{"id":999964228,"date":"2023-08-18T16:43:03","date_gmt":"2023-08-18T09:43:03","guid":{"rendered":"https:\/\/bizzi.vn\/?p=999964228"},"modified":"2026-10-12T16:37:24","modified_gmt":"2026-10-12T09:37:24","slug":"what-is-cost-control-definition-strategic-method","status":"publish","type":"post","link":"https:\/\/bizzi.vn\/en\/what-is-cost-control-definition-strategic-method\/","title":{"rendered":"What is cost control? The process and how to evaluate its effectiveness."},"content":{"rendered":"<article class=\"bizzi-template-page bizzi-cost-control-guide\">\n<p>Cost control helps businesses identify which expenses are deviating from the plan, why, and what adjustments are needed. A good system tracks resource utilization efficiency, output quality, and the accountability of those making spending decisions.<\/p>\n<div class=\"bizzi-answer-box\">\n<p><strong>What is cost control?<\/strong> Cost control is the process of setting goals and budgets, recording actual costs, analyzing discrepancies, and then implementing and evaluating corrective actions. Costs should be compared within the same period, scope, and level of activity.<\/p><div id=\"ez-toc-container\" class=\"ez-toc-v2_0_85 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Index<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewbox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewbox=\"0 0 24 24\" version=\"1.2\" baseprofile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/bizzi.vn\/en\/what-is-cost-control-definition-strategic-method\/#Kiem_soat_chi_phi_khac_cat_giam_va_quan_tri_chi_phi_the_nao\" >How does cost control differ from cost reduction and cost management?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/bizzi.vn\/en\/what-is-cost-control-definition-strategic-method\/#Doanh_nghiep_nhan_duoc_gi_khi_kiem_soat_dung\" >What benefits do businesses receive from proper control?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/bizzi.vn\/en\/what-is-cost-control-definition-strategic-method\/#Can_chuan_hoa_du_lieu_nao_truoc_khi_kiem_soat_chi_phi\" >What data needs to be standardized before implementing cost control?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/bizzi.vn\/en\/what-is-cost-control-definition-strategic-method\/#Phan_loai_chi_phi_de_lap_ngan_sach_va_giao_trach_nhiem\" >Categorize costs for budgeting and assigning responsibilities.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/bizzi.vn\/en\/what-is-cost-control-definition-strategic-method\/#Tach_de_nghi_cam_ket_thuc_te_va_thanh_toan\" >Separate offer, commitment, fact, and payment.<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/bizzi.vn\/en\/what-is-cost-control-definition-strategic-method\/#Quy_trinh_kiem_soat_chi_phi_gom_nhung_buoc_nao\" >What steps are involved in the cost control process?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/bizzi.vn\/en\/what-is-cost-control-definition-strategic-method\/#Phan_cong_de_viec_kiem_soat_khong_chi_nam_o_ke_toan\" >Assign responsibilities so that control doesn&#039;t rest solely with the accountant.<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/bizzi.vn\/en\/what-is-cost-control-definition-strategic-method\/#Tong_chi_phi_tang_co_dong_nghia_mat_kiem_soat_khong\" >Does an increase in overall costs mean a loss of control?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/bizzi.vn\/en\/what-is-cost-control-definition-strategic-method\/#Phan_tich_chenh_lech_chi_phi_khac_ANOVA\" >Analysis of cost differences ANOVA<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/bizzi.vn\/en\/what-is-cost-control-definition-strategic-method\/#Chon_phuong_phap_kiem_soat_theo_nguyen_nhan_chi_phi\" >Choose a cost control method based on the cause of the cost.<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/bizzi.vn\/en\/what-is-cost-control-definition-strategic-method\/#Dinh_muc_chi_phi_la_cong_cu_quan_tri\" >Cost standards are a management tool.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/bizzi.vn\/en\/what-is-cost-control-definition-strategic-method\/#Thue_ngoai_va_tu_dong_hoa_can_danh_gia_chi_phi_day_du\" >Outsourcing and automation require a thorough cost assessment.<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/bizzi.vn\/en\/what-is-cost-control-definition-strategic-method\/#Uu_tien_khoan_chi_nao_ma_van_bao_dam_chat_luong\" >Which expenditures should be prioritized while still ensuring quality?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/bizzi.vn\/en\/what-is-cost-control-definition-strategic-method\/#Ton_kho_va_nha_cung_cap\" >Inventory and suppliers<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/bizzi.vn\/en\/what-is-cost-control-definition-strategic-method\/#Quy_trinh_nhan_su_va_chi_tieu_van_hanh\" >Processes, personnel, and operating expenses<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/bizzi.vn\/en\/what-is-cost-control-definition-strategic-method\/#Dieu_chinh_theo_dac_thu_nganh\" >Adapt to industry specifics.