ABSTRACT
Profit maximization is the pursuit of every business organization. Profit itself is the excess of revenue over expenditure. To obtain this profit, increase in selling price of the product or reduction in the cost of production is inevitable. Since excessive price increase is dreaded by the public, it becomes necessary to achieve the business objective through controlling the cost of production of each product.
This project, therefore, is undertaken to give actual background on cost control measure, the need for the control, cost items to be controlled and affect of uncontrolled cost of production on the organization, using the West Africa Milk Company PLC. Lagos as a case study.
According to the study, uncontrolled costs could lead to higher operating costs, lower profit margins and dissatisfaction among shareholders.
Using observation, interview and questionnaire method, it was found that cost could be controlled in the different manufacturing areas such as material, labour and overheads.
Also discussed was the benefit of production cost control to the industry under study. The major findings was that company has not been able to produce to its installed capacity, it employed a system of remuneration that guaranteed a fixed salary and its production budget was based on the average performance of previous year results.
However, the use of standard costing has been advocated because it will avail the company the opportunity of company actual cost with standard in order to check necessary variances and also to make for easier interpretation of management reports.
TABLE OF CONTENTS
Title pageII
Approval pageIII
DedicationIV
AcknowledgementV
PrefaceVI
AbstractVII
Table of contentsIX
Chapter one
1.1Introduction1
1.2Statement of problem7
1.3Statement of objectives8
1.4Significance of the study9
1.5Scope and limitation10
1.6Definitions of terms11
Chapter Two
Literature Review13
2.1Material Control14
2.2Labour Control22
2.3Overhead Control30
2.4Cost Control33
2.4.1Budgetary Control33
2.5Standard Costing49
2.6Variance and Variance Analysis.59
Chapter Three
3.1Research Deign and Methodology74
3.2Sources of Data74
3.3Measurement Instrument76
3.4Instrument Design77
3.5Instrument Administration79
3.6Instrument Distribution
3.7Reliability of Data82
3.8Data Analysis Method.83
Chapter four
4.1Data Analysis84
4.2Costing System84
4.3Material costing86
4.4Labour Control
4.5Overhead Control91
4.6Budgetary Control.91
Chapter Five
5.1Findings96
5.2Recommendations100
5.3Conclusion102
Bibliography104
Questionnaire107