The purpose of this research is a modest of attempt to verify the indiscriminate increase in the prices of commodities produced by manufacturing organization in this part of the country which has attracted the attention of many citizens, especially those who know the implications of this continuous rise continuous rise in prices on the people and on the nation’s economy.
This rapid increase in price of manufactured goods can be attributed to cost of production of goods and it is for this reason that the need for the control arises. Moreover, in compliance with the current drive towards structural Adjustment programme (SAP), these organizations are now caught up in the need to control their production cost.
This research paper will, therefore, attempt to give a comprehensive account of the control of costs in the field of production with particular emphasis on manufacturing organizations.
The feature of every organizations the pursuit of a goal and this goal or objective exists in different dimensions.
It is evident, therefore that every manufacturing organization, whether sole, partnership, corporation, among others, must have an objective and the primary objective of these organization is to maximize profit. Any other objective such as social service is purely secondary and generally dependent n profit.
Profit is the excess of total income over total cost during a specific period of time. It follows therefore, that for organizations to make profit, they must control over the cost of their productions and services.
Manufacturing is the transformation of materials into finished goods through the use of labour and factory facilities. It is clear that currently, the price of materials are so exorbitant to the extent that manufacturing companies are in a serious profit squeeze. They are struggling to maintain satisfactory earnings in a situation where costs are rising but some industrialist contend that profit increases are becoming more difficult to obtain ever at less proportionate degree to costs. Foreign and domestic competition as well as governmental efforts to prevent further inflation put serious restraints on additional increases. In addition to these, are governmental, (both or state and federal levels, stabilization measures aimed at re-structuring and improving the economy, and their attendant cost effect. Some of these measures like the second tier foreign exchange Market (SFEM)and structural adjustment programme have had the effects of not only causing increased prices as a result of increased cost of inputs, but have gone further to multiply in –built imported inflation by the incremental exchange rate of he Naira against the convertible currencies that are used in importation.
These governmental structural re-adjustment measures have contributed to a great in rendering most profit seeking long range plans of companies ineffective. Thus, most, of these companies are compelled by the prevailing economic circumstances to be more interested in research and development for the expansion of profit margins of already existing products. This will as well help them to avoid diversification. This quest for increased profit margins in the light of the near fixed nature of revenue, implies that the achievement of same depends wholly on prudent management of costs.
To maintain the level of earnings or to increase earnings following these situations, many companies are taking strong steps to control costs, if not reduce costs, do away with waste and increase productivity. The industrial revolution which brought about improvemenrs in tehcnological techniques do help to control and reduce costs but are in most cases not adequate.
The members of management board of most companies are putting pressure onthier orgnaizations at every poisnt. Jobs are being timed and standards set in manufacturing department where timing and standards did not exist previously. These procedures have also been extended into office operations. Budgets are being made more detailed” they are tighter. Religiously adhered to and are controlled more vigorously.
These developments are typical of a current emphasis in Nigeria business. In those wise, the manufacturing organization are not left our. In order to ensure their survival and also to create more positive impacts on the economic growth, many methods of cost control are being utilized. The purpose of this research work therefore, is to examine critically the various cost control measures being used by manufacturing organizations using project development Agency (PRODA) as a case study, the consequence of these measures (long range as well as short range), and to purpose alternative courses of action if necessary with more promising long range results. The project development agency was chosen as the case study because it is a large outstanding institute which has embarked on the manufacturing of many products in this country, and because of the indiscriminate rise in prices of their products which is attributed to the cost of productions.
The institute was established by East central stated Edict No.11 of 1971. It was a post-war creation of the then administrator of east central stated, Ukpabi Asika to Channel through applied research and technological innovation, the energies and newly found self-confidence of the indigenous engineers, scientists and technicians into the solution of problems of industrial development of the state and Nigeria in general.
Before it was officially promulgated as a statutory corporation in April 1971, Projects development agency (PRODA) existed as a department under the east central state ministry of trade and industry. In April 1976, the institute was taken over by the federal military government when the former east central state was saplit into Anambra and Imo states. As a result of this, it became one of the research institutes under the defunct national science and technology development agency (NSTDA). Thus the name automatically changed to project development institute. However, the acronym remains
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF STUDY
1.2 STATEMENT OF THE PROBLEMS
1.3 OBJECTIVE OF THE STUDY
1.4 SIGNIFICANCE OF THE STUDY
1.5 SCOPE AND LIMITATION OF THE STUDY
1.6 DEFINITION OF TERMS
CHAPTER TWO
LITERATURE REVIEW
2.1 PRODUCTION COST CONTROL
2.2 COST REDUCTION
2.3 COST CONTROL
2.4 PRODUCTION COST
2.5 ACCOUNTING FOR ELEMENTS OF PRODUCTION COST
2.5.1 ACCOUNTING FOR MATERIAL COST
2.5.2 ACCOUNTING FOR LABOUR COST
2.5.3 ACCOUNTING FOR OVERHEAD COST
2.6 CONTROL
2.6.1 MATERIAL CONTROL
2.6.2 LABOUR COST CONTROL
2.6.3 PRODUCTION OVERHEAD CONTROL
2.7 COST CONTROL METHODS
2.7.1 BUDGETARY CONTROL SYSTEM
2.7.2 STANDARD COSTING
2.7.3 VARIANCES
CHAPTER THREE
RESEARCH DESIGN AND METHODOLOGY
1.1 AN OVER-VIEW
1.2 SOURCES OF DATA
1.3 SAMPLES USED
1.4 METHOD OF INVESTIGAITON
1.5 INFORMAITON FROM THE USE OF QUESTIONNAIRE
1.6 PROBLEM ENCOUNTERED IN DATA COLLECTION PROCESS AND LIMITATIONS
CHAPTER FOUR
DATA ANALYSIS AND DISCUSSION
4.1 PRODUCTION COST ASCERTAINMENT AND CONTORL
4.2 MATERIAL COST
4.1.2 LABOUR COST
4.1.3 OVERHEAD COST
4.1.4 FIXED COST
4.2 COST CONTROL SYSTEM-BUDGETARY CONTORL
4.2.1 THE PRODUCTION BUDGET
4.3 INTERNAL CONTORL SYSTEM
4.3.1 OVERTIME AND PREPARATION OF WAGES
CHAPTER FIVE
FINDINGS, RECOMMENDATION AND CONCLUSION
5.1 FINDINGS
5.2 RECOMMENDATION
5.3 CONCLUSION
APPENDICES
APPENDICE A
NOTE
APPENDICES B
QUESTIONNAIRE
APPENDICE C
ORGNAIZATION CHART
BILIOGRAPHY
