ABSTRACT
Decision-making has become a main concern to any organization, and efforts are being made by management to make sure that best decisions are made.
Therefore, this study investigates the effectiveness and efficacy of marginal costing as an essential tool for decision-making. To determine this, the fundamental objectives of the study among others are
(a)An evaluation of the marginal costing technique towards ascertaining the effeteness and efficiency.
(b)Finding out any inherent deficiencies in its application.
(c)To determine the criteria for cost control and analysis.
(d)How product decisions are made by management under this technique.
(e)And how, management decision-making is aided under the technique.
In investigating the above, data were obtained through question mare administered to management staff and few senior staff who have knowledge about the technique under application. More so, useful pieces of information were got from libraries. The collected data were classified, analysis and interpreted by tabular discussion and simple percentage analysis, and the hypothesis were tested by using the chi-square method form the analysis of data, the major findings were that:
ANAMMCO apply marginal costing technique in valuation of stock, cost planning are control,
(a)The company purposefully uses these techniques for the following reasons:
•Decision making
•Controlling of cost
•Fixing of prices
(b)ANAMMCO uses marginal costing because it is simple to operate.
(c)ANAMMCO used marginal costing technique because it shows a meaningful and more realistic profit position of the company.
(d)The technique easily reveals the contribution made by each product or department.
(e) That when faced with decision about the best alternative the marginal costing technique is applied.
(f)When there is a special order, in deciding whether to accept or reject the special order marginal costing technique is used. Based on the findings the following recommendations were made.
a.The organization should fund a way of ensuring that instrumentality is closely tied to productivity or output of the employee.
b.Due to the difficulty associated with receipt of orders, the orders for basic raw materials should be made long in advance.
c.Where there is a request for special order, marginal costing should be applied
d.The company budgetary control system should be supported with the standard costing technique from effective control of materials and labour cost.
Above all, I strongly believe that if recommendations and accepted and vigorously pursued the decision-making will meet the set organizational objectives.
TABLE OF CONTENTS
Title pagei
Certificationii
Dedicationiii
Acknowledgmentiv
Prefacev
Abstractix
Table of contentsxii
CHAPTER ONE
1.0Introduction 1
1.1Background of study 1
1.2Statement of problem4
1.3Objectives of study 5
1.4Significance of study5
1.5Scope of the study 6
1.6Limitation of study 7
1.7Definition of terms 7
1.8Hypothesis 9
CHAPTER TWO
2.0Review of Related Literature 10
2.1Marginal Costing 10
2.2The Principles of Marginal costing15
2.3Marginal costing and decision making 20
2.3.1Acceptance of special order 24
2.3.2Add or Drop Decision 27
2.3.3Make or buy Decision31
2.4The contribution margin theory 36
2.5Marginal versus Absorption costing 39
2.6Marginal costing and profit46
2.7The breakdown Analysis and Decision making 48
2.8Advantages and Disadvantages
of marginal costing references61
CHAPTER THREE
3.0Research Design and Methodology 63
3.1An Overview63
3.2Sources of Data64
3.3Sample used65
3.4Method of Investigation65
3.5Problem encountered in data collection process67
CHAPTER FOUR
4.0Data Presentation and Analysis 68
4.1An Overview 68
4.2Analysis of Responses 69
4.3Hypothesis 83
CHAPTER FIVE
5.0Findings, Recommendation and Conclusion 87
5.1Summary of Findings 87
5.2Conclusion88
5.3Recommendations90