<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/bizzi.vn\/en\/what-is-cost-control-definition-strategic-method\/#Theo_doi_KPI_nao_de_biet_bien_phap_thuc_su_hieu_qua\" >Which KPIs should you track to determine if your measures are truly effective?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-18\" href=\"https:\/\/bizzi.vn\/en\/what-is-cost-control-definition-strategic-method\/#Bang_theo_doi_phai_dan_den_mot_hanh_dong\" >The tracking sheet must lead to an action.<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-19\" href=\"https:\/\/bizzi.vn\/en\/what-is-cost-control-definition-strategic-method\/#Khi_nao_can_phan_mem_va_cach_trien_khai_the_nao\" >When is software needed and how is it implemented?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-20\" href=\"https:\/\/bizzi.vn\/en\/what-is-cost-control-definition-strategic-method\/#Trien_khai_tung_pham_vi_va_kiem_tra_ket_qua\" >Implement each scope and test the results.<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-21\" href=\"https:\/\/bizzi.vn\/en\/what-is-cost-control-definition-strategic-method\/#Bizzi_co_the_ho_tro_phan_nao_cua_quy_trinh\" >What aspects of the process can Bizzi assist with?<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-22\" href=\"https:\/\/bizzi.vn\/en\/what-is-cost-control-definition-strategic-method\/#Cau_hoi_thuong_gap_ve_kiem_soat_chi_phi\" >Frequently Asked Questions about Cost Control<\/a><\/li><\/ul><\/nav><\/div>\n\n<p>Businesses can start with a major expenditure group: identify responsible parties, create a budget, control requests before spending, and periodically review the causes of overspending.<\/p>\n<\/div>\n<h2><span class=\"ez-toc-section\" id=\"Kiem_soat_chi_phi_khac_cat_giam_va_quan_tri_chi_phi_the_nao\"><\/span>How does cost control differ from cost reduction and cost management?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Cost control focuses on plan execution and addressing deviations. Cost reduction is an action that can be chosen after analysis. Cost management has a broader scope, encompassing product design, operating model selection, resource allocation, and long-term cost optimization.<\/p>\n<div class=\"table-responsive\" tabindex=\"0\" role=\"region\" aria-label=\"Distinguish between cost control, cost reduction, and cost management.\">\n<table>\n<thead>\n<tr>\n<th>Work<\/th>\n<th>The question needs to be answered.<\/th>\n<th>For example<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Cost Control<\/td>\n<td>Is it actually within budget and activity level?<\/td>\n<td>Analyze whether the increase in shipping costs is due to the number of orders or the unit price.<\/td>\n<\/tr>\n<tr>\n<td>Cut costs<\/td>\n<td>Which expenses can be reduced while still ensuring output?<\/td>\n<td>Combine deliveries while still meeting the committed deadline.<\/td>\n<\/tr>\n<tr>\n<td>Cost management<\/td>\n<td>Which cost structure is suitable for the business strategy?<\/td>\n<td>Choose between operating your own warehouse or outsourcing services, based on total cost and service capacity.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>Spending less than the budget isn&#039;t enough to conclude that management is good. The business might be delaying maintenance, experiencing staffing shortages, or declining quality. Conversely, increased overall spending as production increases could still be accompanied by improved performance. The causes and consequences of the business should be considered before making a decision.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Doanh_nghiep_nhan_duoc_gi_khi_kiem_soat_dung\"><\/span>What benefits do businesses receive from proper control?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The direct benefits include early detection of waste, protection of profit margins, and clearer resource allocation. Reliable data also helps forecast capital needs, evaluate suppliers, and identify departments requiring support. However, profitability is also influenced by revenue, selling prices, and product mix; cash flow also depends on the timing of receipts, payments, and investments.<\/p>\n<p>Therefore, cost control can support competitiveness, financial stability, and long-term growth as businesses maintain quality, operational efficiency, and necessary investments. There is no universal cost-saving rate guaranteed for all organizations.<\/p>\n<figure class=\"bizzi-figure\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/bizzi.vn\/wp-content\/uploads\/2023\/08\/Hieu-ro-kiem-soat-chi-phi-la-rat-quan-trong-trong-viec-quan-ly-to-chuc-1024x576.jpg\" alt=\"The image illustrates the analysis and management of costs in a business.\" width=\"1024\" height=\"576\" title=\"\"><figcaption>Cost control requires linking financial data to the actual operations of the business.<\/figcaption><\/figure>\n<h2><span class=\"ez-toc-section\" id=\"Can_chuan_hoa_du_lieu_nao_truoc_khi_kiem_soat_chi_phi\"><\/span>What data needs to be standardized before implementing cost control?