Cost Control


DEFINITION of 'Cost Control'

The practice of managing and/or reducing business expenses. Cost controls starts by the businesses identifying what their costs are and evaluate whether those costs are reasonable and affordable. Then, if necessary, they can look for ways to cut costs through methods such as cutting back, moving to a less expensive plan or changing service providers. The cost-control process seeks to manage expenses ranging from phone, internet and utility bills to employee payroll and outside professional services.


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BREAKING DOWN 'Cost Control'

To be profitable, companies must not only earn revenues, but also control costs. If costs are too high, profit margins will be too low, making it difficult for a company to succeed against its competitors. In the case of a public company, if costs are too high, the company's may find that its share price is depressed and that it is difficult to attract investors.

  1. Lifetime Cost

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  3. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. ...
  4. Variable Cost

    A corporate expense that varies with production output. Variable ...
  5. Direct Cost

    A price that can be completely attributed to the production of ...
  6. Encumbrance

    A claim against a property by a party that is not the owner. ...
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  1. What are the differences between operating expenses and SG&A?

    In many cases, the operating expenses of a company and the selling, general and administrative expenses, or SG&A, of ... Read Full Answer >>
  2. Do dividends affect working capital?

    Regardless of whether cash dividends are paid or accrued, a company's working capital is reduced. When cash dividends are ... Read Full Answer >>
  3. Do prepayments provide working capital?

    Prepayments, or prepaid expenses, are typically included in the current assets on a company's balance sheet, as they represent ... Read Full Answer >>
  4. Does working capital include inventory?

    A company's working capital includes inventory, and increases in inventory make working capital increase. Working capital ... Read Full Answer >>
  5. Does working capital include salaries?

    A company accrues unpaid salaries on its balance sheet as part of accounts payable, which is a current liability account, ... Read Full Answer >>
  6. What is a profit and loss (P&L) statement and why do companies publish them?

    A profit and loss (P&L) statement, or balance sheet, is essentially a snapshot of a company's financial activity for ... Read Full Answer >>

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