ABSTRACT
Profit maximization is the pursuit of every business organization. Profit itself is the excess of revenue over expenditure. To obtain this profit, increase in selling price of the product or reduction in the cost of production is inevitable. Since excessive price increase is dreaded by the public, it becomes necessary to achieve the business objective through controlling the cost of production of each product.
This project, therefore, is undertaken to give actual background on cost control measure, the need for the control, cost items to be controlled and affect of uncontrolled cost of production on the organization, using the West Africa Milk Company PLC. Lagos as a case study.
According to the study, uncontrolled costs could lead to higher operating costs, lower profit margins and dissatisfaction among shareholders.
Using observation, interview and questionnaire method, it was found that cost could be controlled in the different manufacturing areas such as material, labour and overheads.
Also discussed was the benefit of production cost control to the industry under study. The major findings was that company has not been able to produce to its installed capacity, it employed a system of remuneration that guaranteed a fixed salary and its production budget was based on the average performance of previous year results.
However, the use of standard costing has been advocated because it will avail the company the opportunity of company actual cost with standard in order to check necessary variances and also to make for easier interpretation of management reports.
TABLE OF CONTENTS
Title page II
Approval page III
Dedication IV
Acknowledgement V
Preface VI
Abstract VII
Table of contents IX
Chapter one
1.1 Introduction 1
1.2 Statement of problem 7
1.3 Statement of objectives 8
1.4 Significance of the study 9
1.5 Scope and limitation 10
1.6 Definitions of terms 11
Chapter Two
Literature Review 13
2.1 Material Control 14
2.2 Labour Control 22
2.3 Overhead Control 30
2.4 Cost Control 33
2.4.1 Budgetary Control 33
2.5 Standard Costing 49
2.6 Variance and Variance Analysis. 59
Chapter Three
3.1 Research Deign and Methodology 74
3.2 Sources of Data 74
3.3 Measurement Instrument 76
3.4 Instrument Design 77
3.5 Instrument Administration 79
3.6 Instrument Distribution
3.7 Reliability of Data 82
3.8 Data Analysis Method. 83
Chapter four
4.1 Data Analysis 84
4.2 Costing System 84
4.3 Material costing 86
4.4 Labour Control
4.5 Overhead Control 91
4.6 Budgetary Control. 91
Chapter Five
5.1 Findings 96
5.2 Recommendations 100
5.3 Conclusion 102
Bibliography 104
Questionnaire 107