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Before setting up alerts, identify the cost recipients, reporting periods, and classification methods. If the budget is project-based but records are only departmental, comparisons will lack basis. To standardize the cost structure, you can compare the methods used. <a href=\"https:\/\/bizzi.vn\/chi-phi-la-gi-phan-loai-quan-ly-va-toi-uu-cac-loai-chi-phi-trong-doanh-nghiep-hieu-qua\/\">Classification of costs in a business<\/a> before allocating the budget to each department.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Phan_loai_chi_phi_de_lap_ngan_sach_va_giao_trach_nhiem\"><\/span>Categorize costs for budgeting and assigning responsibilities.<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ul>\n<li><strong>Fixed and variable:<\/strong> This allows for budget adjustments based on activity levels. Fixed costs typically remain stable within a certain capacity range; when additional warehouse space or shifts are added, costs can increase progressively.<\/li>\n<li><strong>Direct and indirect:<\/strong> These classifications serve to aggregate or allocate products, orders, or services. These two classification methods are not synonymous with fixed and variable.<\/li>\n<li><strong>Controllable and uncontrollable aspects during the period:<\/strong> This helps to delegate responsibilities appropriately. Department heads can adjust consumption levels but cannot unilaterally determine electricity prices or agreed-upon rental fees.<\/li>\n<li><strong>By department, project, and category:<\/strong> This helps identify the budgetary entity and avoids a single expenditure being recorded in multiple places.<\/li>\n<\/ul>\n<p>For manufacturing businesses, cost of goods sold includes not only raw materials and direct labor; appropriately allocated overhead costs can also be a component. The specific recording method must follow the applicable accounting system. Not every expenditure should be considered an expense of the period.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Tach_de_nghi_cam_ket_thuc_te_va_thanh_toan\"><\/span>Separate offer, commitment, fact, and payment.<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Unapproved purchase requests, committed purchase orders, goods received, and payments made are different statuses. The report needs to indicate which status is included in the available budget and when the status changes.<\/p>\n<div class=\"bizzi-note\">\n<p><strong>Avoid double counting:<\/strong> Once a purchase order&#039;s invoice has been recorded, the corresponding commitment must be replaced or offset according to internal rules. Combining both the purchase order and the invoice for the same transaction will make the budget appear to have been used more than it actually was.<\/p>\n<\/div>\n<p>For example, the budget for purchasing equipment is 100 million VND, the order has been approved for 30 million VND but the goods have not yet been received. If the business includes commitments in its budget limit, the uncommitted budget is 70 million VND. When the goods are received and the actual 30 million VND is recorded, the 30 million VND from the commitment must be transferred to the actual amount; it should not be added up to 60 million VND. This is an example of budget management and does not replace accounting rules or tax conditions.<\/p>\n<p>Each data line should at least include the transaction code, purpose, department or project, budgeter, amount, period, approval status, source of documentation, and a link to the previous transaction. Forms and systems should use standardized catalog codes instead of arbitrary naming conventions.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Quy_trinh_kiem_soat_chi_phi_gom_nhung_buoc_nao\"><\/span>What steps are involved in the cost control process?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The following control mechanisms can be implemented for each expense group. The frequency of reviews, approvals, and warning thresholds should be appropriate to the scale, risk level, and transaction rate.<\/p>\n<ol class=\"bizzi-steps\">\n<li><strong>Define objectives and budget.<\/strong>\n<p>Choose the outputs you want to ensure: the number of orders delivered on time, the quality of production, or the service hours completed. Assign one person responsibility for each budget and define the amounts they have the authority to adjust.<\/p>\n<\/li>\n<li><strong>Budgeting and assumptions.<\/strong>\n<p>Clearly state the activity volume, unit price, consumption rate, fixed costs, and contingency. An approved version of the budget is required; updated forecasts should be tracked separately to avoid erasing traces of the original plan. When building a foundation, refer to the following methods. <a href=\"https:\/\/bizzi.vn\/thay-doi-cach-quan-ly-tai-chinh-voi-quan-ly-ngan-sach\/\">corporate budget management<\/a>.