TABLE OF CONTENTS
CHAPTER ONE: INTRODUCTION
1.1
BACKGROUND TO THE STUDY
1.2
STATEMENT OF PROBLEM OF THE STUDY
1.3
AIM AND
OBJECTIVES OF THE STUDY
1.4
SIGNIFICANCE OF THE STUDY
1.5
SCOPE OF THE STUDY
1.6
LIMITATION, CONSTRAINT OF THE STUDY
CHAPTER TWO: LITERATURE REVIEW
2.1
THE MEANING OF COST VOLUME PROFIT ANALYSIS
2.2
THE EFFECT OF COST
VOLUME PROFIT ANALYSIS
2.3
THE EQUATION INVOLVE IN USING COST VOLUME
2.4
LIMITATION OF COST
VOLUME PROFIT ANALYSIS
2.5 THE PROFIT AND
VOLUME RATIO INVOLVED IN COST
VOLUME ANALYSIS
2.6
THE GRAPHICAL APPROACH
2.7
ASSUMPTION OF BREAK-EVEN ANALYSIS
CHAPTER THREE: RESEARCH METHODOLOGY
3.1
RESEARCH DESIGN
3.2
POPULATION OF THE STUDY
3.3
SAMPLING PROCEDURES
3.4
METHOD OF DATA
COLLECTION
3.5
DATA PRESENTATION AND ANALYSIS TECHNIQUE.
CHAPTER FOUR: DATA PRESENTATION AND
ANALYSIS
4.1 BRIEF HISTORY OF CASE STUDY ( NIGERIA BREWERIES PLC)
4.2
DATA PRESENTATION AND
ANALYSIS
4.3
HYPOTHESIS TESTING AND DATA
ANALYSIS
CHAPTER FIVE: CONCLUSION AND RECOMMENDATION
5.1 SUMMARY
5.2 CONCLUSION
5.3 RECOMMENDATION
REFERENCES
BIBLIOGRAPHY
CHAPTER ONE
INTRODUCTION
Cost volume profit analysis is a distinct or unique
discipline in the study of management. The cost volume profit has various
application in industries from profit planning, formulation of marketing plans
as well as decision making on volume.
In decision
making, it must be understood that cost volume profit is an important tool in
short term planning. It should be ascertained that the relationships that exist
between the costs of carrying out a business, the revenue generated from such
business as well as the sales of a firm. This is important because in the
simplest form it is the cost definition of profit.
The cost
volume profit analysis is vital to marketer as it guides in the formulation of
plans and control. The treatment of break even point allows the market to know
the cost revenue behaviors of the firm, while planning allows management of an
organization to minimize risk and uncertainty.
In the study
of cost volume profit, the technique used is called break-even analysis, it is
concerned with the study of revenue cost in relation to sales volume and
particularly the level of activities that produces neither profit nor loss,
where revenue equals to cost is the break even point.
The break even
point can only be achieved when there is a decision involving price, volume and
cost that can be split into two classifications.
The cost
volume profit relationship is needed because it represents what profit decision
can be made. The company decision on price and output attempts to produce the
goods efficiently. If the planning process is effective and efficiently
utilized, a profit may result.
1.1
BACKGROUND TO THE STUDY
Concerned has been on cost even since the existence of money
replaced by trade by barter.
It was the concentration of manufacturing facilities into
factories which gave impetus into the development recognizable cost system.
The early developments were almost entirely related to
manufacturing industries. The analysis is used in different prostates i.e.
hospital, transport undertaking, local authority’s offices, banks as well as
manufacturing companies.
It was realized that the information
from financial accounting was insufficient for the numerous decision by the
management. Due to this inadequacy, the development of cost accounting of which
cost volume profit analysis was used as a means of decision taking.
History had it
that there were seven factors which were responsible for this development among
which are the increase in industrial activities, the production of war
equipment in a contract based on cost plus policy which were known as time and
line contract in position of price control by government and competition.
History also
had it that this method was use before and during the First World War and to a lessee’s
extent during the Second World War. It was used frequently in building trade
even in U.S.A at that time and frequently used in modern times.
Those entire factors
combine to create a necessity to determine and analyze cost supported by
accurate facts and figures to ensure that cost did not go beyond marketing
price or contract price.
