The Effect of Cost Control on the Profit of an Organization (A Case Study VIJU Industries Nigerian Limited)
Chapter One
OBJECTIVE OF THE STUDY
This work seeks to establish the needed reasons why such a study has been conducted.
- Firstly, the emphasis will be on the manufacturing companies that will enable them to embrace the positive idea of cost control in a bid to achieve desired targets.
- Secondly, it seemed that the idea of performance evaluation needs to be stressed better to achieve the goals of theories that have devoted consideration to developing such evolution criteria.
- Thirdly, it is intended to aid the manufacturing companies in adopting profit planning or budgeting in a concise and exact analysis of budgeting as an aid to resource utilization.
- Finally, it is hoped to improve cost control systems by adequate control measures in ensuring that there is rational optimum asset utilization to aid profit attainment and control of organization resources.
CHAPTER TWO
LITERATURE REVIEW
INTRODUCTION
This chapter reviews some of the existing literature on the effect of cost control on profit of an organization. It became fundamental philosophy to firms that of purity of business operations to actively monitors cost accumulatively and ensure consistent profit for organization growth.
The ideas of cost control refers to the guidance and regulation of operating cost by management action and the word ‘control’ simple implies that some sort of plans were in existence like budget or standard for individual cost items.
It further discussed some of the costing concept, method and techniques and its effectiveness as a means of control.
The limitations of financial accounting have made the management to realize the importance of cost accounting whatever may be the type of business. Cost accounting is an integral part of accounting and accounting is in an age of rapid transition, its environment has undergone vast changes in the few decades and an accelerate rate of change is in prospect for the future.
THE CONCEPT OF COST CONTROL
According to Breech (2005), cost control as all items of expenditure by regulation and frequent comparison of actual expenditure with predetermine cost, (standard or budget), so that undesirable trend away from standard can be detected and corrected at an early stage.
According to Biggs (2008), Cost control is the process of ensuring that cost within a relevant range is a direct function of the level of motivation given the employees of such a department which in itself emanates from the inspiring personality of the head of the organization towards the subordinates.
According to Barras Clough (2002), cost control is a development which is a product of organized efforts of management, yet cannot be exhaustively diverged from intentional cost reduction approaches because cost reduction variable rather are dynamic? whose response rate to changing economic climate can hardly be predicted by even the best minds. Hence he posited that for a system of cost control within the organization to actually attain its target, efforts must be made reducing costs.
CHAPTER THREE
REEARCH METHODOLOGY
INTRODUCTION
Methodology is the research design which requires specification of procedures. Since data is the life wire of an empirical study, an attempt will be made in this chapter to carry out structural framework which deals with the generation.
The data to be obtained will therefore assist the researcher to arrive at the dependable solutions to the research problem through planned and systematic research design which is the framework that directs the investigation in the process of collecting, analyzing and interpretation of data will show the general management, planning steps and pattern of the study with a view to obtaining information on the study being carried out.
A research design is the structuring of investigation which is aimed at identifying variables and their relationship to one another. It is a useful guide used by researchers as a scheme or blueprint for the collection of data prior to the actual study.
This chapter will therefore reveal the sampling technique to be adopted, method of data collection and method of data analysis amongst others.
RESEARCH DESIGN
A research design is the structuring of investigation aimed at identifying variable and their relationship with one another. This is used for obtaining data to enable the researcher test hypothesis or answer research questions. It is an outline, a scheme that serves as a guide to the researcher in his effort to generate data for his study (ASIKA 2009).
It could be noted from the above definition that research design seeks to investigate identified variables and their relationship with one another as its result is used to obtain data to test hypothesis or answer research question.
The type of research design that would be used is the survey method. Under this, questionnaires would be dispatched to targeted population. The questionnaire would be divided into two sections. The first section will contain the personal data and information of the respondents while the Second section will contain the research related questions.
POPULATION
A population is an aggregation of all elements that share a common characteristic(s). A target population is the population of interest on which the study is being carried out.
