Determine the scope and areas of cost reduction, Managerial Accounting

Assignment Help:

Determine the Scope and areas of cost reduction

Scope and areas of cost reduction the scope of cost reduction is so wide that it is not practicable to develop fully the areas in which cost reduction may be applied. Wherever cost are incurred there is scope for their reduction in any particular area. Effort should therefore be made to reduce cost right from the top level to the shop floor level. However in the following areas scope of cost reduction is the largest:

1) Product design : the design of the product provides the greatest scope for cost reduction. Product design being the first step in production if cost reduction can be made at design stage then it is likely that the benefits can be availed to the largest:

there are two basic point that should be kept in mind while effecting cost reduction in product design:  

1) The product should perform all the functions for which it is intended and

2) The production should retain its esteem or aesthetic value this is in the case of many products which have the shape or other characteristic which pleases the eye.

2) Organization : cost reduction may also be achieved by improving factory organization in form of clear-cut lines of authority and responsibility , wall-define charnels of communication , co-ordination and co-operation between various executives , etc,

3)  Production : cost reduction program should make study of sequence of operation to fined out the best one , to used the most suitable machines for the work ,to use jigs and fixture to reduce operating time , to reduce ideal time , to reduce scrap by the use of bate quality tools , to provide better working condition conduct to efficiency , etc.

4) Administration : item under this head include saving affected by modifying the rang of cash  discounts to customers introduction mechanical and electronic aids to office routine, modifying internal and external communication system, etc.

5) Marketing : in this function costs can be reduced by revising the method of remuneration of salesmen re-arrange territorial responsibilities of sales representative modifying current methods of advertising improving product design and production quality so to reduce after sales service economizing channels of distribution improving packing etc.

6) Finance : a cost reduction programmed should aim at securing capital at economical cost employing capital to give maximum return and eliminating over and under capitalization and wasteful use of capital etc.

 

 

 


Related Discussions:- Determine the scope and areas of cost reduction

What are the advantages of ratio analysis, Advantages of ratio analysis ...

Advantages of ratio analysis 1) Helpful in financial analysis: financial analysis is easier if accounting ratios are used to analyze the different financial statement relatio

Analysis, Analysis Various business decisions have recurrent themes: wh...

Analysis Various business decisions have recurrent themes: whether to the outsource production or to the support functions, what level of production and pricing to establish, w

Comparing between real and planned outcomes , Comparing real and planned ou...

Comparing real and planned outcomes and responding to Divergences from Plan The final phases in the process outlined in figure shown below of comparing real and planned outcome

What are the advantages of cost accounting, What are the Advantages of cost...

What are the Advantages of cost accounting: 1. Cost accounting as an aid to management: cost accounting helps the management in carrying out of its functions, planning, organ

Material storage, Material storage Sophisticated mathematical models to...

Material storage Sophisticated mathematical models to control economic buying, and systems control the flow of material may all be for naught if the obvious-efficient storekeep

Explain functional classification of ratios, Explain Functional classificat...

Explain Functional classification a)  Liquidity ratio: these are the ratio which measures the short term solvency or financial position of a firm. These ratios are calculati

Differential analysis, Barker Company has a single product called a Zet. Th...

Barker Company has a single product called a Zet. The company normally produces and sells 80,000 Zets each year at a selling price of $40 per unit. The company’s unit costs at this

How much was Topaz’s operating income (income before taxes), How much was T...

How much was Topaz’s operating income (income before taxes) last year?

Bussiness.., #queThe following information pertains to Fairways Driving Ran...

#queThe following information pertains to Fairways Driving Range, Inc.: The company is considering operating a new driving range facility in Sanford, FL. In order to do so, they

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd