 20 times with the detailed cost estimate report?
Our calculations and feedback from our clients have shown that this report gives you
1000% to 2000% return of your investment. The detailed estimate costs are:
Built Area in Square Feet Price of our report Saving Potential
Up to 2000 sq.ft. Rs. 2.50 per square feet
Report will help you save
from Rs. 25 to Rs. 50 per
Square Feet
From 2001 sq.ft to 5000 Sq.
Ft .
Rs. 2.25 per square feet.
From 5001 sq.ft to 10,000
Sq. Ft .
Rs. 1.75 per square feet
From 10,001 Sq. Ft
onwards.
Rs. 1.25 per square feet.
What do we do need from you to prepare this report?
We will need architectural plan and other drawings that your architect had provided you
have for your home. We review the quantity that is required from each item and then
research the rates from your area.
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Sample Detailed Cost Estimate
1) Cost Analysis
Total Area 3214 sq.ft
Total Cost Rs.3170162 (Rupees Thirty One lack
Seventy Thousand One Hundred and
sixty Two)
Cost Per Sq.ft (total Area/ Total cost) Rs. 987 (Rupees Nine Hundred Eighty
seven Sq. ft
2) Specifications chosen by you
Question: What type of flooring are you planning to use in all the rooms?
Your Reply: Either vitrified tile or Granite not exceeding RS 100 per square
fee (including laying cost)
Question: Which type of frames is being used for doors and windows?
Your Reply: The main entrance door frame and shutters would be teak. All
other frames are pad auk wood
Question: Which type of shutters and wood is being used for doors and
windows? Would it be deodar wood, hillock wood, teak wood
etc.
Your Reply: Windows will have tinted glass shutters
Question: What material are you planning to use on Bathroom and Kitchen
Walls?
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Your Reply: Normal good quality Sanitary ware.
Question: What type of finishing will be used for Exterior walls?
Your Reply: I'll use good quality exterior paint.
3) Detail of Material (Required for the whole project)
Stage wise material will help you procure the raw material properly. A lot of times,
the building owner do not keep track of the material used in their construction and the
labor uses this lack of information to either use sub standard material or use less than
the specified quantity.
Sr. no Material Quantity Unit
1 Cement 1250 Bags
2 Sand 3600 C ft
3 Bazari Or Stone Chipping 12 to 20 mm
gauge
3200 C ft
4 Stone Blast/ Brick blast 1000 C ft
5 Brick 50400 No. s
6 Bitumen 200 Kg
7 Polythene sheet 1600 S ft
8 MS Steel bars of different diameter 10896 Kg
9 Ceramic tiles 866 S ft
10 Vitrified tiles 3200 S ft
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11 Granite 52 S ft
To know more about purchasing tips of Cement and Bricks click or copy the link
below:
http://www.gharexpert.com/articles/Start-Construction-1460/Purchasing-Guidelines-
Cement-Bricks-_0.aspx
C ft=Cubic Feet
4) Detail of Material (Stage Wise)
Foundation
Sr. no Material Quantity Unit
1 Cement 180 Bags
2 Sand 650 C. ft
3 Bazari or Stone Chippings 12 to 20 mm
gauge
550 C ft
4 Stone Blast / Brick Blast 350 C ft
5 Bricks 8000 No. s
6 Bitumen 250 C ft
7 Polythene sheet 250 C ft
8 MS steel bars of different diameter 1719 Kg
9 Ceramic tiles -- --
10 Vitrified tiles -- --
11 Granite -- --
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Ground Floor
Sr. .no Material Quantity Unit
1 Cement 570 Bags
2 Sand 1650 C. ft
3 Bazari or Stone Chippings 12 to 20 mm gauge 1400 C ft
4 Stone Blast / Brick Blast 350 C ft
5 Bricks 22400 No. s
6 Bitumen -- --
7 Polythene sheet -- --
8 MS steel bars of different diameter 4837 Kg
9 Ceramic tiles 436 S ft
10 Vitrified tiles 1764 S ft
11 Granite 28 S ft
First Floor
Sr. .no Material Quantity Unit
1 Cement 500 Bags
2 Sand 1350 C. ft
3 Bazari or Stone Chippings 12 to 20 mm gauge 1250 C ft
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4 Stone Blast / Brick Blast 300 C ft
5 Bricks 20000 No. s
6 Bitumen 175 --
7 Polythene sheet 1350 --
8 MS steel bars of different diameter 4340 Kg
9 Ceramic tiles 430 S ft
10 Vitrified tiles 1436 S ft
11 Granite 24 S ft
5) Abstract of Cost
Abstract of cost is used for the planning purposes. From the abstract of cost, we will
get stage wise and item wise expenditure. With the help of this we can control the
expenditure item wise and stage wise and also in better position to deal with
contractor & supplier.