It refers to the total number of people that make up a particular territory, that is, the whole of the materials from which the sample for the purpose of this study will be taken.
The study population for this study/research work invariably, refers to those people or areas where opinions or responses will be obtained with the aims of finding solution to issues as regards this research work. Therefore, for the purpose of this study, the population shall be the nationalities of Nigeria particularly the VIJU industrial Nigeria ltd Igbesa, Ogun State, with a view to knowing their opinion on “The effect of cost control on the profit of an organization”.
CHAPTER FOUR
PRESENTATION AND ANALYSIS OF DATA
ANALYSIS OF DATA
This chapter attempts to analyze in detail the data collected through the tested formulated research question and research hypothesis based on the analysis.
Firstly, data obtained from type A of the questionnaire in this research study start with personal data and official data of the respondents, which tend to obtain information about their age, sex, marital status, religion e.t.c
Secondly, data obtain from the questionnaire in this research study provides information for the purpose of this research study.
CHAPTER FIVE
SUMMARY, CONCLUSION AND RECOMMENDATION
SUMMARY
Cost control is an imperative measure that is being embarked on by all level of organization on Nigeria. Quality services is a product of quality oriented management. Hence, a price ought to be paid for such an attainment of excellence. The adoption of cost control measure would be benefiting to organization if necessary, machineries be regarded as a guide. Besides all deviation should be given a required evaluation in the light any prevailing event, provided it is within a defined framework and not in isolation.
This selected case study, VIJU Industrial Nigeria limited, elucidated more on the historical presentation, economic, social cultural norms and management developed to suit each organization peculiarity.
The empirical analysis of the research design adopted by the researcher was field design, via the use of questionnaire sampling method. The data were collected, analyzed and the hypothesis was subsequently tested.
CONCLUSION
In conclusion, It is obvious that there is existence of high rate of competition in the market, where organization are not only trying to break even but also to ensure their survival. Hence, this will depend highly on their ability to use optimally, the resources at their disposal.
The concept of cost control and reduction enable a company to keep cash flow at required level of operations, as well as cost management such as avoidance of excessive amount of cash tied up in too much inventory and over staffed departments.
A strict compliance to the policy of cost reduction and cost control set a standard of performance, reviewing of find the areas that can be controlled and compared against organization benchmarks, as a guide in achieving organizational goals, its survival and profitability.
It is therefore expedient in the interest of any business organization to adopt cost control and reduction as a policy, giving it all the encouragement and total support to enable it provide the rewards and effective service to the organization without compromise.
RECOMMENDATIONS
The following recommendations would be of importance to the average users and others organization aiming at enhancing the use of cost control and good system of cost reduction.
There must be a management orientation design which should not only resources dependent, it must also be human specific and machine tailored.
In order to ascertain competence in the area of design allocation to personnel, there has to be a psychological and capability test to ensure.
There are also needs for management to engage in the service of qualified accountants, statisticians, mathematicians, economists’ system analysis and data administrators etc, to manage the flow of their resources and information.
There must be constitutional empowerment of middle line managers to ensure performance reporting.
For any benefit of cost control plan to be reaped, there must be general and specific restricting of most organization with responsibility and well spelt authority, adequately furnished system designed with a relevant pattern portfolio in order to ensure a unique incorporation changes.
Communication should be left open at all level to enhance performance, hence management should design communication network such that information would be established internally externally.
This is a due need for a system design that will require management expect consultancy services. This will ensure quality service at all levels.
These are need for continuous enlightenment on the uses and benefit of cost need, for required tool acquaintance (regression graph) cannot be over emphasized.
SUGGESTIONS FOR FURTHER STUDY
This study is restricted to VIJU Industrial Nigeria limited, therefore the finding cannot be generalized to other Organization. However, further study could be constructed in the following areas:
Determination of effectiveness of cost reduction and cost control in other manufacturing companies.
Cost reduction and cost control with special reference to manufacturing companies.
Impact of cost reduction cost control in management of government parastartals.
Cost reduction and cost control as management strategy of achieving organization goals.
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