TABLE OF
CONTENTS
CHAPTER ONE
INTRODUCTION
1.1
BACKGROUND OF THE STUDY
1.2
STATEMENT OF THE PROBLEM
1.3
OBJECTIVES OF THE STUDY
1.4
RESEARCH HYPOTHESIS
1.5
SIGNIFICANCE OF THE STUDY
1.6
SCOPE AND LIMITATIONS OF THE STUDY
1.7
RESEARCH METHODOLOGY
1.8
DEFINITION OF TERM
1.9
PLAN OF THE STUDY
CHAPTER TWO
LITERATURE REVIEW
2.1 INTRODUCTION
2.2 FUNDAMENTALS OF
COST CONTROL
2.3 DEFINITION OF COST
CONTROL
2.4 IMPORTANCE OF COST
CONTROL
2.5 DESIRABLE CONDITION OF A COSTING SYSTEM
2.6 BASIC COSTING
TECHNIQUES.
2.7 COSTS BEHAVIOR;
THE COMPASS FOR COST DIRECTION.
2.8 BREAK EVEN
ANALYSIS AS A PROFITABILITY MANAGEMENT TOOL.
2.9 COST MANAGEMENT
2.10 TECHNIQUES OF
COST MANAGEMENT.
2.11 SEPARATE COST
CONTROL DEPARTMENT; A NECESSITY
2.12 SUMMARY
CHAPTER THREE
RESEARCH METHODOLOGY
3.0 INTRODUCTION
3.1 RESEARCH DESIGN
3.2 THE STUDY
POPULATION
3.3 SAMPLE DESIGN AND
PROCEDURE
3.4 SAMPLE SIZE
DETERMINATION
3.5 DATA COLLECTION
INSTRUMENTS
3.6
SOURCES OF DATA
3.7
PROCEDURES FOR PROCESSING ANALYSIS OF
SELECTED DATA
CHAPTER FOUR
1.
2.
3.
4.
4.0
4.1 INTRODUCTION
4.2 PRESENTATION OF DATA THROUGH RESEARCH QUESTION AND
4.3 SUMMARY
CHAPTER FIVE
1.
2.
3.
4.
5.
5.0
5.1
SUMMARY OF FINDING
5.2
CONCLUSION
5.3
RECOMMENDATIONS
5.4
AREA OF FURTHER RESEARCH.
CHAPTER ONE
INTRODUCTION
2.0
BACKGROUND OF THE STUDY
The competitive nature of today’s business world coupled with
the need for persistent cost reduction and continuous profitability have made
it imperative for an organization to be aware of its cost components. This is
to ensure that it products are made and sold at least possible price and this
is where cost control come into act as a compass to the managers in their daily
endeavors of achieving the corporate objectives of the organization and those
of the shareholders.
Cost control is the practice of managing
and or reducing business expenses. Cost control starts by the business
identifying what their costs are and evaluate whether those costs are
reasonable and affordable. The, if necessary, they can look for ways to cut
costs through method such as cutting back, moving to a less expensive plan or
changing service providers.
The analysis involves the study of certain
specialized cost concepts such as fixed and variable costs, control cost,
differential cost, replacement cost, sunk cost, inventorial cost etc.
The concept of cost control has to do with
various means by which management ensures that their cost element do not get
out of hand.
According
to Malomo (1999), control in the management sense is the “process by which
managers ensure that resources are obtained and used effectively and
efficiently in the production or manufacturing of goods and services.
Thus, cost control or cost minimization is
something that must be going on at all times.
Buttressing this facts Drury (1948), says
for cost control to be of greatest utility “it must be in continuous operation
so that as waste and efficiency enters the picture, hat are spotted it once
before losses have had a chance to accumulate.” Cost control system is really an
indispensable tool for an organization to pursue it cost minimization and
control objectives and obtains the best fit within its competitive business
environment
2.1
STATEMENT OF THE PROBLEM
For an effective and efficient
internal and cost control, the management of every production firm is usually
concerned with the setting up of rules and regulations including policies which
are comprehensive enough to cover or apply to all functional areas of the
organization which consists of cost reduction function carried out by the
generality of the employees on a day to day basis. Hence, for any limited
resources available to produce a higher output for the profit maximization and
to be able to compare their actual cost to the budgeted cost.
Therefore, viewed from the above angle, one can see to be an
obvious agreement between outlined management movable asset physical cash,
inventory salary payment, Banking services, other assets and daily management
routine. Related problems which face them are being associated with the
following shortcomings:
1.
