COST CONTROL AND ITS EFFECT IN THE MANUFACTURING INDUSTRIES (A CASE STUDY OF CHISCO BAKERY INDUSTRIES ENUGU
ABSTRACT
Maximization of profit is the pursuit of every business organization profit itself is the excess of revenue over expenditure. To obtain 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 production each product.
This project was therefore undertaken to give actual background on cost control measure, the heed for the control, cost items to be controlled and effect of uncontrolled cost of production on the organization, using Chisco Bakery industry Enugu as a case study.
According to the study, uncontrolled cost could lead to higher operating costs, lower profit marginal and dissatisfaction to the chairman of the company.
Using questionnaire methods it was found that cost could be controlled in different manufacturing areas such as material, labour and overheads. Also discussed was the major finding that the company had not been able to produce to its installed capacity, it employed a system of remuneration that guarantied a fixed salary and its production.
More ever, The use of standard costing has been advocated because, it will avail the company the opportunity of comparing actual cost with standard in order to check unnecessary various and also to make for easier interpretation of management reports.
CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
With the attendant development in Hi tech material souring and government economic policies, manufacturing sector is becoming more complex and completive as day price of our locally manufactured goods is of public concern. The increase in prices of our attributed to high cost of production of goods. It is therefore for this reason that the need for control arose. Beside the government policy of privatization and commercialization calls for preparedness on the part of manufacturing sector to square up for the stiff competition.
Cost control becomes imperative when one looks at the objectives of firms which among other thing include making as much profit as possible to satisfy the investors, becomes a good corporate entity to customers, government, local community and other external members. All these arms are tied to the cost control measures.
Cost control be done in two ways:
Operating and accounting controls.
Controlling cost through personal observation and supervision of operations does operating control. Such control attempts to minimize wasted other costs. And accounting control on the other hand entails the creation of a system of recording, which will establish accountability for cost that is comprise with standard. It is therefore against this background that this study and attempts to critically X – ray the effects of cost control in a manufacturing organization or company.
Metro best international is a bakery which engages in the baking of high quality bread-Chisco bread. There product is highly competitive in Enugu and its environments. The main raw materials of the firm is floor and the production capacity is 20 bags everyday. The other raw material are (1)sugar(2)salt (3)water (4) Butter (5) flavorings (6) groundnut oil (7) Preservation and yeast.
The bakery industry is strategically located at N01 metro best Amachi Road Akwunawo Enugu. It has about 50 staff comprising about 15 skilled and 35 unskilled the bakery has one bus that convey workers to and from office and there is shift for workers they have four (4) vehicles which they use in marketing of their products.
The various departments in the bakery are:
- Administrative department
- Production department
- Sales department
- Purchasing department
- Accounts department
- Engineering/ maintenance department.