<\/p>\n<\/li>\n<li><strong>Verify before committing to spending.<\/strong>\n<p>The applicant is required to state their needs, budget, expected price, and deadline. The approver checks the budget limits, selects suppliers, and authorizes approval. Any unplanned expenditures require a justification, an individual&#039;s approval for exceptions, and a clear source of budget compensation.<\/p>\n<\/li>\n<li><strong>Record and compare the facts.<\/strong>\n<p>Compare the request, purchase order, goods or services received, and related documents; update the correct codes and periods. Separate items that are pending documents, not yet received, or not yet paid for, so that the report accurately reflects their status.<\/p>\n<\/li>\n<li><strong>Analyze the discrepancies and choose a course of action.<\/strong>\n<p>Compare actual performance with the budget appropriate to the level of activity. Separate the impact of quantity, price, structure, and performance; check data quality before assigning responsibility. Assign specific actions, responsible persons, and completion dates.<\/p>\n<\/li>\n<li><strong>Check the results and update the forecast.<\/strong>\n<p>Evaluate post-action costs along with quality, delivery time, and service capabilities. Update the forecast for the next period when assumptions change, record the reasons for the adjustment, and continue to monitor the unaddressed discrepancies.<\/p>\n<\/li>\n<\/ol>\n<h3><span class=\"ez-toc-section\" id=\"Phan_cong_de_viec_kiem_soat_khong_chi_nam_o_ke_toan\"><\/span>Assign responsibilities so that control doesn&#039;t rest solely with the accountant.<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>The requester is responsible for the needs and documentation; the budgeter decides on priorities and justifications for discrepancies; purchasing assesses supply conditions; accounting verifies data, documents, and recording periods; and the authorized person approves exceptions. In small businesses, one person may handle multiple tasks, but independent review of high-risk items and a signature of approval are still necessary.<\/p>\n<p>Minimum documentation includes budget and assumptions, expenditure request, approval decision, basis for purchase, receipt or acceptance documents, related documents, and action tracking sheet. Internal approvals do not automatically make an expenditure eligible for tax deduction; tax matters require separate review according to applicable regulations.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Tong_chi_phi_tang_co_dong_nghia_mat_kiem_soat_khong\"><\/span>Does an increase in overall costs mean a loss of control?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>No. Comparisons at the same level of activity are needed before drawing conclusions. Budgets adjusted for actual output help differentiate between increases due to doing more and increases due to price or consumption.<\/p>\n<p>Let&#039;s assume we only consider one group of variable costs, with a standard cost of 100,000 VND per product. The production plan is 1,000 products; the actual production is 1,200 products with an average cost of 95,000 VND. Assume the products are equivalent in quality and fixed costs are not considered.<\/p>\n<div class=\"table-responsive\" tabindex=\"0\" role=\"region\" aria-label=\"For example, comparing costs per unit of output.\">\n<table>\n<thead>\n<tr>\n<th>Target<\/th>\n<th>Plan<\/th>\n<th>Actual\/Comparative level<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Output<\/td>\n<td>1,000 products<\/td>\n<td>1,200 products<\/td>\n<\/tr>\n<tr>\n<td>Cost per product<\/td>\n<td>100,000 VND<\/td>\n<td>95,000 VND<\/td>\n<\/tr>\n<tr>\n<td>Total cost<\/td>\n<td>100 million VND<\/td>\n<td>114 million VND<\/td>\n<\/tr>\n<tr>\n<td>Budget based on actual output<\/td>\n<td>\u2014<\/td>\n<td>1,200 \u00d7 100,000 = 120 million VND<\/td>\n<\/tr>\n<tr>\n<td>Difference in output<\/td>\n<td>\u2014<\/td>\n<td>114 \u2212 120 = \u22126 million VND<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>Compared to the initial budget, total expenditure increased by 14 million VND. However, when comparing the same output, costs were 6 million VND lower, and the average unit price decreased by 5%. It is not yet possible to conclude that this difference constitutes a sustainable benefit if the defect rate, warranty costs, or delayed deliveries increase.<\/p>\n<figure class=\"bizzi-figure\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/bizzi.vn\/wp-content\/uploads\/2023\/08\/cost-volume-example.jpg\" alt=\"For example: the plan was 100 million, but the actual cost was 114 million; for the same 1,200 products, the budget was 120 million and the actual cost was 6 million less.\" width=\"1024\" height=\"1536\" title=\"\"><figcaption>This illustrates how to compare costs at the same output level. The data is hypothetical, considering only variable costs.