AN EVALUATION OF STANDARD COSTING SYSTEM AS AN INSTRUMENT FOR MANAGEMENT CONTROL IN MANUFACTURING INDUSTRY

AN EVALUATION OF STANDARD COSTING SYSTEM AS AN INSTRUMENT FOR MANAGEMENT CONTROL IN MANUFACTURING INDUSTRY

ABSTRACT

The purpose of this study is to ascertain that “standard cost system” as an instrument of management control in manufacturing organization played by eastern Bulkcen cement (Eagle Cement) Port Harcourt. Standard cost system as an instrument of managerial control in managerial organization has a vital function in the operation of industries because of its direct effect on economic growth and business development. Regardless of sector leading organizations around the world are being driven to examine the way and nature of the business they are in, their relationship with customers, the process of manufacturing and the market response (price and profit). In the direction the researcher gets his information through observation, data collection journals, oral interviews coupled with the distribution of questionnaires to respondents. The importance of standard in relation to income measurement and policy making is sometimes costing is to provide a scientific basis for price determination and the desired profit of an organization.

CHAPTER ONE

1.0     INTRODUCTION

Standard cost was brought up from an assessment value of cost elements. This correlate technical specification and the qualification of materials, labour and other costs of the prices or wages rates expects to apply during the period in which the standards is intended to be used.

There is no necessity these days to emphasize the importance of standard cost in cost accounting either from the manufactures or the examiners point of view.

Present competitive conditions make it imperative that accurate and reliable account should be available showing not only financial results of ach trading period for a business as a whole but also the extent to which each unit, be it an article, a job, contract, department process or services that contributes to the aggregate turn over if the business should be responsible for those results.

Manufacturing business in particular have now with few exception device costing system that enable the management to determine with substantial accuracy, the cost of every article manufacturers.

The changed conditions and disturbing price fluctuations that have hampered post war manufacturers have rendered pre-war costing useless for present day purpose , at the same time have made it both more difficult and more imperative to ascertain what the current cost of manufacturing actually is.

It cannot be over-emphasized, however, that cost accounting is essentially the same in principle as ordinary accounting except that it is aimed at accounting for units. For that reason it is seldom practicable to incorporate the cost accounting in the general system of double entry book keeping. Since an attempt to do so would necessarily involve the disappearance of many of the nominal account total which are required for the preparation of the financial account at the end of the trading period.

1.1     BACKGROUND OF THE STUDY

The eastern company limited (EAGLE CEMENT) situated in remuohumeni Port Harcourt, was incorporated in 1977 and started operation on 3^rd November 1981.

The term cement was formerly applied to a variety of commercial products that had one important feature in common that they could act as bounding agents. In olden days, mortar was usually made from lime and sand. As they were not stable in water, hydraulic ingredient were added such as trass, pozzolara Santorin earth, or burnt clay.

1.2     STATEMENT OF PROBLEM

Many manufacturing organizations in Nigeria today have collapsed as a result of lack of standard cost control system. So many factors which includes;

1)      The change condition and the disturbing price fluctuation in a manufacturing organization

2)      Inaccuracy of the cost of articles or products manufactured in the organization and unreliable financial reloads.

3)      Inadequate packaging.

The managerial in manufacturing organization is enhanced by standard cost control system which is lacking in most of the manufacturing industries in Nigeria.

Furthermore, is the problem of in effective cost control and inaccuracy in financial record which result to huge financial loses to the eagle cement company Port Harcourt.

1.3     OBJECTIVE OF THE STUDY

The main objective of this research is to examine the effectiveness of standard costing system as an instrument of managerial control in a manufacturing organization using the eastern bulkcen cement company Port Harcourt (eagle cement) as a case study.

1.     A means of cost control over all cost

2.     A bases for formulating operating policies e.g to determine whether it is more advantageous to make an article or to but  ready made or whether an operation can be performed by a  more efficient method.

3.     The composition of total cost so that selling price can be effectively adjusted to meet the prevailing composition.

4.     Distinguishing un-profitable from profitable activities.

5.     Indicating source of wastage or loss whether of time, material or the usage of equipment.

6.     An efficient system of material control where by the existence of excessive, adequate, oblolence or slow moving stocks are brought to light and at proper time.

7.     A detail information for reference to which the out put of finished goods and also such production activities as stock of material and the supply of labour can be kept in step with changes in the volume of sale.

1.4     SIGNIFICANCE OF THE STUDY

There fore, standard costing system has been devised to overcome the limitation of historical ccost account by impacting a forward looking instead of backward looking to the accounting record. The basic features of standard costing are the analysis of differences between standard and actual cost for a given period of time an these variation are record in the double entry account along with the standard and actual themselves.

In essence, standard costing accounting involve the recording of predetermined cost as well as actual cost in the double comparison between the two in other to determine how and why actual cost differ from standard. For instance, current attainable standard is absolutely efficient under expected actual operating condition expected actual operating condition (expected actual standard). The current standards are thus in the nature of budgetary standards.

1.5     SCOPE OF THE STUDY

The scope of this research work covers the origin and the introduction of standard cost system and it’s essential to a given organization. The eastern bulkcen eagle cement.

1.6     DEFINITION OF TERMS

STANDARD COST:

Standard cost can be defined as a techniques which establishes predetermined estimate of the cost of product and services and then compares this predetermined cost with actual cost as they are incurred.

VARIANCE:

The differences between standard costing an actual cost.

ACCOUNTING:

This is the act of recording, classifying and summarizing in a significant manner in terms of money transaction and event with which are in past at least of financial character and interpreting the result.

ORGANISATION:

Act of organizing or organized body of persons.

PROFIT:

Profit could be defined as total cost minus from total revenue.

MANAGEMENT:

The combination of human material and capital resources to achieve a desired goal.

DATA:

Could simply be defined as raw information or unprocessed.

MATERIAL:

This can be defined as substances needed for the production of an item.

PRODUCTION:

This can be defined as the use of human effort to bring about the production of goods and services.

CONTROL:

This can be defined as the power to make decision for an effective running of an organization.

COMPANY:

A company can be defined as an organization that specializes in the production of goods and services.

PRICE:

Price can be defined as the amount paid in respect of goods bought.

WAGE:

Can be defined as an amount of money earn for week for work done or service rendered.

---

REQUEST FOR PROJECT MATERIAL

Good Day Sir/Ma,

WARNINGS!

PLEASE make sure your project topic or related topic is found on this website and that you have preview the abstract or chapter one before making payment.

Thanks for your interest in the research topic. The complete research work will cost you N2000 and we will send the material to you within 24hours after confirming your payment.

Make the payment of N2000 into any of the account number below and we will send the complete material to you within 24hours after confirming your payment.

Account Name: Agada Leonard E
Account No: 2070537235
Bank: UBA

Or

Account Name: Agada Leonard E
Account No: 3049262877
Bank: First Bank

Or

Account Name: Agada Leonard
Account No: 0081241151
Bank: Diamond Bank

After payment, send the following information to us through this email
address: enemsly@gmail.com

Topic paid for:
Amount Paid:
Date of Payment:
Teller No or Transaction ID:
Name of Depositor:
Depositor Phone Number:
Email address:

NOTE: The material will be forwarded to the email address you provided
within 24hrs after confirmation of the payment.

Thanks.

Agada Leonard E.
For: Enems Project.

 For more information visit our contact page @ CONTACT US

---