The
sources and application of fund mishandling
2.
Inefficient
cost control system
3.
Management
weakness or inefficiencies cost allocation to the various sectors concerned
4.
poor
motivation of employees
the above
effect the profitability, growth and smooth running of most production sectors
and at the end of this research study the management of any producing sector
shall be able to know the effect of proper cost control system in any field of
their business focus.
1.2 OBJECTIVES OF THE STUDY
The objective
of this research is to investigate the impact which an effective and efficient
cost control system could have in drastically reducing lapses which could be
costly to the enterprise if taken for granted.
The main
objectives of the study are as follows:
1.
To
know how effective cost control are being administered during each production
2. To determine the actual and budgetary
cost control on every product of each production
3. To ascertain the costing system in
the production sector
4. To determine the costing inventories
5. To identify some of the factors
militating against effective cost control system and make necessary suggestions
for the improvement and effective cost control system.
1.3
RESEARCH HYPOTHESIS
The following three hypotheses were tested in this study:
Let HO: Null hypotheses
HI: Alternative hypotheses
1.
HO:
cost controlling information does not ensure cost consciousness and profit
mindedness.
2.
HO:
the current cost reduction policies of Mighty God investment are not very
effective in enhancing the profitability of the organization
3.
HO:
separate cost controlling department/unit is not desirable for cost management
HI: separate cost controlling department/unit is desirable for effective
management.
1.4 SIGNIFICANCE OF THE STUDY
It
is obvious that this research study is of great importance not only of Mighty
God investment but also to all production/manufacturing concerns in Nigeria
because of the cost control involved. The lack of education and general
awareness undoubtedly could be pointed out as one of the reasons for this
unpleasant scenario in our economy today. Hence, he study becomes inevitable
as:
1.
It
will help the Nigerian production sector to know the importance of cost
reduction scheme and control in their business
2.
It
will sensitize them on how best cost control can be achieved
3.
It
will expose the consequence of an enterprise without efficient and effective
cost control
4.
It
will educate both the management and staffs on the importance of cost control.
5.
It
would also correct erroneous notion that the cost control system is not too
vital in the profit making process of any sector
2.2
SCOPE
AND LIMITATIONS OF THE STUDY
At this point it is very necessary to
define the scope of this study, especially what the study centers around:
1.
Mighty
God investment
2.
Only
those areas of cost control concerned with the cost management and cost
minimization
3. Appraisal of the costing policies of
the organization under study with the aim of ascertaining its efficiencies and
effectiveness
1.3 RESEARCH
METHODOLOGY
RESEARCH DESIGN
The study research design method was employed to
conduct the research because in survey elements of the study population cannot
be subjected to control situation. (adamu and Tinuke 1985)
SAMPLING, DESIGN AND
PROCEDURE
Stratified
random sampling method was used to draw the sampling size of the study because
the population was non-homogeneous.
DATA COLLETION
INSTRUMENTS
The
following data collection instruments were used
1. Questionnaire
2. Oral interview
3. Observation
SOURCES OF DATA
The
study made extensive use of both primary and secondary data
PROCEDURES FOR PROCESSING COLLECTED
DATA
The
researcher made use of table, comparative percentages in additions to
chi-square test in processing and analyzing the data collection for this study.
1.7
DEFINITION OF TERMS
Cost control system like any
other course has it own peculiar terms. Some of the terms are as follows:
Cost management: this consist of those actions that
are taken by managers
to reduce costs, some of which are privatized
on the basis of information extracted from
the cost system. Drury (2000)
Cost consciousness: this is continuously being aware of cost implication of any managerial decisions
or actions.
Cost of inventories: these are the costs incurred in the
process of obtaining or ordering
raw materials components or
parts from suppliers
Competitive: these are goods that are cheaper
than similar goods
Profit-mindedness: this is the continual focusing on
profits as the only factor for the survival of a business in the long run
Strategic planning: this is the process of setting long
term survival policies and targets of an organization
Fixed cost: this are cost items that will always
remain constant and unchanged regardless of the level of activities
Variable cost: this is the cost item that moves or
varies in direct proportion with the level of activities
1.8 PLAN OF THE STUDY
This research work has been planned to cover Mighty
God investment, chapter one is the introduction part that gives insight for the
reader and chapter two is literature review carried out.
The
research is a case study of Mighty God investment and it will be in chapter
three that the data analysis, data collection is chapter four while summary,
conclusions and recommendations is chapter five.
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