Sr.
no
Description Quantity Unit Rate Amou
nt
1 Earth work in excavation in foundation of
columns walls including dressing the side
and ramming the bottom up to 5' lift
2124 C ft 3 6372
2 Earth filling with earth available at site
from excavation around columns footings,
plinth beam and masonry in layers
2124 C ft 1 2124
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including watering and compacting.
3 Earth filling under floor with earth
brought from out side including carriage
of earth, loading, un loading watering and
compacting the same. at site around
columns footings , plinth beam and
masonry.
3275 C ft 4 13100
4 Supplying and laying sand filling in
foundation of footing under PCC
827.6 C ft 50 41380
5 Pc c 1:5:10 with granite stone aggregate
of 40mm and down size mechanically
mixed and vibrated including laying
compacting as per requirement.
366 C ft 70 25648
6 Cement concrete 1:1.5:3 with stone
chipping or bazri 12 mm to 20 mm gauze
in foundation of columns footings, plinth
beam etc including centering and
shuttering but excluding steel re-
enforcement mechanically mixed and
vibrated complete in position as per
specification.
573 C ft 140 80220
6) Detail of Quantities
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Abstract or detail of quantities provides us quantities required to complete the
construction. With the help of this we are able to know the quantities of each item
stage wise, unit wise and this will help in doing agreement, procurement of raw
materials according to need. Save wastage in materials, labor. And timely
Construction.
Sr.
no
Particulars No
.s
L
(Length)
B
(Width)
H
(Height)
Q(Quantity) Unit
1
Earth work in
excavation in
foundation of
columns walls
including
dressing the side
and ramming the
bottom up to7'
lift
Columns
footings
Footing I 4 4 4 5 320 C ft.
Footing II 8 4 4 5 640 C ft.
Footing IV 4 4 5 5 400 C ft.
Plinth beam 2 40 1.5 1.5 180 C ft.
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bed1,2 and toilet
vertical
Plinth beam
bed1,2 and toilet
internal
4 12.5 1.5 1.5 112.5 C ft.
Plinth beam
toilet internal1 8.5 1.5 1.5 19.13 Cf t.
Plinth beam
toilet internal
1 10.33 1.5 1.5 23.24 C ft.
Plinth beam
right side
1 52 1.5 1.5 117 C ft.
Plinth beam
living, study,
and kitchen.
3 21.5 1.5 1.5 145.1 C ft.
Plinth beam
kitchen.1 14 1.5 1.5 31.5 C ft.
Plinth beam
kitchen.
1 11.25 1.5 1.5 25.31 C ft.
Plinth beam
living
1 13.25 1.5 1.5 29.81 C ft.
Total 2124 C ft
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Techniques of Cost control
Techniques for ensuring cost control include the following:
i. System of budgetary control;
ii. Standard costing and variance analysis;
iii. Control on purchase, handling and investment in materials;
iv. Control on labour cost including labour time, productivity and remuneration ;
v. Control on production, office and selling overheads;
Definition of Budgeting:
A budget may be defined as a comprehensive and coordinated plan of action,
expressed in monetary terms. It is prepared and approved prior to the budget
period and may show income, expenditure and capital to be employed to attain the
objective.
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Techniques of Cost Reduction
Techniques of cost reduction are similar to those used for cost control. These are;
i. Budgetary control,
ii. Standard costing,
iii. Control on material cost,
iv. Control on labour cost,
v. Control on overheads,
vi. Standardization of product,
vii. Product simplification,
viii. Production scheduling,
ix. Product designing
x. Engineering improvements,
xi. Technological up gradation,
xii. Production research,
xiii. Market research operation research,
xiv. Improvement in plant layout,
xv. Value analysis,
xvi. Cost benefit studies,
xvii. Contribution analysis,
xviii. Quality measurement and research,
xix. Job evaluation and rating,
xx. Work studies.
