The primary aim of this research project is to prepare manufacturing establishment thoroughly for the task of controlling their cost of production concentration has therefore made on the pertinent factors necessary for the fulfillment of this project.
This work is written to include the dangers of uncontrolled costs and need and possible method of cost control. The method have been found necessary in familiarizing manufacturing organizations with the act of controlling their production costs which will avail them the opportunity of maximizing profit without much price increase.
It is therefore suggested that big enterprises and public corporations should get acquainted with the techniques developed in this project and apply them whenever possible in controlling their costs of production.
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.
Chapter one
1.1Introduction 1
1.2Statement of problem 7
1.3Statement of objectives 8
1.4Significance of the study 9
1.5Scope and limitation 10
1.6Definitions of terms 11
Chapter Two
Literature Review 13
2.1Material Control 14
2.2Labour Control 22
2.3Overhead Control 30
2.4Cost Control 33
2.4.1Budgetary Control 33
2.5Standard Costing 49
2.6Variance and Variance Analysis. 59
Chapter Three
3.1Research Deign and Methodology 74
3.2Sources of Data 74
3.3Measurement Instrument 76
3.4Instrument Design 77
3.5Instrument Administration 79
3.6Instrument Distribution
3.7Reliability of Data 82
3.8Data Analysis Method. 83
Chapter four
4.1Data Analysis 84
4.2Costing System 84
4.3Material costing 86
4.4Labour Control
4.5Overhead Control 91
4.6Budgetary Control. 91
Chapter Five
5.1Findings 96
5.2Recommendations 100
5.3Conclusion 102
Bibliography 104
Questionnaire 107
CHAPTER ONE
1.1 INTRODUCTION
Manufacturing is becoming more complex and competitive with each passing day. The complexity can be viewed from the angle of technology, computerization, raw material sourcing, governments’ economic
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