ABSTRACT
This research
is centred on “Cost Accounting” as a yardstick for management decision-making. It
is endeavour to examine critically what is exactly meant by cost accounting and
how far it is used by most management when making decisions. The objectives and
purpose of preparing cost accounting statements can only be just fled and
accomplished if the user of such statements is able to interpret and read meaning to the figures contained in the statements. It
was revealed that the necessity for managers of all business functions to
understand the essential principles and conventions of cost accounting if they
have fulfill part in the development of system of planning and controlling
which must have a financial as well as a costing basis. Even this untrained in
cost accounting and related subject will find by a review of this project that
the principles, conventions and practice of cost accounting are not mysteries
but amendable to the logic of common sense. Finally, meaningful suggestions
were not put forward on the basis of the analysis and findings to ensure a more
efficient adoption of an appropriate costing system that can lead to
profitability and maximization of the value of a firm.
TABLE OF CONTENTS
Title Page i
Certification ii
Dedication iii
Acknowledgement iv
Abstract v
Table of Contents vii
Chapter
one: Introduction 1
1.1 Background
to the Study 1
1.2 Statement of Problem 2
1.3
Research Questions 3
1.4
Objectives of the Study 3
1.5
Statement of Hypothesis 4
1.6
Significance of the Study 4
1.7
Scope of the Study 5
1.8 Limitation of the Study 5
1.9 Definition of Terms 6
Chapter
Two: Review of Related Literature 9
2.1
Introduction 9
2.2 Cost Classifications 10
2.2.1 Cost Classification by Behaviour 10
2.2.2 Cost Classification by Function 11
2.2.3 Production Cost 11
2.2.4 Administrative Costs 11
2.2.5 Selling Costs 12
2.2.6 Distribution Costs 12
2.2.7 Development Cost 12
2.2.8 Research Cost 13
2.2.9 Cost Classification by Association 13
2.3 Cost Classification by Cost Element 14
2.3.1 Cost Accounting System 14
2.3.2 Process Costing 15
2.3.3 Job Costing 15
2.3.4 Batch Costing 16
2.3.5 Operating Costing 16
2.3.6 Single or Output Costing 17
2.3.7 Contract Costing 17
2.3.8 Service Costing 17
2.3.9 Composite or Multiple Costing 18
2.4 Fundamental of Cost: Cost Accounting 18
2.4.1 Management Control System 22
2.4.2 Setting Standard 22
2.4.3 Cost Control Measures 24
2.4.4 Budgeting Planning and Control Measures 25
2.4.5 Purpose
of Budgeting 26
2.4.6 Budget Period 28
2.4.7 Fixed and Flexible Budget 28
2.4.8 Limiting Factor 29
2.4.9 Operational Control System 29
2.5 Standard Costing and Variance Analysis 30
2.6 Relevance of Cost Accounting Information in
Management Decision Making 32
Chapter
three: Research Method and Design 34
3.1
Introduction 34
3.2 Research Design 34
3.3 Description of Population of the Study 35
3.4 Sample Size 36
3.5 Sampling Techniques 36
3.6 Sources of Data Collection 37
3.7 Method of Data Presentation 39
3.8 Method of Data Analysis 39
Chapter
Four: Data Presentation,
Analysis
and Interpretation 41
4.1 Introduction
41
4.2 Presentation
of Data 44
4.3 Data
Analysis 44
4.4 Hypothesis
Testing 45
Chapter
Five: Summary of Findings, Conclusion
and Recommendations 53
5.1
Introduction 53
5.2
Summary of Findings 53
5.3
Conclusion 55
5.4
Recommendations 57
References
60
Appendix 61
Questionnaire 62
CHAPTER
ONE
INTRODUCTION
1.1 Background to the Study
Guinness (Nig) Plc, Benin was opened in 1972 after the incorporation
of it’s headquartering at Ikeja, Lagos
State in the year 1962.
