Essay On Cost Saving Methods

BASIC DIFFERENCE IN PRACTICAL & THEORETICAL COST SAVING METHODS

COST is “the price paid or required for acquiring, producing or maintaining something, usually measured in money, time, or energy”. “It is an expense or expenditure” -reverso.net-

COST SAVING is a cost reduction that can be specifically identified and will be made to a budget or program, resulting from implementing a specific alternative in lieu of continuing the present system.”

There are relatively a lot of business strategies available to support and decrease costs in the corporate world. Some of these are streamlining of the manufacturing methods, increasing the cash flow and searching for discounted purchases.

Effective cost saving strategies can be useful in

Additionally, other cost saving methods can be lease of office equipment, purchasing reconditioned devices instead of new ones, and learning to negotiate effectively with stakeholders such as suppliers and vendors of material and equipment, Cutting traditional advertising costs and opting for social media advertising, employer branding through its employees and CSR projects and reviewing all expenses including the little ones. In planning a Cost Saving Strategy, Companies must evaluate the types of Costs. These include Fixed Costs, Variable Costs, Direct Costs, Indirect Costs, and Operating Costs. Fixed cost- A fixed cost is a cost that does not change with an increase or decrease in the amount of goods or services produced. These are expenses that have to be paid by a company, independent of any business activity, thus they are standard.

Variable cost- These are costs that vary depending on a company's production volume.

Direct cost- These are materials, labor and expenses related to the production of a product. They can be traced directly to a cost object such as a product or a