Cost reduction strategies
finance
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Basic contribution of accounts and finance to cost reduction strategies is to provide
datas for variances for material price , material consumptions , labour variations , cost of
production .
Major activity related to cost accountings are
Budgeting
Budgeting is prime function of accounts and finance in which cost are allocated for one
financial year and then performance are measured against fixed budget .
Negative variances are then highlighted in monthly reviews , Corrections can made for
these variances .
Costing
Prepare or calculate price for product taking into all cost involved in production , labour ,
energy ie fixed and variable cost and other overheads .
prices are increased or lowered by doing costing of product.
In earlier days of accounts operation it used to have cashier and salary disbursement
clerks ,these are now obselete as arrangement can be made with banks for disbursement
of salaries .This has resulted in increase in efficeincy and lower manpower in accounts .