<\/figcaption><\/figure>\n<p>With both fixed and variable costs, the simple model is: <strong>Adjusted budget = fixed costs within appropriate range + variable cost standard \u00d7 actual operating level.<\/strong> If there are tiered costs, multiple product types, or unusual capacity requirements, the model needs to be adjusted before use.<\/p>\n<p>This principle is explained in the document. <a href=\"https:\/\/www.accaglobal.com\/middle-east\/en\/student\/exam-support-resources\/fundamentals-exams-study-resources\/f5\/technical-articles\/budgeting1.html\" target=\"_blank\" rel=\"noopener nofollow\">ACCA&#039;s flexible budget<\/a>. This example uses hypothetical data. When applying, replace production and quotas with actual business data.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Phan_tich_chenh_lech_chi_phi_khac_ANOVA\"><\/span>Analysis of cost differences ANOVA<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>In budget control, variance analysis compares expected and actual figures and identifies causes based on price, quantity, productivity, or range. ANOVA is a statistical technique for testing for differences between data groups; it is not an alternative name for the budget comparison step.<\/p>\n<p>For example, increased raw material costs could be due to higher purchase prices, increased consumption, increased production, or changes in product mix. The total difference is just the starting point. Managers need to check the quantity purchased, the quantity used, losses, and quality before choosing a course of action.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Chon_phuong_phap_kiem_soat_theo_nguyen_nhan_chi_phi\"><\/span>Choose a cost control method based on the cause of the cost.<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Budgeting, cost accounting, and cost management address different questions. Choose the right tool based on the specific problem, available data, and controllable operating costs.<\/p>\n<div class=\"table-responsive\" tabindex=\"0\" role=\"region\" aria-label=\"Choosing a cost control method\">\n<table>\n<thead>\n<tr>\n<th>Problem<\/th>\n<th>Appropriate method<\/th>\n<th>Terms and limitations<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>I don&#039;t know who decides on the expenditure.<\/td>\n<td>Owner-led budgeting, limits, and pre-approval.<\/td>\n<td>We need approval permissions and exception handling; avoid having every small transaction go through too many levels.<\/td>\n<\/tr>\n<tr>\n<td>Consumption varies between shifts or products.<\/td>\n<td>Cost estimation and variance analysis<\/td>\n<td>Standards must reflect reasonable conditions; they should be updated when technology or inputs change.<\/td>\n<\/tr>\n<tr>\n<td>It&#039;s difficult to know which products use the most shared resources.<\/td>\n<td>Cost accounting, allocation by matching factor or ABC.<\/td>\n<td>Operational data is needed; the accuracy must be commensurate with the effort put into collecting it.<\/td>\n<\/tr>\n<tr>\n<td>Low purchase price but expensive to operate.<\/td>\n<td>Compare total cost of ownership.<\/td>\n<td>Calculate shipping, maintenance, faults, downtime, and switching costs within the same scope.<\/td>\n<\/tr>\n<tr>\n<td>The project is prolonged, costs are increasing, and the amount of work completed remains unclear.<\/td>\n<td>Earned Value Management (EVM)<\/td>\n<td>A reliable baseline and method for measuring completed work volume are needed; do not apply mechanically to recurring expenditures.<\/td>\n<\/tr>\n<tr>\n<td>Many small, repetitive tasks or redundant operations.<\/td>\n<td>Continuous improvement, standardization, and small-scale testing.<\/td>\n<td>Measure time, cost, and failure before\/after; do not extrapolate test results to the entire system immediately.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<h3><span class=\"ez-toc-section\" id=\"Dinh_muc_chi_phi_la_cong_cu_quan_tri\"><\/span>Cost standards are a management tool.<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Standard costing uses projected costs for a unit or activity to plan and analyze variances. It&#039;s a management method, not a separate &quot;cost accounting standard.&quot; Setting standards too low can create pressure to compromise quality; setting standards too high can mask waste.<\/p>\n<p>Cost accounting provides data for aggregation and allocation, while budget control uses that data to make decisions. When building a system, the cost calculation method should be compared with the company&#039;s accounting system. IFRS&#039; IAS 2 is a reference source for inventory cost components and does not replace Vietnamese accounting regulations.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Thue_ngoai_va_tu_dong_hoa_can_danh_gia_chi_phi_day_du\"><\/span>Outsourcing and automation require a thorough cost assessment.