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Cost Reduction

Programme
 Cost reduction programme is geared in to
action to meet the situation & improve the
position.

 It may be short term Or Long term

 Long range: It arise due to huge capital


expenditure designed toward a continual
reduction in cost
Short range Programes:
 A temporary fall in profit.
 An impending unfavorable competitive Situation
 Adverse cost variance .

Approaches:
 Crash Programmes.
 Planned Programmes
Essential Of Cost Reduction
Programmes
 A cost reduction programme must be appropriate to the
organization.

 A cost reduction should not be taken as one time activity.

 Cost reduction should be real &permanent reduction in cost.


 The success of cost reduction programme dependes upon the co-
operation of all.
 A Cost Reduction programme should not take
consideration only cost but it also consider other
factors.

 There should not be double counting of cost reduction


measures.

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