On enterprise cost control

Abstract: With the gradual improvement of socialist market economy and modern enterprise system, deepening the reform of cost management has increasingly become a prominent and urgent issue. In order to survive and develop, enterprises must participate in the whole process of cost formation, control it comprehensively, and operate at a lower cost than competitors, so that enterprises can gain competitive advantage at the lowest cost, improve resource utilization efficiency and maximize profits.

Keywords: enterprise; Cost; positive control

First, the basic meaning of cost control

The so-called cost control refers to a series of preventive and adjustment measures taken by the cost control subject according to various factors and conditions that affect the cost before the production consumption occurs and during the cost control process, so as to ensure the realization of the cost management objectives. It includes six links: cost prediction, cost planning, cost control, cost accounting, cost assessment and cost analysis.

The process of cost control is a process of calculating, adjusting and supervising all kinds of expenses in the process of production and operation by using the principle of system engineering, and it is also a process of finding weak links, tapping internal potential and finding all possible ways to reduce costs. Scientifically organizing and implementing cost control can promote enterprises to improve their management, change their operating mechanism, improve quality of enterprise in an all-round way, and enable enterprises to survive, develop and grow in a highly competitive market environment. The starting point or platform of cost control process is the basic work of cost control. Cost control does not start from the basic work, and the effect and success possibility of cost control will be greatly affected. In the process of cost control, two standard prices should be set, one is internal price, that is, internal settlement price. The second is the external price, that is, the settlement price of supply and marketing with external enterprises in the purchase and sale activities of enterprises. Standard price is the basic guarantee of cost control operation. In addition, quality is the soul of products. Without quality and lower cost, it is futile. In the market economy, the basic guarantee of enterprise operation is system and culture. System construction is fundamental, and cultural construction is a supplement. Without system construction, it is impossible to solidify the operation of cost control and ensure the quality of cost control. The most important systems in cost control are quota management system, budget management system and expense audit system.

Second, the problems that should be paid attention to in cost control

1. Cost control should comprehensively control the whole process of cost formation.

The whole process of product cost formation includes the design before the product is put into production, the determination of technology and all links in the production process. In addition, the life cycle cost of the product in use should also be considered. Cost control is to effectively control the whole process of product cost formation by combining the different nature and characteristics of each stage of production and operation.

2. Cost control requires full participation.

In order to truly achieve the purpose of cost control and give full play to the enthusiasm of all departments and employees to control and reduce costs, it is necessary to carry out political and ideological education for all employees, implement the reward and punishment system, determine the level of cost responsibility, the responsible units and their responsibilities and rights, conduct team economic accounting, and establish vertical and horizontal mass cost control organizations according to the organizational form and cost management requirements of enterprises. For all kinds of quotas, expenditure standards, cost targets and measures to reduce costs, we should widely mobilize employees to discuss them, make them our own goals, and make cost control a conscious action of the masses.

3. Cost control must be measured by the use effect in all aspects.

Cost control can not only passively limit the actual cost expenditure within the scope of the cost standard, but also undertake the task of re-examining and revising the cost standard to keep the cost standard at a positive and advanced level.

The purpose of cost control is to sum up experience and lessons.

The purpose of cost control is to better sum up the past experience and lessons, and then take more effective measures to quickly correct the shortcomings in the work, thus reducing costs and achieving greater economic benefits.

5. Cost control must have a perfect management system.

Cost control is closely related to other management methods, so we must do the corresponding basic work and other preparatory work before we can control the cost, otherwise it will become a mere formality. This requires the establishment of various consumption quotas, material unit prices, internal allocation prices and expense budget limits, the improvement of a set of original records and assessment reports, the establishment of a set of measurement tools, the implementation of comprehensive planning management, the adoption of standard cost systems, and the establishment of a reward and punishment system that combines responsibility, right and benefit. What needs to be particularly emphasized is that cost control is a systematic project, which requires all departments of the enterprise to work together and perform their duties, starting from all aspects of the production and operation of the enterprise, and all employees and the whole process participate in cost control. Therefore, each department plays an irreplaceable role in cost control.

