AN APPRAISAL OF COST ACCOUNTING TECHNIQUE IN MANUFACTURING INDUSTRY

ABSTRACT

This study focuses on an appraisal of cost accounting techniques in manufacturing industry. Data were collected and presented using averages and simple percentages. The hypothesis was tested using normal distribution statistical tool at α=0.05 significant level and population of 944 employees of Unilever Nigeria PLC Lagos. The sample size, n=40 was determined by systematic random sampling from the above stated population. The Z value was calculated and the results compared with the critical Z value, accepting the alternative hypothesis since Zcal value was higher than the Ztab at 0.05 significant level. The major findings made in the course of the study include: information for planning and control that enhances decision making can be provided through costing techniques in manufacturing industries. The best cost accounting technique that is used towards decision making is stated to be the marginal costing; the essence of estimating and price determination in manufacturing industries and finally, the valuation of stores, stocks and work-in-progress which is an objective of cost accounting technique. On recommendation, emphasis should be made in order to appraise costing techniques in manufacturing industries so as to help managers of various industries in decision making.

1.01 BACKGROUND OF THE STUDY

Cost accounting is a subject that provides management with information relating to costs; it is clearly a service to management. Therefore, by this cost accounting can be defined as the process of identifying, analyzing, computing and reporting cost to management.

This shows that unlike accounting as a whole, cost accounting has the management of an organization as the user of its information.

Business of all sizes; small and medium and large scale of all kind; profit and non-profit making whether in the private or public sector need information relating to the cost of goods and services they produce and render. Cost accounting is relevant to these business and organization because it is one of the sources from which information relating to cost can be obtained and effectively managed.

Management of a manufacturing or service organization, private sector or public sector organization, profit-making or non-profit making, military or civilian organization would ensure that cost accounting is recorded with the necessary attention it deserves. The management of an organization ensures the creation of departments, section or units to take care of the supply of cost accounting information for managerial decision making.

1.02 BRIEF HISTORY OF THE CASE STUDY

UNILEVER NIGERIA PLC, LAGOS STATE

Unilever Nigeria PLC is located in Lagos State, Nigeria. The company deals with food manufacturing, industrial premises, warehouses refurbishments business activities. It is situated at N0. 1 Billingsway, Oregun Ikega Lagos with the postal address of P.O. Box 1063. The nature of the business is manufacturing and marketing of consumer products.

1.03 STATEMENT OF THE PROBLEM

The role of cost accounting in the effective and efficient management of manufacturing companies set up is indispensable much and the need for accountability in companies has been talked about. The need for effective management of its resources and the maintenance of clean and fraud less record of business transaction in the company has necessitate the need for proper and effective management of cost accounting.

Being one of the important factors that determine the smooth running and progress of any establishment, cost accounting has its problem and as well its prospect.

However, from a research review, it has been discovered that little effort has been directed towards the study of the prospect and problem facing cost accounting in manufacturing industries; coupled with the fact that the success or failures of any company has dire effort on generality of populace of the society, hence, it is the interest of this study to study the problem and prospect of cost accounting in manufacturing industries with Unilever Nigeria PLC as a case study.

1.04 OBJECTIVES OF THE STUDY

The main objective of this study is to appraisal of cost accounting techniques in manufacturing industries. The specific objectives will include:

1.05 RELEVANT RESEARCH QUESTIONS

1.06 STATEMENT OF HYPOTHESIS

The statement of hypothesis is stated in Null form. This shows the relationship between variables study.

H₀: Information for planning and control which include decision making by

Managers cannot be provided in manufacturing industries.

H₁: Information for planning and control which include decision making by

Managers can be provided in manufacturing industries.

H₀: Providing information for estimating and price determination is not

necessary in manufacturing industry.

H₀: Providing information for estimating and price determination is necessary in

manufacturing industry.

1.07 SCOPE OF THE STUDY

This research work is based on an appraisal of cost accounting techniques in manufacturing industries a case study Unilever Nigeria PLC Lagos. The will resolve within the scope and time limit to help readers become intelligent users of cost accounting techniques in decision making process.

1.08 ASSUMPTIONS

In writing this paper, the researcher has made the following;

1.09 SIGNIFICANCE OF THE STUDY

The study was undertaken to ascertain the appraisal of cost accounting techniques in manufacturing industry using Unilever Nigeria PLC as a case study. The findings of this study will be of primary importance to the management of Unilever Nigeria PLC and its customers as it will help to guide in buying its products.

The contribution of its knowledge will be useful to researcher and anyone who is interested in the appraisal of cost accounting techniques in manufacturing industries.

1.10 DEFINITION OF UNFAMILIAR TERMS

APPRAISAL: According to Dictionary.com, appraisal is the act of estimating, judging the nature or value of something as for sale, assessment, or taxation; valuation.

COST: Cost can be defined as the amount that has to be paid or given in order to get something.

ACCOUNTING: Accounting is the process of providing needed information regarding primarily, the financial activities of the economic entities so that the user of this information may make decisions about the entities. Okezie (2001)

Costing: In accounting terms, costing refers to a system of calculating the amount it takes to produce goods or operate a business.

TECHNIQUES: This can be defined as a way of carrying out a particular task, especially the execution or performance of an artistic work or scientific procedure, or a systematic procedure, formula, or routine by which a task is accomplished.

That the responses given by respondents to questions reflect the true situation of things.
It was assumed that the management and staff of the company selected from the organization are using cost accounting techniques in decision making.
That Unilever Nigeria PLC uses cost accounting techniques in the organization.
That the reliance of Unilever Nigeria PLC on cost accounting techniques in decision making is greatly responsible for effective and efficient operations and optimum capacity.
What ways can information for planning and control which includes decision making by the manager be provided in manufacturing industries?
How can we provide information for estimating and price determination?
In what way do we show where standard costs are prepared and what the cost of production will be?
Is it necessary to value stores, stocks and work-in-progress?
To provide information for planning and control which includes decision making by the manager.
To provide information for estimating and price determination.
To show where standard costs are prepared and what the cost of production will be.
To value store, stocks and work-in-progress....

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