ProjectClue.com We're Ready, Call Us

(+234) 07030248044

Project Topic:

MARGINAL COSTING AS AN ESSENTIAL TOOL FOR DECISION MAKING IN A MANUFACTURING COMPANY FOR DECISION MAKING IN A MANUFACTURING COMPANY (A Case Study Of Anamco Enugu)

Project Information:

 Format: MS WORD ::   Chapters: 1 - 5  ::   Pages: 69 ::   Attributes: Questionnaire, Data Analysis,Abstract  ::   311 people found this useful

Project Department:

ACCOUNTING UNDERGRADUATE PROJECT TOPICS, RESEARCH WORKS AND MATERIALS

Project Body:

ABSTRACT 
Decision-making has become a main concern to any organization, and efforts are being made by management to make sure that best decisions are made. 
Therefore, this study investigates the effectiveness and efficacy of marginal costing as an essential tool for decision-making. To determine this, the fundamental objectives of the study among others are 
(a) An evaluation of the marginal costing technique towards ascertaining the effeteness and efficiency. 
(b) Finding out any inherent deficiencies in its application.
(c) To determine the criteria for cost control and analysis.
(d) How product decisions are made by management under this technique. 
(e) And how, management decision-making is aided under the technique. 
In investigating the above, data were obtained through question mare administered to management staff and few senior staff who have knowledge about the technique under application. More so, useful pieces of information were got from libraries. The collected data were classified, analysis and interpreted by tabular discussion and simple percentage analysis, and the hypothesis were tested by using the chi-square method form the analysis of data, the major findings were that:
ANAMMCO apply marginal costing technique in valuation of stock, cost planning are control,
(a) The company purposefully uses these techniques for the following reasons:
• Decision making 
• Controlling of cost 
• Fixing of prices 
(b) ANAMMCO uses marginal costing because it is simple to operate.
(c) ANAMMCO used marginal costing technique because it shows a meaningful and more realistic profit position of the company.
(d) The technique easily reveals the contribution made by each product or department.
(e) That when faced with decision about the best alternative the marginal costing technique is applied.
(f) When there is a special order, in deciding whether to accept or reject the special order marginal costing technique is used. Based on the findings the following recommendations were made.
a. The organization should fund a way of ensuring that instrumentality is closely tied to productivity or output of the employee.
b. Due to the difficulty associated with receipt of orders, the orders for basic raw materials should be made long in advance.
c. Where there is a request for special order, marginal costing should be applied 
d. The company budgetary control system should be supported with the standard costing technique from effective control of materials and labour cost.
Above all, I strongly believe that if recommendations and accepted and vigorously pursued the decision-making will meet the set organizational objectives. 

 

Table Of Contents 
Title Page 
Certification 
Dedication 
Acknowledgment 
Preface 
Abstract 
Table Of Contents

Chapter One
1.0 Introduction 

1.1 Background Of Study 
1.2 Statement Of Problem 
1.3 Objectives Of Study 
1.4 Significance Of Study 
1.5 Scope Of The Study 
1.6 Limitation Of Study 
1.7 Definition Of Terms 
1.8 Hypothesis

Chapter Two
2.0 Review Of Related Literature 

2.1 Marginal Costing 
2.2 The Principles Of Marginal Costing 
2.3 Marginal Costing And Decision Making 
2.3.1 Acceptance Of Special Order 
2.3.2 Add Or Drop Decision 
2.3.3 Make Or Buy Decision 
2.4 The Contribution Margin Theory 
2.5 Marginal Versus Absorption Costing 
2.6 Marginal Costing And Profit 
2.7 The Breakdown Analysis And Decision Making 
2.8 Advantages And Disadvantages Of Marginal Costing References

Chapter Three 
3.0 Research Design And Methodology 

3.1 An Overview 
3.2 Sources Of Data 
3.3 Sample Used 
3.4 Method Of Investigation 
3.5 Problem Encountered In Data Collection Process

Chapter Four 
4.0 Data Presentation And Analysis 

4.1 An Overview 
4.2 Analysis Of Responses 
4.3 Hypothesis

Chapter Five 
5.0 Findings, Recommendation And Conclusion 

5.1 Summary Of Findings 
5.2 Conclusion 
5.3 Recommendations 

 