Third, the impact of cost control objectives factor analysis

To determine the goal of cost control, we should put cost control in the relationship with business activities, management measures and strategic choices of enterprises.

The more complex economic activities are, the more complex the relationship between costs and economic activities is. These relationships can be summarized into three categories: First, costs occur because of economic activities, and reducing consumption is always the basic requirement of economic activities. The law of conservation requires people to reduce costs as much as possible in the process of achieving specific goals. Because the total cost is affected by the dynamic momentum, the basic sign of reducing the cost is to reduce the unit cost. Second, cost is the restrictive factor of economic activities. As far as specific business is concerned, business managers often don't want more cost constraints. Less cost restriction means more freedom, and the business process becomes relatively easy and relaxed. Third, the compensatory characteristics of cost determine people's different judgment standards of cost. On the premise that cost changes do not affect other indicators, people always pursue low cost and judge cost control measures by the absolute amount of cost. However, the change of cost will inevitably affect the change of other indicators. The substitution of cost composition often changes the interrelated cost composition, and the income changes with the change of cost and income. The complex relationship between cost and various factors makes the criteria for judging the level of cost vary with different horizons.

Fourth, the determination of cost control objectives.

1. Reduce costs

As long as it does not affect product quality and profit, reducing costs is always the first priority. Cost reduction can be achieved in two ways: first, under the given economic scale, technical conditions and quality standards, cost reduction can be achieved through measures such as reducing consumption, improving labor productivity and rational organization and management; The second is to change the basic conditions of cost, that is, to change the allocation of production factors, improve the level of technical equipment, adopt new technologies, new materials and new processes, and improve product structure to reduce costs.

2. Cooperate with enterprises to gain a competitive advantage.

In enterprise management, the choice and implementation of strategy is the fundamental interest of enterprises, and the need of strategy is above all else. First of all, cost control should cooperate with the strategic choices made by enterprises to gain competitive advantage, and with the needs of enterprises to implement various strategies of cost control, and guide enterprises to minimize costs within the scope permitted by enterprise strategy. The core idea of cost leadership strategy is to take cost competition as the center, use low-cost advantage to obtain higher profits than competitors in competition, or rely on low-cost to expand market share through price competition, and finally expand the profits of enterprises and establish their competitive advantages.

3. In the case of limited resources, improve the efficiency of resource utilization through cost control.

When enterprises can't get the needed economic resources without restriction, the basic function of cost control is not only to reduce costs, but also to improve the utilization efficiency of resources. Reducing the consumption of limited resources through cost control not only reduces the cost, but also can produce more products and create more value with limited economic resources, thus achieving the purpose of "saving and increasing production". To maximize the overall marginal revenue, enterprises should first maximize the marginal revenue of limited resources. At this point, the focus shifts from reducing costs to using available costs (resources). For enterprises with obvious weak links, how to improve the production efficiency of weak links and the utilization efficiency of bottleneck resources is a key concern in the process of cost control.

4. Maximize profits under the established enterprise strategic model.

Simply taking the lowest cost as the standard is easy to form misunderstandings, and exchanging cost for efficiency also has its merits. In some cases, the strategic issue is to gain other competitive advantages by increasing costs. Cost generally does not change risk, but it can change return. Increasing salary by reducing cost is only one aspect of cost control; Improving remuneration by changing the composition and scale of costs is another aspect of cost control.

References:

[1] Le Yanfen. On the reform of modern enterprise cost management [J]. Shanghai Accounting, 1999( 10).

[2] Jiao Yuehua, pastoral. On the goal of cost control [J]. Finance and Accounting, 2000(5).

[3] Ge Feiping. Renewal of cost management concept and new ideas of cost control [J]. Shanghai Accounting, 1999(7).