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

Periodic system and a perpetual system, Your manager has informed you that ...

Your manager has informed you that the company is trying to determine if it should use a periodic system or a perpetual system in accounting for the inventory. He wants you to spea

Costs and benefits of factoring, Two types of costs concerned in factoring ...

Two types of costs concerned in factoring are as: 1) The service fee or factoring commission 2) The interest on advances granted through the factor to the firm. Factoring

Determine the value of equipment at the current date, A company is preparin...

A company is preparing a value in use calculation for a factory building and the equipment used to make a particular product. It has prepared cash flows for the next five years fro

Commercial paper, The CP introduced in the Indian financial market, for the...

The CP introduced in the Indian financial market, for the recommendations of the Vaghul Committee has turn into a well-liked debt instrument of the corporate world. Commercial Pape

Mgt acc., company jobcosting system

company jobcosting system

The more competitive bid, Hornsby Manufacturing has four categories of ove...

Hornsby Manufacturing has four categories of overheads. The four categories and the expected overhead costs for each category for next year are as follows:   Maintenance  $140,000

Mr, i want to get the answer for exercises 2.1 and 2.2 on strategic and tac...

i want to get the answer for exercises 2.1 and 2.2 on strategic and tactical decisions

Illustration of optimum cash balance, M/s Sunrise Industries estimates its ...

M/s Sunrise Industries estimates its net cash requirement at Rs. 20 million for the subsequent year. Opportunity cost fund is 15 percent per annum of the Companies. The company wil

Describe financial budgets, Describe Financial budgets Financial budget...

Describe Financial budgets Financial budgets: financial budgets are concerned with cash receipts and disbursements working capital expenditure financial position and business o

Determine the creditors turnover ratio, Creditors turnover ratio ( or payab...

Creditors turnover ratio ( or payables turnover ratio) Meaning: this ratio establishes a relation ship between net credit purchases and average trade creditors. Objective

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