CHAPTER ONE

1.0 INTRODUCTION 
1.1 BACKGROUND OF STUDY 

The reality of modern business management in a free enterprise economic system is the level of competition among all the enterprise, where only the filter enterprises survive. The motive for maximization of profit in business and quest for Wealth Creation being in vogue, management continues to remain under increasing obligation to improve its share of the market, its assets, its credit worthiness and its overall potential.
These in turn require an improvement in the quality of decision. Therefore in order to respond effectively to the challenges of time, management requires good factors in business decisions.
This research work is a real attempt to investigate into the principle and practice of marginal costing as an essential tool for decision-making in Manufacturing Companies using Anambra Motor Manufacturing Company (ANAMMCO) as a case study. 
This study will critically examine the following:
- The condition for analyzing cost into fixed and variable components.
- How the cost are normally controlled, 
- And how management decision in aided under the technique.
An appraisal is necessary in order to determine effectiveness and efficiency of the management accounting technique. In carrying out this research work, data was got from questionnaire.
Information and analysis of the data, using the percentage method to analyze the response elicited from respondents. Also the personal observation methods were used, together with relevant information from libraries.
BRIEF HISTORY OF ANAMMCO LIMITED 
Against the background of rapid economic growth, the Federal Military Government in 1975 was faced with the enormous task of developing the country’s infrastructure from one geared toward peasant farming to one oriented towards mechanized agriculture and industry.
The Anambra Motor Manufacturing Company is the result of the economic and technological co-operation between the government and the people of Nigeria and DAIMLER-BENZ AG OF West Germany. The company is located at Emene Industrial layout, Enugu. The site covers an area measuring over 300,000 square meters generously leased by the state government.
Although, the partnership agreement was signed in 1975, the company was incorporated in Nigeria on the 17th of January, 1977 under the name Anambra Motor Manufacturing Company Limited and a Cronym ANAMMCO. As a private limited liability company with an authorized share capital of N7,000,000 ordinary shares of N1.00 each all of which were issued and fully paid up.
SHARE HOLDING 
The share holding structure is as follows:
%
Daimler –Benz Ag of Germany 40.00
Federal Government of Nigeria 35.00
Anambra State Government 12.50
Imo state Government 2.50
Rivers State Government 3.40
Nigeria Citizens and Associates 6.60
100.00
Despite the fact that the Company was incorporated in 1977, the laying of foundations stone was done on 12th of May, 1978 by then Military Governor of the old Anambra State, Col. John Atom Kpera. The official commissioning of the plant was done on July 8th 1980, by the President of the Federal Republic of Nigeria, Alhaji Aliyu Usman Shehu Shagarri.

1.2 STATEMENT OF PROBLEM 
This study will try to answer the questions listed below:
a. Can marginal costing reduce the arbitrary allocation of production cost to cost centres?
b. With this technique of marginal costing can production not be increase without increasing the amount of fixed cost?
c. When management is faced with two or more alternative choices of product, is marginal costing a useful tool for selecting or choosing the best alternative?

1.3 OBJECTIVES OF STUDY 
Marginal costing as an essential tool for decision-making. Marginal costing technique of cost accounting tends to separate cost into variables and fixed components. Bearing this mind, the objectives of this study among other things include:
- An evaluation of the marginal costing technique towards ascertaining its effectiveness and efficiency.
- Finding out any inherent deficiencies in its application.
- To determine the condition for cost control and analysis and 
- Examine how management under this technique makes product decisions.

1.4 SIGNIFICANCE OF THE STUDY 
Since it is a technique of cost accounting adopted by an organization to measure its profitability, any effort geared towards establishing how the technique helps in the profit realization of the organization in worthwhile.
Since this relationship is reciprocal, any suggestion on the improvement of the costing technique should have some bearing on profit improvement.
It output or productively is to be enhanced, and profit maximized, a knowledge of cost behaviour and analysis into the various components is essential and worth undertaking.
Based on the findings of this study and the suggestions proffered, it is strongly hoped that attention to them would go a long way in improving the profit position of the firm.

1.5 SCOPE OF THE STUDY 
This study is limited to the survey of how the marginal costing technique is used to make decision at the Anambra Motor Manufacturing Company (ANAMMCO) and how effective and efficient it is to the company. This investigation is not to be taken as an exhaustive piece.

1.6 LIMITATION OF THE STUDY 
This researcher had difficulties in collecting all the relevant data required for an depth evaluation of this subject. This constraint emanated from the fact that the Company (ANAMMCO) is said to be a competitive manufacturing company concern and the General manager considers its risk to issue out information required.

1.7 DEFINITION OF TERMS 
MANUFACTURING INDUSTRY: A manufacturing industry is one that acquires raw materials and intermediate goods and transfer them to finished goods through an industrial process. This definition satisfies the purpose of this study. A manufacturing industry can also be defined as one where pre-occupation is the processing of materials into other goods through the use of labour and factory facilities.
MARGINAL COST: Marginal cost is the amount at any given volume of output by which aggregate cost are changed of the volume of output is increased or decrease by one unit.
The marginal cost of a product is alternatively known as its variable cost, which includes direct material, direct labour and direct experiences and the variable part of overheads.
MARGINAL COSTING: Marginal costing is defined by (IMA’S officials terminology as “A principle whereby variable cost are charged to cost units and fixed cost attributable to the relevant periods is written off in full against the contribution in that period”.
FIXED COST: Fixed cost is a cost that accrues in relation to the passage of time and which, within certain output and turnover limits, tends to be unaffected by fluctuations in the level of activity.
It is treated as period cost and are charged in full to the profit and loss account of the accounting period which they are incurred. 
CONTRIBUTION: Contribution is the different between sales value an the variable cost of those sales expressed either in absolute terms or as a contribution per unit. This is the central point in marginal costing. When the contribution per unit is expressed as the different between the selling price and its marginal cost.
Marginal costing cannot be used without calculating the contribution.

