THE IMPACT OF COST CONTROL IN MANUFACTURING INDUSTRIES AS WELL AS ITS PROBLEM

ABSTRACT

These research works try as much as possible to look into the impact of cost control in manufacturing industries as well as its problem. In pursuance of this objective, there will be head to highlight the following. Make detailed explanation of the methodology involved in the heading of the cost control in that case study. Chapter one of this project based on the scopes, purpose, hypothesis in a manufacturing concern, it also deals with the background statement of the problem and definition of term in the cost control system. Chapter two deals with the literature review where definition and meaning of cost control, control methods need for cost control, importance, modern development, types, merits, costing system and cost control as it affects Nigeria Bottling Company Plc was being mention here. Chapter three deals with the research methodology like area of study, population, sample and sampling procedure, method of data collection and others.

Chapter four based on data analysis and interpretation of the study. Also deals with findings that are concern mainly with that method adopted. Chapter five deals with summary, conclusion and recommendation of the study. It recommended that if more accurate cost control record kept, the organisation would achieve more than their present value of their production.

CHAPTER ONE

1.0     General Introduction

1.1     Background of the study

Management as a discipline is becoming more dynamic in nature as a result of complexities that surrounds our business world. Numerous routine planning and control activities formally performed by clerks have now been developed into sophisticated functions with far reading effect on corporate objectives and profits. Cost control, a vital element of cost management is one of such functions.

          According to Odetayo (1998), cost can be defined as the monetary measures of value consumed acquired. It is the amount of expenditure (actual or national) incurred on or attributable to a specific thing or activity.

          Cost can also be defined as the amount of goods or the provision of a service (Eddy, 1991). In other words, it means the amount of expenditure incurred on a particular project or venture over a given period of time. It could be fixed cost, variable cost and opportunity cost etc.

          In addition, objectives of cost analysis is the process of discovering the purpose in which factors of production have been used for concise information in management decision. However, cost control is defined as a profit maximize, monitoring and a central criterion of costs.

          This means that a task of controlling must be related to decision of importance for the success of operation as a whole, within the scope of the planning and controlling process. Further, another relevant area of cost is budgeting control which is defined as a system of managing a business. It also deals with other control like inventory control or stock control, variance analysis (standard and actual comparism control)

1.2     Statement of the Problem

          Cost control problem are not peculiar to manufacturing organisation only but also extended to armed forces, government parastatals and other PAYEE agencies.

          The following are the cost control problems in manufacturing concern:

(a) The divisible and manner of cost control in the company.

(b) The company is facing the problem of setting budget and standard cost.

(c) The problem of comparing the total accurate standard or variance.

1.3     The Research Hypothesis

          Hypothesis can be defined as a tentative probable explanation of the relationship between two or more variables that create a state of affair or phenomenon.

          These hypothesis are formulated under two sub-headings viz-a-viz, null and alternative hypothesis. Null hypothesis is normally represented by “H0” while alternative hypothesis is represented by “H1” limit the context of our studies Null hypothesis is preferred.

          The research work to be considered is:

          How cost control and factory management affect the pricing of finished goods?

1.4     Objectives of the Study

          The main purpose of this study is to make official review and analytical demonstration of cost control in a manufacturing organisation. Costing system differs from one industry to another.

          In pursuance of this objectives, there is a need to highlight the following Aids:

(a)     Identify the cost control system and method used in Nigeria bottling company.

(b)     Determine the importance of cost control in a manufacturing concern.

(c)     Make detailed explanation of the Nigeria bottling company Plc.

(d)     Assess the effectiveness of cost control in our case study (cost and budget)

(e)     Determine the units of production cost

1.5     The Scope of the Study

          One of the primary responsibilities of management is to set up and implement the cost control in industries. The project work will examine critically the cost control system and factory management used in the industries classification of cost reduction and standard costing. However, the work will not be studied in department because of some financial constraint and problem of planning.

1.6     The Significance of the Study

          The study will be beneficial to small scale industries in the area of adequate budgeting. There will be a mutually agreed budgets or standard where appropriate. This will aid adequate decision-making for these small scale industries.

          The study will be beneficial to both the Federal and state government in the area of controlling the cost of goods and services in the manufacturing industries. There would be recommendations at the end of the study in order to help the government on how to control the cost of goods and services.

          The study will also be beneficial to the students on the area of their academics. The study will help other students on how to control the cost of goods and services if eventually they find themselves in industries.

1.7     Historical Background

          Nigeria bottling company plc was incorporated as a private company with authorized share capital of N20,000 divided in 40,000 ordinary shares of 50k each and issued share capital of 50k each by foreign shareholders, notable; late Anachasios George Leventis and constrastine P. Leventis. The company establish for the purpose of manufacturing and marketing table water, Coca-Cola, Fanta and Sprite in Nigeria. Under a franchise agreement with Coca-Cola international through changing of distribution outlet all over the country

          However, in the past six decades, the company has diversified tremendously into vital areas through subsidiaries and associates. About six years ago, Nigeria bottling company Plc acquired other assets of Nigeria soft drinks, company bottlers of Schweppes international limited for the exclusive manufacturing and marketing in Nigeria of the Schweppes range of products.

          The purpose was to eliminate competition in the area of bitter lemon product. Around that time, the company took over the assets of Nigeria soft drinks Company at Ikeja. It successfully acquired 40% interest in the two bottling plants in the north; Sokoto drink and other sapanda industry limited. Abia & Imo state in the south. All were done to associate the company base and strengthen its competitive position.

          The maize production company, AGENBOBY operates the following Agro-Industrial ventures which are integrated with the company farming activities.

(a)     Maize milling and maize grits plant.

(b)     Rice milling and par-boiling

(C)     Oil extract and refining

          The company bottling are now carried out in 19 plants at various plants of the federation.

 1.8   Organisation Chart