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Project Work Undertaken
Cost Control and Cost Reduction
A study on Cost Control and Cost Reduction with Special reference to “Shaikh &
Associates Tax Consultants & Certified Auditor.”
“Shaikh & Associates Tax Consultants & Certified Auditor.” It help in Tax
Consultants to the people and Company’s
The Office of “Shaikh & Associates Tax Consultants & Certified Auditor.” Is located in
Asha Complex 414 new mangalwar peth Pune 411011.
H. K. Builder
H.K. Garden is the First project done by H.K. Builder in Pune. Mitha Nagar Sr. No 42
Kondwa Pune – 48. Basically H.K. Builder is from Mumbai. From Last 3 to 4 Year he is
in Pune. There is 4 to 5 Site Under construction in Pune of H.K.Builder.
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Analysis and Interpretation of data
Q1. What type of flooring are you planning to use in all the rooms?
Answer: - Either vitrified tile or Granite not exceeding RS 100 per square fee (including
laying cost)
Types of flooring Answers
Granite Yes
laminated wooden flooring No
vitrified Maybe
Granite Tiles are strong and good looking tiles and it fit in the budget. (Rs.100 per.sq.ft)
48
4
48
Granite Tiles laminated wooden
flooring
Vitrified Tiles
Types of flooring
Types of flooring
type of flooring
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Laminated wooden flooring is awesome but they are very costly. . (Rs.350 Per.sq.ft)
Vitrified tiles are good tile and can fit in budget. (Rs.60 per.sq.ft)
Q2. Which type of frames is being used for doors and windows?
Answer: - The main entrance door frame and shutters would be teak wood. All
Other frames are pad auk wood.
Type of Door Answers
Teak Wood Doors Yes
Maple wood door As per request
Sandal wood As per request
Teak Wood Doors is nice and commly use door is cost Rs 3000 each.
0%
10%
20%
30%
40%
50%
60%
Teak Wood Doors Pak auk Doors Sandal wood
Requirement of types of Doors
Requirement of types of Doors
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Maple wood door are imported door they are Costly. (Rs.10000 each)
Sandal wood Door is very costly then any other door in the whole world.
Sandal wood cost Rs.6000 per Kg. The door weight is 40 Kg.
That means Rs 240000
Q3. Which type of Safety Wood is being used for doors?
Answer: - Iron Safety Door or Wooden Safety Door
Types of safety Door Answer
Iron Safety Door As per request
Wooden Safety Door As per request
Iron Safety Door is most costly but strong. (Rs.13,000 each)
Wooden Safety Door is stylesh and cost Rs 7,000 each.
0%
10%
20%
30%
40%
50%
60%
70%
Iron Safety Door Wooden Safety Door
As per Requirement Shutter Doors
As per Requirement Shutter
Doors
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Suggestion & Conclusions
Better Technique should be use to decrease the time.
Gas Pipe line should be given in every flat.
CC TV Camera should install in every building and every floor.
The builder is using old techniques to build the building so he should use new
techniques that decrease the time to make building.
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Bibliography
Introduction
http://www.bigrefinance.com/
Meaning & Definition
From Pragati page 1.1
Objectives of the Study
http://www.managementparadise.com/forums/final-100-mark-project/175617-
cost-control-cost-reduction.html
Ppt of
23.2.2 Scope of cost reduction
Book: - principles and practice of cost accounting
Third edition by Asish K. Bhattacharyya
Chapter no: 23 cost reduction and productivity
Page 1041
Techniques of Cost control
Book cost Accounting for P.E.II (C.A.), NEW Syllabus
By D.K.MITTAL
Chapter 19: cost control and Cost reduction
Page: 808
Techniques of Cost Reduction
Book cost Accounting for P.E.II (C.A.), NEW Syllabus
By D.K.MITTAL
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Chapter 19: cost control and Cost reduction
Page: 814
Definition of Cost Control
Book: - cost Accounting for P.E.II (C.A.), NEW Syllabus
By D.K.MITTAL
Chapter 19: cost control and Cost reduction
Page: 807
Definition of cost Reduction
Book: - Management Accounting
By Prof. A.P.Rao
Chapter: - 15 Cost Control and Cost reduction
Page: - 412
Distinction between Cost Control and cost reduction
Book: - cost Accounting for P.E.II (C.A.), NEW Syllabus
By D.K.MITTAL
Chapter 19: cost control and Cost reduction
Page: 810