During the year, fundamental principle was divided for
costing before setting up of a cost accounting system. Therefore, some
preliminary investigation has to be made to stand in form of principle to guide
management in setting up the system.
These principles are:
-
It
must be designed to suit the business
-
The
cost of the system must be considered in relative to the scope of the business
and the benefit to be obtained.
-
The
requirement of the management and laying out of the factory should be
considered
-
The
method of storing raw materials and of enumerates labour whether by hours or
pieces of work or by the combination of the two must also be considered.
-
The
personalities of the key personnel and the capacity of the office staff should
also be considered.
1.2
STATEMENT OF PROBLEM OF THE STUDY
The main concern of this study or
problem of this study is to view the impact or application of cost volume
profit analysis method of a company’s product in the market it served.
Basically the main issue is to know the extent in which cost volume profit analysis
effort has led to increase in accountability aspect and profitability level of Nigeria
breweries plc Ibadan.
This
research work is embarked upon to carry out a critical appraisal and evaluating
a current level at which cost volume profit analysis has changed the face of Nigeria
breweries plc in terms of their business decision compared to what the
organization is practicing before the advent of cost profit analysis as
producer of consumable goods in Nigeria
market.
1.3
AIMS AND
OBJECTIVES OF THE STUDY
Specifically, the aim of this study is to know or examine the
application of cost volume profit analysis in taking business decision. To
achieve this aim the following objectives shall be proved:
- To examine the
impact or application of cost volume profit analysis method of a company’s
product in the market it served
-
To
find out the extent in which cost volume profit analysis effort has led to
increase in accountability aspect and profitability level of Nigeria
breweries plc lbadan.
-
Also
to examine the appraisal and evaluate a current level at which cost volume
profit analysis has changed the face of Nigeria breweries plc in term of
their business decision compared to what the organization is practicing before.
-
To
also examine the adventure of cost profit analysis as producer of consumable
goods in Nigeria
market.
1.4
SIGNIFICANCE OF THE STUDY
The significance of the study is to identify analyze and make
recommendation on the application of cost volume profit analysis in taking
business decision
The
significance to Nigeria
breweries plc is to be the first beneficiary to the recommendation given after
the research.
The significance
of the study to the research is to widen the knowledge of the researcher on the
subject matter which is application of cost profit volume analysis in taking
business decision, also to educate the researcher on application of cost profit
volume analysis in taking business decision.
Finally, the
significance of the study to the society at large is for reference purpose more
so, for reading purpose for people that find it interesting.
In addition,
estimation and application of sales volume is necessary to earn a normal
profit, plans can be laid in the areas of marketing, purchasing, production and
financing,
1.5
SCOPE OF THE STUDY
The study of cost volume profit
centers the usefulness and application of the accounting concept i.e. C.V.P
cash tool for management in making business decision, and focus on how to
calculate the cost volume profit analysis, computations of the C.V.P analysis
as well as its basic principles. And not exempt the assumption behind
limitations and the uses of the concept.
Finally a case
study of the Nigeria
brewery plc lbadan would be investigated under the concept of C.V.P analysis.
1.6
LIMITATIONS AND
CONSTRAINTS OF THE STUDY
This study has been hindered by a lot
of problems, also the effectiveness of carrying out this research is hindered
by the following factors.
A.
Poor response: - some staff of the company who are in
adequate position to give adequate information declined in doing this. They
claimed it is due to organization set up and personal perception, a side the
fact that it’s meant for public consumption.
But personal observations are being
carried out and consultation was also made on this study for broad analysis and
for easy understanding.
B.
Claim of confidentiality: - in case where the staff agreed to
respond to questions thrown to them, the information and factors supplied were
not adequate. This is as result of confidentiality claimed by the personnel.
But promise were made to keep the
investigation given as secret before they were to supply little information
C.
Non- availability of data: - this is another hindrance to the
study. The data necessary for the study was not fully supplied and available,
its validity is another problem.
But the sources of data for this project
work were gathered mostly from textbooks, journals, library and secondary data
were also adopted.
D.
Time and money constraint: - This project work requires time and
money which are not available as a student; there is limit to the sources of
income available to researcher.
But money was sourced from other
means like borrowing and gifts from relatives to complete the research work.
Also, one or two days was left out for the research work.
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