<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Outsourcing can reduce the need for investment or leverage expertise. But the decision needs to consider service costs, contract management, transitions, quality control, security, and vendor dependencies. Compare similar volumes, service levels, and deadlines instead of just looking at quotes.<\/p>\n<p>Automation is suitable for repetitive tasks and standardized data. If the input is incorrect, the system can process errors more quickly. Human review of exceptions, change logs, and handling procedures are needed when integrations or data disruptions occur.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Uu_tien_khoan_chi_nao_ma_van_bao_dam_chat_luong\"><\/span>Which expenditures should be prioritized while still ensuring quality?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Start with significant expenditures that are subject to unusual fluctuations or are subject to adjustment during the period. Prioritize eliminating non-value-adding work, duplicate transactions, and errors requiring rework before cutting resources for core operations.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Ton_kho_va_nha_cung_cap\"><\/span>Inventory and suppliers<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Regarding inventory, check for slow-moving goods, losses, storage conditions, and required stock levels. Excessively drastic inventory reduction can lead to shortages, emergency purchasing, or production stoppages. Stock levels should consider supply lead times and demand volatility.<\/p>\n<p>With suppliers, evaluate purchase price along with quality, on-time delivery, shipping, and payment terms. Negotiating prices or consolidating orders can be helpful, but consider the risks of dependence and over-ordering. Changes in payment terms affect cash flow and do not automatically reduce recognized expenses.<\/p>\n<figure class=\"bizzi-figure\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/bizzi.vn\/wp-content\/uploads\/2023\/08\/Quan-ly-hang-ton-kho-la-chien-luoc-kiem-soat-chi-phi-1024x576.webp\" alt=\"Illustrative image of inventory management in a cost control strategy.\" width=\"1024\" height=\"576\" title=\"\"><figcaption>Inventory management requires balancing working capital with the ability to meet demand.<\/figcaption><\/figure>\n<h3><span class=\"ez-toc-section\" id=\"Quy_trinh_nhan_su_va_chi_tieu_van_hanh\"><\/span>Processes, personnel, and operating expenses<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>Review duplicate data entry, unnecessary approvals, rework due to incorrect information, and services no longer in use. When adjusting staffing, assess service capacity, workload, training time, and re-recruitment costs. Cutting training or maintenance may reduce costs this period but increase risks in the next.<\/p>\n<p>Costs for electricity, water, technology, and office space should be tracked by usage: operating hours, number of people, transaction volume, or capacity. Reduced consumption needs to be verified with before\/after data and under the same operating conditions; new technology or green solutions should not be assumed to always be cheaper.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Dieu_chinh_theo_dac_thu_nganh\"><\/span>Adapt to industry specifics.<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<div class=\"table-responsive\" tabindex=\"0\" role=\"region\" aria-label=\"Cost control points by industry\">\n<table>\n<thead>\n<tr>\n<th>Work<\/th>\n<th>Checkpoint<\/th>\n<th>Output needs protection<\/th>\n<\/tr>\n<\/thead>\n<tbody>\n<tr>\n<td>Manufacture<\/td>\n<td>Material consumption, waste, machine time, and energy.<\/td>\n<td>Quality, safety, and ability to fulfill orders.<\/td>\n<\/tr>\n<tr>\n<td>Healthcare and Hospitality<\/td>\n<td>Sources of materials, usage history, manpower according to needs, and procurement.<\/td>\n<td>User safety, quality of care, or service.<\/td>\n<\/tr>\n<tr>\n<td>Retail<\/td>\n<td>Inventory, losses, store operations, and promotions.<\/td>\n<td>Supply capacity and customer experience.<\/td>\n<\/tr>\n<tr>\n<td>Build<\/td>\n<td>Acceptance volume, scope changes, materials, and contractors.<\/td>\n<td>Construction progress, quality, and safety.<\/td>\n<\/tr>\n<tr>\n<td>Technology and professional services<\/td>\n<td>Working hours, infrastructure usage, subscriptions, and job rework.<\/td>\n<td>Reliability, security, and professional quality.<\/td>\n<\/tr>\n<tr>\n<td>Transportation and logistics<\/td>\n<td>Route, payload, fuel, maintenance, and redelivery costs.<\/td>\n<td>On-time delivery, ensuring the safety of both the vehicle and the goods.<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<\/div>\n<p>The points above are guidelines for review, not industry standards or mandatory targets. Comparisons between units should only be made when the scope, quality, and calculation methods are equivalent. Selling prices can improve profit margins, but the impact on demand and competitiveness needs to be analyzed separately.