1.8 HYPOTHESIS 
The following hypotheses are proposed for this study.
i. Marginal costing principles aid prudent management decision-making.
ii. Statements prepared using marginal costing principles are easier to understand by management.
iii. Marginal costing aid in the achievement of the organizational goal.

Get the complete project »

Instant Share On Social Media:

OTHER SIMILAR ACCOUNTING PROJECTS AND MATERIALS

AN APPRAISAL OF THE IMPLICATION OF ELECTRONIC BANKING IN NIGERIA BANKS (A CASE STUDY OF ACCESS BANK)

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 67 ::   Attributes: Secondary data, Data Analysis,Abstract  ::   2543 engagements

CHAPTER TWO REVIEW OF RELATED LITERATURE Electronic banking in Nigeria has overtime been viewed by many especially economists as having a lot of implications on the economy of Nigeria and especially...Continue reading »

A CRITICAL ANALYSIS OF THE USE OF FINANCIAL STATEMENTS IN ASSESSING THE PERFORMANCE OF AN ORGANIZATION (A CASE STUDY OF FIRST BANK NIGERIA)

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 75 ::   Attributes: Questionnaire, Data Analysis, Abstract  ::   2293 engagements

ABSTRACT The study was carried out to analyse how an organization performs making use of the financial statements with First Bank of Nigeria Plc serving as the case study. the study disclosed that th...Continue reading »

AN EVALUATION OF THE PERFORMANCE OF NIGERIAN STOCK EXCHANGE IN THE ECONOMIC DEVELOPMENT OF NIGERIA ( A CASE STUDY OF NIGERIAN STOCK EXCHANGE)

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 78 ::   Attributes: Questionnaire, Data Analysis,Abstract  ::   1025 engagements

HISTORICAL BACKGROUND OF THE NIGERIA STOCK EXCHANGE IN THE ECONOMIC DEVELOPMENT OF NIGERIAN. The nigeria stock excahnge denoted by NSE is a government establishment where stocks are traded on a daill...Continue reading »

APPLICATION OF BUDGETS AND BUDGETARY CONTROL MEASURES IN A NON-PROFIT ORGANIZATION: A CASE STUDY OF APOSTOLIC CHURCH, DELTA

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 76 ::   Attributes: Questionnaire, Data Analysis,Abstract  ::   1214 engagements

2.1 CONCEPTUAL FRAMEWORK A budget is can be defined by accountants as “a planned outcome to be generated and for the expenditure to ensure during that period and the capital to be employed to a...Continue reading »

ASSESSING BOOK-KEEPING PRACTICES OF SMALL AND MEDIUM SCALE ENTERPRISES IN CALABAR LOCAL GOVERNMENT AREA

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 69 ::   Attributes: Questionnaire, Data Analysis,Abstract  ::   1026 engagements

ABSTRACT The economy of Nigeria cannot function properly or thrive without the micro, small and medium scale enterprises (SMEs). These small scale enterprises cannot function properly if they are not ...Continue reading »

ASSESSMENT OF ADEQUATE RISK RECOGNITION AND MANAGEMENT IN NIGERIAN INSURANCE COMPANIES (A CASE STUDY OF UNION ASSURANCE COMPANY, UYO)

 Format: MS WORD ::   Chapters: 1-5 ::   Pages: 86 ::   Attributes: Questionnaire, Data Analysis  ::   677 engagements

THE CONCEPT OF RISK Risk has been the subject of study by different scholars over the years with several meaning and definitions. But the most accepted definitions are that of J.E Banister and P.A Baw...Continue reading »

What are looking for today?

WHAT OUR CUSTOMERS ARE SAYING:
  • 1. Taleeb from Kwara state polytechnic said "I like all topics on this website but anytime i wrote topic to my project supervisor he used to ask where is the case study and case study is not written there . thanks ................".
    Rating: Very Good
  • 2. Donald from ui said "i thank you guys for the good work...i never believe that there are still some Nigerians that are trustworthy until i stumbled upon projectclue. excellent job. great write up. weldone Glory keep up the good job. nice voice.,...i will always recommend projectclue to any Nigerian researchers...God bless.".
    Rating: Very Good
  • 3. Abdoulrasheed Tapheeda from Taraba State University,Jalingo said "The Project Clue owe me a Tribute Respect, because of the nature of their work and delivery system. I recommend this site for any undergraduate due to the quality and fast delivery system of their work. Thanks".
    Rating: Excellent
  • 4. Sam Seyil from Federal Uni Agric. Markudi said "I had a wonderful experience using ProjectClue, they delivered not only on time, but the content had good quality. I recommend ProjectClue for any project research work.".
    Rating: Excellent
  • 5. Eval, Effa A. from University of Calabar (Unical) said "It was a wonderful experience using projectClue, it really helped me in carrying out a Term paper research NGP.".
    Rating: Good
  • 6. Abimbola Bisola from Obafemi Awolowo University said "Thanks a million times for giving me a quality research project. not only have i defended i was commended by my supervisor. You guys are the best; Project clue".
    Rating: Very Good

Leave a comment: