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CHAPTER ONE

INTRODUCTION

1.1  Background of the Study

Cost control is all knows as cost management or cost containment, which is a broad set of “cost accounting” methods and management techniques with the common goal of efficiency and improving business cost at least restricting their rate of growth. Business uses cost control methods to monitor, evaluate, and ultimate enhance the efficiency of specific areas, such as department division of product line within their operation. During the 1990s cost control initiatives received paramount attention from cooperate America , often taking the form of cooperate restructuring, diversement of peripherals activities mass layoffs, or out sourcing, cost control strategies were seen as necessary to preserve or boost cooperate profit and to maintain or to maintain or gain a competitive advantage.

According to (wheldon 1994) which states that cost control is the activities of any business enterprise which the determining factor towards the realization of set objectives. Further more, cost control provides the measurement of the degree to which its aims and objectives is attained, thus it has a definite place in the activities of any organization. Cost control technique can help a company pose good financial results and overcome difficult situations with ease, though it is not essential to be a finance experts to understand the definition of cost control, planning and actual implementing the techniques can be quite a big challenge.

In the tie of recession, many firm resort to cost control techniques such as reducing the extra facilities to the employees such as recreational facilities. The technique might also include cutting down the expenditure incurred on traveling by air and luxury hotel accommodation in order the cash flow. As a part of the cost cutting measure, few firms may postpone or cancel their plans of acquiring new companies, investing in new business and buying new machinery or system. These techniques should be utilized to save money and bring back financial strength of the company.

Cost control is used by different organization are different and are largely dependent on their business model and strength of their balance sheet. The better the implementation of

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