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Theo_doi_KPI_nao_de_biet_bien_phap_thuc_su_hieu_qua\"><\/span>Which KPIs should you track to determine if your measures are truly effective?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>It is advisable to use a group of financial indicators along with quality and operational indicators. Each indicator needs a responsible person, data source, formula, and reporting frequency.<\/p>\n<ul>\n<li><strong>Budget difference:<\/strong> In reality, budget deductions should be appropriate to the level of activity. The sign convention must be clearly indicated; with expenses, a positive number usually indicates an overspending, but the cause needs to be analyzed.<\/li>\n<li><strong>Cost per unit:<\/strong> The cost of the same range divided by the equivalent number of output units. Track the same defect or return rates to avoid reducing costs by compromising quality.<\/li>\n<li><strong>Gross profit margin:<\/strong> (Net revenue - Cost of goods sold) \/ Net revenue \u00d7 100%, when net revenue is not equal to 0. Variations may arise from selling price, product mix, or cost of goods sold.<\/li>\n<li><strong>Operating expense ratio:<\/strong> Operating costs are calculated based on a unified range \/ revenue for the same period. Seasonality, growth investments, and the classification between periods should be considered.<\/li>\n<li><strong>Quality control:<\/strong> The report includes the rate of requests with missing documents, approval time, number of overdue exceptions, on-time delivery rate, and rework costs.<\/li>\n<\/ul>\n<p>ROI is appropriate when evaluating a specific investment or project, with clear net benefits, total costs, and timelines. Do not use a vague ROI figure to replace regular expense reporting.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Bang_theo_doi_phai_dan_den_mot_hanh_dong\"><\/span>The tracking sheet must lead to an action.<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>A concise report should include the original budget, actual activity level, adjusted budget, actual costs, difference, cause, action, responsible person, and deadline. Don&#039;t just mark the excess in red and carry it over to the next period. For general administrative expenses, <a href=\"https:\/\/bizzi.vn\/mau-bao-cao-chi-phi-quan-ly-doanh-nghiep\/\">business management cost report template<\/a> This can help organize data by category; add causes, budgetary sources, and processing deadlines to reports that support decision-making.<\/p>\n<p>For example, the cost per delivery increases along with an increase in the redelivery rate. Appropriate action might be to check address data and confirm delivery schedules, rather than requesting fuel reductions for all routes. After the change, both the cost per delivery and the successful delivery rate need to be re-measured.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Khi_nao_can_phan_mem_va_cach_trien_khai_the_nao\"><\/span>When is software needed and how is it implemented?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>Spreadsheets may be suitable when transactions are infrequent, there are few participants, and data is consistently reconciled. Software is worth considering when multiple departments share a budget, approvals are difficult to trace, duplicate transactions or delayed reporting cause businesses to miss crucial processing times.<\/p>\n<p>Review the system&#039;s capabilities for managing categories, limits, approval permissions, transaction status, document reconciliation, discrepancy reporting, and change history. For ERP systems, clarify which system is the primary data source and how the code is synchronized; for cloud or AI systems, assess access rights, data quality, security, costs, and exception handlers.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Trien_khai_tung_pham_vi_va_kiem_tra_ket_qua\"><\/span>Implement each scope and test the results.<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<ol>\n<li>Select a department or group of expenses with a clear problem; record background data on processing times, discrepancies, and missing records.<\/li>\n<li>Standardize the catalog, approvers, and commitment\/actualization rules; review transaction templates from proposal to report.<\/li>\n<li>Conduct trial runs along with reconciliation procedures, exception handling, and user training; check balances before scaling up.<\/li>\n<li>Evaluate the results, quality, total operating costs, and user acceptance; make adjustments before scaling up.<\/li>\n<\/ol>\n<p>Fragmented data, inconsistent categories, slow updates, and unclear responsibilities are common obstacles. The solution needs to start with the process and the person responsible; adding a dashboard won&#039;t automatically solve these problems.<\/p>\n<h3><span class=\"ez-toc-section\" id=\"Bizzi_co_the_ho_tro_phan_nao_cua_quy_trinh\"><\/span>What aspects of the process can Bizzi assist with?