TABLE OF CONTENT
TITLE PAGE i
CERTIFICATION ii
DEDICATION iii
ACKNOWLEDGEMENT iv
TABLE OF CONTENTS vi
CHAPTER ONE
INTRODUCTION
1.1
BACKGROUND
TO THE STUDY 1
1.2
STATEMENT
OF THE RESEARCH PROBLEMS 3
1.3
OBJECTIVES
OF THE STUDY
4
1.4
SIGNIFICANCE
OF THE STUDY 5
1.5
RESEARCH
QUESTIONS 6
1.6
SCOPE
OF THE STUDY 7
1.7
LIMITATION
OF THE STUDY 8
1.8
PLAN
AND ORGANIZATION OF THE STUDY 9
1.9
DEFINITION
OF KEY TERMS 10
CHAPTER TWO
LITERATURE REVIEW
2.1
INTRODUTION 12
2.2
PRODUCT
COSTING 13
2.3
FLOW
OF COST 17
2.4
PRICING
DECISION 18
2.5
COST
PLUS PRICING SYSTEM 20
2.6
OBJECTIVE
OF PICING POLICY 28
2.7
PRICE
CONROL AND RATIONING 34
2.8
GENERAL
PRICING PROBLEM 35
CHAPTER THREE
RESEARCH METHODOLOGY
3.1
HISTORICAL
BACKGROUND OF P.Z LTD 37
3.2
METHOD
OF DATA COLLECTION 38
3.3
POPULATION
AND SAMPLE SIZE 39
3.4
SAMPLING
TECHNIQUES 39
3.5
METHOD
OF DATA ANALYIS 39
3.6
METHOD
OF DATA COLLECTION 40
3.7
INDUSTRY
MANUFACTURING 40
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
4.1
DISCUSSION
OF ANALYSIS 42
4.2
DISCUSSION
OF FINDINGS 49
CHAPTER FIVE
SUMMARY, CONCLUSION AND
RECOMMENDATIONS
5.1
SUMMARY 62
5.2
CONCLUSION
65
5.3
RECOMMENDATION
66
BIBLIOGRAPHY 69
CHAPTER ONE
INTRODUCTION
1.1
BACKGROUND
TO THE STUDY
The
economy which was one agriculture oriented is now largely into manufacturing
our metaphosing into a more dynamic and diversified one. In essence, since the
manufacturing industry is concerned with the production of finish goods, their
absence is no exception as catalyst for the fast transformation of the
country’s economy to manufacturing economy should be encourage for the
tremendous contribution to the growth I can be give to the country. The growth
of the costing started during the industries revolution in 1780AD and this was
applied on the manufacturing activities of the small scale and medium scale
business managed by individual shortly after, there was the need for the
manufacturing industry to know their cost analysis involved in producing a
particular goods or services to achieve the price at which the industry
(manufacturing will sell it out to the consumer, thereby applying the costing
principle necessary).
“Probably
no single marketing tool is so critical from both economy and social stand
point as price. Yet, as important as it is less is probably know about any
other single market tool”.
(Buskirle 2001). Therefore should be
a proper and effective method at arriving at actual expense should be a proper
and effective method at arriving at actual expense (Direct Material Cost,
Direct labour cost, overhead expenses and others indirect cost) on a production
produced in an industry. The industry is bound to collapse, or continue to be
run ineffectively if proper costing method is not that in place.
Any
decision process requires the implementation of some sort of guide to action.
Actual total cost per units produced should be the guide to the price to be
fixed on a product in order to maximize profit or gain. Manufacturing
industries ill thereby obtain the most effective use of the economic resources
held by the industry. Consumers usually do not decide to buy a commodity
without some idea of its make up or characteristic. Similarly, if an industry
acquires knowledge of the composition of cost data similarly, if an industry
acquires knowledge of the composition of cost data system, they will be in a
better position to decide what types to “buy in what situation”.
“Since
pricing is not an end in itself, but a means to an end, an explicit formulation
of the company pricing objective is essential. The fundamental guides to pricing
objective and company’s overall goals (Dean 2003). Therefore the researchers
was set to carryout as research on effectiveness of pricing policy in the
manufacturing industry with a view to funding out the problem faced in
determining the prices of products. Some total cost is equal to the fixed cost
and variable cost and suggestion on solution to the problems.
1.2
STATEMENT
OF THE RESEARCH PROBLEMS
The researcher was set to address the
following problems.
1.
Persistence/escalating
price of inputs constitute, a major problems in determining the poor units
price of a commodity, making it difficult to cover the total cost incurred.
2.
Like
many other types of problems the pricing decision in manufacturing industry
suffers from the lack of accurate and relevant information.
3.
The
forces of demand and supply often posses of problem for a firm costing policy
in achieving a realistic price, particularly if a firm is a price taker.
4.
In
the process of maximizing profit, the manufacturing industries often face the
problem of competition.
5.
The
position of the manufacturing industry as regards the quality of product cannot
complete well with imported goods.
