1.0 Introduction
Manufacturing is the transformation of raw materials into finished goods through the use of labour and the factory facilities. It is clear from this point of view that currently the prices of raw materials are exorbitant to the extent that manufacturing industries are in a serious profit squeeze. They are struggling to maintain satisfactory earnings in a situation that increases are becoming more difficult to obtain even atleast proportional degree of cost.
Manufacturing companies whether sole proprietorship, corporation among others must have an objective and the primary objective of these company is to maximize profits. It therefore follows that for a company or organization to make profit, it must have control over the cost of it's production and services.
1.1 Background of the Study
It is paramount that the feature of every organization is in the pursuit of a goal(s) and objective and this target exists in different dimension. So to maintain the level of earning or to increase earnings following this situations, companies have to take drastic measures to control, if not reduce costs do away with waste and increase productivity at al ebbs.
This research work is conducted to see in general the effect of cost in a manufacturing industry and also to verify the discriminate increase in the price of commodities produced by companies which have attracted the attention of many citizens, especially those who know the applications of the continuous rise in price (inflation) on nation's economy in general. This rapid increase in price of manufactured goods can be attributed to the cost of production of goods and services and it is in light of this reason that the need for cost control rises.
This research work will therefore attempt to give a comprehensive account of the cost control in the field of manufacturing company with a particular emphasis on Longman furniture company Enugu.
In other words, the purpose of this study is to examine the various cost control measure being used in manufacturing company using Longman furniture company as a case study.
The consequence of these reasons is necessary because the industry/company involved in the manufacturing of many products faced with discriminate rise in price of their product which is attributed to the cost of production, when cost control is applied the product cost will be reduced.
1.2 Statement of the Problem
For sometimes, major discussions have been going on in government circles, among the members of the public and within private organizations about serious cost control. Some of these problem include:
- The discriminate increase in the price of commodity by companies
- Some manufacturing industries are in a serious profit squeeze, struggling to maintain satisfactory earnings.
- The rapid increase in price of manufactured goods as a result of high cost of production of goods and services.
1.3 Objective of the Study
The sole objectives of this study
- To examine the cost control system in operation at Longman furniture company Enugu.
- To evaluate them as to their effectiveness or otherwise
- To find out all the inherent deficiency
- To make recommendation for solving identified problems and possibly improved and undated any absolute techniques lines with recent trends.
- To find out the effect of cost control in the price of a product, growth of the firm and operating expenses.
1.4 Research Questions
- What are the main purpose of cost control in the manufacturing companies?
- What are the objectives of effects of cost control in the manufaction company?
- What procedures should be taken in cost control in manufacturing companies?
- What are the methods of costing in the manufacturing company?
- What are the techniques used in cost control in the manufacturing companies.
1.5 Significance of the Study
It is a fact that in all manufacturing company, cost of producing goods and services constitutes the major proportion of operating cost. Therefore for a manufacturing industry to survive, grow, pay it's workers and make a reasonable profit, the effective and efficient cost control by the management becomes very vital.
The assumption of studying the effects of cost control is that the result will help manufacturing companies to identify the exact problem affecting their cost of production.
For students who would research further on this topic, it will give them a clue on what goes on in the company, prepare their minds on some hardship to be encountered and also limit their research.
1.6 Scope of the Study
Although there are many manufacturing companies in existence in the country, but because it is not all that possible for research to cover them all, coupled with time and financial factor, this present study is designed to cover only one manufacturing industry, Longman furniture company Enugu.
It is believed that what is obtainable in Longman furniture company is used to represent other manufacturing companies.
1.7 Limitation of the Study
The researcher while trying to obtain information from respondents encountered certain draw backs which hindered data collection. The reluctance of some official to grant audience during the course of the study was a stumbling block in the way of an indepth course of the study.
Another problem and constraints against the successful conduct of the study is relating to inadequate finance, material and time resources together with low level of cooperation from the respondent in rendering vital information.
Finally the problem of conceptualization and also problems relating to the process of data collection pose a great limitation of the study.
1.8 Definition of Terms
Cost Centre:
A cost centre is a location, person or item in respect to which cost may be ascertained or related to.
Cost:
The amount of expenditure 9actual or normal) incurred on or attributed to a specified thing or activity.
Costing:
The ascertainment of cost
Control:
The monitoring of activities to see that organizational goals and objectives are achieved as planned. It is the measurement of the set out goal of a firm to achieve aim or objectives.
Manufacturing:
It is the transformation of material into finished goods through the use of labour and factory facilities.
Manufacturing Industry:
This is defined as an industry that turns primary products (raw material) into finished goods.
Budgetary Control:
This is the establishment of departmental budget relating the responsibilities of executives to the requirement of a policy and the continuous wither to secure by individual action, the objective of that policy or provide a firm basis for this revision.
Marginal Costing:
This is a costing technique which distinguishes between fixed costs and variable cost. Overhead: The cost incurred other than direct cost in the course of production activity.
Inventory:
Also known as stock, refers to the goods and materials that a business holds for the ultimate purpose of resale.
Prime Cost:
The addition of direct material, direct labour and direct expenses.