<span class=\"ez-toc-section-end\"><\/span><\/h3>\n<p>For businesses needing to manage expense requests, limits, and reporting by department, they can explore options. <a href=\"https:\/\/bizzi.vn\/quan-ly-chi-phi\/\">Bizzi cost management solution<\/a>. The solution supports the process of creating and approving requests according to policy, tracking spending against budget, reconciliation, and reporting. This is suitable when businesses need to link spending requests from multiple departments with limits, approvers, and actual expenditures. Analyzing production standards, output quality, and the causes of discrepancies still requires business data and a responsible person.<\/p>\n<p>When evaluating, a real-world scenario should be presented to test the version, configuration, supported transaction types, and integration scope. It should not be assumed that all expenses are automatically recorded or that the use of the software guarantees tax compliance.<\/p>\n<figure class=\"bizzi-figure\"><img loading=\"lazy\" decoding=\"async\" src=\"https:\/\/bizzi.vn\/wp-content\/uploads\/2024\/11\/bizzi-expense-quan-ly-chi-phi-toan-dien.jpg\" alt=\"Illustration of Bizzi Expense with app icon\" width=\"1920\" height=\"1080\" title=\"\"><figcaption>Bizzi Expense \u2014 business expense management. Product illustration.<\/figcaption><\/figure>\n<div class=\"bizzi-cta\">\n<p><strong>Want to test processes using your company&#039;s data?<\/strong> Prepare a spending group, budget item, and exception review scenario to discuss appropriate scope.<\/p>\n<p><a class=\"bizzi-button\" href=\"https:\/\/bizzi.vn\/dang-ky-dung-thu\/\">Register for a chat with Bizzi<\/a><\/div>\n<h2><span class=\"ez-toc-section\" id=\"Cau_hoi_thuong_gap_ve_kiem_soat_chi_phi\"><\/span>Frequently Asked Questions about Cost Control<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<div class=\"bizzi-faq\">\n<details>\n<summary>Where should small businesses begin?<\/summary>\n<p>Select a large or highly variable expenditure group, assign a budget, agree on a spending category, and approve it before spending. Track the actual situation, causes, and actions using a simple table; expand once the data has stabilized.<\/p>\n<\/details>\n<details>\n<summary>Is it always a good thing to spend less than the budget?<\/summary>\n<p>No. The quantity, quality, delayed expenditures, and reasonableness of the budget need to be examined. Savings from doing less or skipping maintenance are different from improvements in performance.<\/p>\n<\/details>\n<details>\n<summary>How often should we review expenses?<\/summary>\n<p>High-risk or rapidly emerging issues require regular monitoring; management reports may be weekly or monthly depending on operations. There is no single schedule that suits all businesses. Review deadlines need to be early enough to allow for adjustments.<\/p>\n<\/details>\n<details>\n<summary>Do I need invoices and approvals to qualify as a deductible expense?<\/summary>\n<p>It&#039;s impossible to draw conclusions based solely on those two factors. Internal control, accounting records, and tax conditions are separate areas. Accountants need to examine records and applicable regulations for each specific item.<\/p>\n<\/details>\n<\/div>\n<p>Start with a spending group that has reliable data: assign responsibility, budget, and track actual performance. When discrepancies arise, identify the cause, choose action, and review both costs and output quality.<\/p>\n<\/article>\n<\/p>","protected":false},"excerpt":{"rendered":"<p>Cost control helps businesses identify which expenses are deviating from the plan, why, and what adjustments are needed. A system\u2026<\/p>","protected":false},"author":37,"featured_media":999964229,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","inline_featured_image":false,"footnotes":""},"categories":[76,85],"tags":[],"class_list":["post-999964228","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-goc-nhin-cfo","category-kiem-soat"],"acf":[],"_links":{"self":[{"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/posts\/999964228","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/users\/37"}],"replies":[{"embeddable":true,"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/comments?post=999964228"}],"version-history":[{"count":3,"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/posts\/999964228\/revisions"}],"predecessor-version":[{"id":999982830,"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/posts\/999964228\/revisions\/999982830"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/media\/999964229"}],"wp:attachment":[{"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/media?parent=999964228"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/categories?post=999964228"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bizzi.vn\/en\/wp-json\/wp\/v2\/tags?post=999964228"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}