The original name of
incorporation was Guinness (Nig) Ltd. It was changed to Guinness (Nig) Plc due
to government directives to distinguish public limited liability companies from
other limited companies.
Guinness (Nig) Plc, Benin is located along Benin-Agbor Oregbeni
Housing Estate, Ikpoba Hill,
Benin City.
Each person like every
business requires some measures of both financial position and financial
performance in assessing his financial conditions. The financial position
depicts one’s wealth at ascertain point in time while one’s financial
performance describes once.
Financial statements
are like compasses which navigators use to locate
their bearing and find direction. People
use them to
gauge their financial
positions
1.3
Research Questions
The following research questions were
raised for the study:
1. Has
there been any impact or relevance of cost accounting information in management
decision making?
2. Has
the implementation of cost accounting information helped in effective and
efficient management decision making?
3. Has
cost accounting information helped to achieve the goal and objective of the
organization?
4. Why
are organizations interested in cost accounting information?
1.4 Objectives
of the Study
i. What
is the place of cost accounting in business organization?
ii. Is
the system in use appropriate for the need of the organization under study?
iii. What
is the rationale behind the adoption of the use of the system?
iv. A
view of the system to find out the control system put in place by management.
1.5
Statement of Hypothesis
The hypothesis of this research is
divided into two as Null (Ho) and Alternative (HI). If the Null hypothesis
were rejected, then the alternative hypothesis is accepted and vice-versa.
The hypothesis is to be tested as follows:
Ho: Cost
Accounting is not relevant in management decision making.
HI: Cost Accounting is relevant to management decision making.
1.6 Significance of the Study
The significance of the study is to be
able to ascertain the relevance of costing system in an organization overall
performance. It’s specific function and contribution to efficiency in
production processes.
It will enable management to know the importance of costing system, thus
ensuring them to look at the purchase department with seriousness in any organization
in which it is found.
This project will also be relevant to
both the students and Government. For the Government, it will help in the
prudent management of scarce resources and for the interested student, it will
equipped them more on the understanding of costing system as a concept.
1.7
Scope of the Study
As a result of time constrain, it will
be delimited to those areas that are necessary for the purpose of this research.
Hence, the relevance of cost accounting and costing system or techniques will
be covered. This study focuses on the cost accounting department of Guinness
(Nig) Plc, Benin City, Edo State.
1.8
Limitations of the Study
During this research work, a lot of
constraints and limitations were encountered. During the course of such
academic exercise, some of these constraints encountered were unusual and
boring. Collection of primary data for this study was a major constraint, as
the researcher has to be on field personally in all the data collected
processes. Inadequate internet facilities on the research work.
1.9
Definition of Terms
Cost Accounting:
It is also defined as ‘the establishment of budgets, standard costs, actual
cost of operations, processes, activities or products and the analysis of
variances, profitability or the social use of funds’.
Cost: Cost
is the value of economic resources used as a result of producing or doing the
thing being costed.
Cost
Unit: A Cost Unit is a unit of production or services to
which cost can be related. The nature of the cost unit will obviously depend on
the type of goods being produced or the type of services by the business
concerned.
Cost Centre: According to
Abohi (2002), Cost Centre can be defined as “a location, person or item of
equipment (or group of these) for which costs may be ascertained and use for
the purpose of cost control”. It can also be defined as a department or
geographical area, a machine or person to which cost can be related.
Cost
Control: This refers to the ability of management to monitor
and supervise expenditure (i.e. current and capital) in order to ensure that
things are going according to plan and that actual results are obtained for
comparison against planned result so that appropriate corrective action (s) can
be taken on the variance that is bound to arise before it is too late.
Activity
Level: Activity Level constitutes the main basis for
forecasting costs especially where changes or future changes are to be
measured.
Variance:
This is the difference between an actual amount and a predetermined standard
amount. That is where actual cost is different from the estimated standard
cost.
Decision
Making: According to Reason (1990), is the mental process
resulting in the selection of a course of action among several alternative
scenarios.
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