Cost Accounting as a Tool for Performance Evaluation in a Manufacturing Company (a Case Study of Nestle Nigeria Plc)
CHAPTER ONE
OBJECTIVES OF THE STUDY
The general objective of this study is to analyze cost accounting as a tool for performance evaluation in manufacturing company. However, the following are the specific objectives:
- To show the relationship between Overhead cost and performance of manufacturing companies in Nigeria.
- To show the relationship between Inventory cost and performance of manufacturing companies in Nigeria.
- To show the relationship between Direct Labour cost and performance of manufacturing companies in Nigeria.
- To examine the effect of cost accounting on the performance of manufacturing companies in Nigeria.
CHAPTER TWO
REVIEW OF RELATED LITERATURE
Meaning of Cost Accounting
Cost accounting developed as an advanced phase of accounting science and is trying to make up the deficiencies of financial accounts. It is essentially a creation of the twentieth century. Cost accounting accounts for the costs of a product, a service or an operation. It is concerned with actual costs incurred and the estimation of future costs. Cost accounting is a conscious and rational procedure used by accountants for accumulating costs and relating such costs to specific products or departments for effective management action. Cost accounting through its marginal costing technique helps the management in profit planning and through its another technique i.e. Standard costing facilitates cost control. In short, cost accounting is a management information
Cost Accounting Information Role
Cost accounting (CA), which measures and reports financial and non-financial information related to the organisation’s acquisition or consumption of resources [6, p. 5], has an exceptionally important position within the entire accounting information system of an organization because it provides information to both management accounting and financial accounting as subsystems of the accounting information system. When its information is intended for the financial accounting it measures product costs in compliance with the strict legal and professional regulations. When its information is used for internal purposes it provides the basis for planning, control, and decision-making. Accounting data used for external reporting very often do not completely satisfy managers‟ needs for decision-making purposes. Attempts at slight modifications of financial accounting systems for managerial purposes rarely end happily – like eating soup with a fork: it is possible, but it is far from effective. [11, p. 9] The importance of CA as information basis for external financial reporting is particularly reflected in providing relevant data for the purpose of inventory balance and determining the cost of products sold. In compliance with the widely accepted regulations, it includes into the inventory value only the necessary costs of functional production fields – but not the costs of uneconomical spending, inefficient work and unused capacity, which represent period costs. CA information support is expanding towards the creation of relevant information for internal reporting on a company‟s business activities – especially for short term periods and in smaller organizational segments. Cost data for the purpose of internal reporting are meanwhile relatively free from the constraints of legal and professional regulations.
CHAPTER THREE
RESEARCH METHODOLOGY
INTRODUCTION
In this chapter, we described the research procedure for this study. A research methodology is a research process adopted or employed to systematically and scientifically present the results of a study to the research audience viz. a vis, the study beneficiaries.
RESEARCH DESIGN
Research designs are perceived to be an overall strategy adopted by the researcher whereby different components of the study are integrated in a logical manner to effectively address a research problem. In this study, the researcher employed the survey research design. This is due to the nature of the study whereby the opinion and views of people are sampled. According to Singleton & Straits, (2009), Survey research can use quantitative research strategies (e.g., using questionnaires with numerically rated items), qualitative research strategies (e.g., using open-ended questions), or both strategies (i.e., mixed methods). As it is often used to describe and explore human behaviour, surveys are therefore frequently used in social and psychological research.
POPULATION OF THE STUDY
According to Udoyen (2019), a study population is a group of elements or individuals as the case may be, who share similar characteristics. These similar features can include location, gender, age, sex or specific interest. The emphasis on study population is that it constitutes of individuals or elements that are homogeneous in description.
This study was carried to examine Cost Accounting As A Tool For Performance Evaluation In A Manufacturing Company. Nestle Nigeria Plc form the population of the study.
CHAPTER FOUR
DATA PRESENTATION AND ANALYSIS
INTRODUCTION
This chapter presents the analysis of data derived through the questionnaire and key informant interview administered on the respondents in the study area. The analysis and interpretation were derived from the findings of the study. The data analysis depicts the simple frequency and percentage of the respondents as well as interpretation of the information gathered. A total of eighty (80) questionnaires were administered to respondents of which only seventy-seven (77) were returned and validated. This was due to irregular, incomplete and inappropriate responses to some questionnaire. For this study a total of 77 was validated for the analysis.
TEST OF HYPOTHESIS
HO: There is no significant relationship between Overhead cost and performance of manufacturing companies in Nigeria.
Hypothesis 2
HO: There is no significant relationship between Inventory cost and performance of manufacturing companies in Nigeria
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
Introduction
It is important to ascertain that the objective of this study was to ascertain Cost Accounting As A Tool For Performance Evaluation In A Manufacturing Company (A Case Study Of Nestle Nigeria Plc). In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of Cost Accounting As A Tool For Performance Evaluation In A Manufacturing Company
Summary
This study was on Cost Accounting As A Tool For Performance Evaluation In A Manufacturing Company (A Case Study Of Nestle Nigeria Plc). Three objectives were raised which included: To show the relationship between Overhead cost and performance of manufacturing companies in Nigeria, to show the relationship between Inventory cost and performance of manufacturing companies in Nigeria, to show the relationship between Direct Labour cost and performance of manufacturing companies in Nigeria and to examine the effect of cost accounting on the performance of manufacturing companies in Nigeria. A total of 77 responses were received and validated from the enrolled participants where all respondents were drawn from Nestle Nigeria Plc. Hypothesis was tested using Chi-Square statistical tool (SPSS).
Conclusion
Most of the manufacturing companies are not using management accounting techniques frequently. It is worth mentioning that most of the manufacturing organizations are not well informed about all these management accounting techniques. Among management accounting techniques in consideration, most influential techniques are: Cash flow return on investment, Return on Investment, Long range forecasting respectively. From this research, it can be concluded that though Researchers and Academicians are trying to pay attention on the manufacturing business, firm’s concerned personnel attitude towards the use of management accounting techniques in decision making, still manufacturing organizations of the study area use various management accounting techniques in narrow scale
Recommendation
Moreover, to enhance the management accounting techniques and to gain competitiveness of manufacturing companies the study recommends’ that manufacturing companies should be synthesized and advised on the usefulness of MATs and moreover all socio economic parameters needed for adoption of these techniques should be put in place in order for manufacturing companies realize is impact in their business and to continue to survive in this strict and ever dynamic competitive environment.
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