1.3
OBJECTIVES
OF THE STUDY
1.
The
primary objective of the study/research was to determine the effectiveness of
pricing policy in the Nigeria manufacturing industry.
2.
The
secondary objectives are: -
(a)
To
investigate, the major problems associated with price determination in
manufacturing industry.
(b)
To
ascertain the problems facing the manufacturing industry in the determination
of prices of product in respect to foreign exchange needed for raw materials
and other imported input.
(c)
To
recommend ways of effectively determining actual cost of production so that
prices can be as reasonably price as possible.
(d)
Involvement
of methods (costing) effectiveness and how the price (realistically) is arrived
at in the sector (manufacturing).
(e)
To
ascertain when item of cost dominate the other cost in price determination in
manufacturing industry.
1.4
SINIFICANCE
OF THE STUDY
In this study, the researcher has
highlighted some of the numerous glaring importance of having a knowledge and
understanding of effective costing for pricing policy in manufacturing
industry.
1.
It
could help to reduce the complication involved in arriving at pricing policy in
manufacturing industry to the understanding of layman.
2.
The
study should be understood by all because it is an effort to analyse costing
influence in any pricing decision. Since price are of great importance to the
general public in their day today activities.
3.
The
research was intended to be an effort at determining the role that cost of
production plays realistic pricing policy of product in manufacturing industry.
4.
The
effect of change in economic polices on the price should be product produced by
the public through he result of this research work.
1.5
RESEARCH
QUESTIONS
The focus of this study is to
identify the effectiveness of pricing policy in manufacturing industries.
Hence, in the course of the study effort has been made to find solution to the
followings research question;
(i)
What
are the effectiveness of pricing policy in the Nigerian manufacturing
industries?
(ii)
What
are the problems of manufacturing industries in determining the price of
product in respect of foreign exchange needed for raw materials and other
imported inputs?
(iii)
What
are the problems associated with price determination in manufacturing
industries?
(iv)
What
are the items of cost that dominate other cost in price determination in
manufacturing industries?
(v)
What
are the pricing method for realization of effectiveness pricing policy in
manufacturing industries?
1.6
SCOPE
OF THE STUDY
The study covered the manufacturing
PZ industries Plc as the case study.
PZ industries Plc is a manufacturing
of consumable goods. The study also covers the aspect of determining of cost
and fixing of price in the area of management accounting and in particularly
cost accounting.
1.7
LIMITATION
OF THE STUDY
There will be definitely be problems
encountered in the course of any study embark upon. Some of the problems
encountered are: -
1. LACK
OF CO-OPERATION FROM RESPONDENTS
Some
respondents find it difficult to make information readily available to the
researcher due to the natures of competition in the manufacturing industry
today which calls for absolute secrecy in terms of method of pricing within the
sector.
2. TIME
CONSTRAINT
The
researcher was faced with the problem of not having sufficient time to cover
the research (as intended) due to the present day crash programming nature of
the educational system.
3. The researchers problem of finding
relevant literature, journal, and newspaper e.t.c. related to the research
topic must be mentioned.
Despite
all the problems encountered the data collected is very authentic to the
research.
1.8
PLAN
AND ORGANISATION OF THE STUDY
This research work has been divided
into five chapters for easy presentation of the fact and figure gathered.
Chapter one contains the introduction
statement of research problem, aims and objectives, significance of the study,
research questions, scope and limitation, plan and organisation of the study
and definition of key time.
Chapter two will treated past and
current literature review which include product costing, flow of cost, pricing
decision cost plus pricing system, objectives of pricing policy, pricing
control and rationing and general pricing problems.
Chapter three will highlight research
methodology and historical background of case study. Research methodology
include method of data collection, population and sample size, sampling
technique and method of data analysis.
Chapter four will discuss the
presentation and interpretation of data while involve discussion of analysis
and discuss of findings.
Chapter five throw light in the
summary, conclusion and recommendation.
1.9 DEFINITION
OF KEY TERMS
The following terms relate to the
research topic.
1. EFFECTIVENESS: Is producing the intended result aims
thereby making a striking impression.
2. COSTING: Is a systematic method or way of arriving at actual
expense (direct material cost, direct labour cost, overhead expenses are other
indirect cost) on a product by a manufacturer or company.
3. PRICING: Amount of money ot be paid based on facts after everything
required has been taking into consideration.
4. PRICIN POLICY: Is the procedure on method of fixing
to ascertaining and determine the price of a product in commodity in
organisation.
5. MANUFACTURING INDUSTRIES: Institution involved in converting
raw material into finished goods in which is finally use by the final
consumers.
6. DIRECT MARGINAL COST: The raw material that becomes an
integral part of the finished product are significant enough to war out tracing
them from material to finished goods.
7. PRODUCT COST: What are closely associated with
units produced by a manufacture or produced for resale by a retailer. Products
costs are assigned to inventory when incurred and expressed are expensed when
it time to which they are assigned are sold.
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