Influence Of Cost Accounting Information On Product Costing In Selected Paint Manufacturing Companies In Port Harcourt

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Influence Of Cost Accounting Information On Product Costing In Selected Paint Manufacturing Companies In Port Harcourt

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PROJECT TOPIC AND MATERIAL ON INFLUENCE OF COST ACCOUNTING INFORMATION ON PRODUCT COSTING IN SELECTED PAINT MANUFACTURING COMPANIES IN PORT HARCOURT

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  • Name: Influence Of Cost Accounting Information On Product Costing In Selected Paint Manufacturing Companies In Port Harcourt
  • Type: PDF and MS Word (DOC)
  • Size: [70 KB]
  • Length: [56] Pages

 

 

 

CHAPTER 1

INTRODUCTION

1.1   Background of the Study

The studies of modern cost accounting yield an insight into both the accountant and management roles in an organization especially with relation to product costing. Management in most cases wants to know how to determine the cost of the products and often depend on cost accounting information for guiding their decisions. Cost accounting information has a main purpose of accumulating cost of anorganizational products and services. Managers of manufacturingcompanies can use cost accounting information as a guide in settingselling prices and for inventory valuation and profit determination (Adeniyi, 2000).

Cost accounting is a process of collecting, analyzing, summarizing and evaluating various alternative courses of action. Its goal of the information obtained from cost accounting is to advise the management on the most appropriate course of action based on the cost efficiency and capability. Cost accounting provides the detailed cost information that management needs to control current operations and plan for the future including product costing.Since managers are making decisions only for their own organization, there is no need for the information to be comparable to similar information from other organizations. Instead, information must be relevant for a particular company. Cost accounting information is commonly used in financial accounting information, but its primary function is for use by managers to facilitate decision making (Wikipedia, 2015).

Unlike the accounting systems that help in the preparation of financial reports periodically, the cost accounting systems and reports are not subject to rules and standards like the Generally Accepted Accounting Principles (GAAP). As a result, there is wide variety in the cost accounting systems of the different companies and sometimes even in different parts of the same company or organization.

According to Adeniyi (2000), product cost control/reduction involves thepredetermination of cost and comparison of predeterminationbudgeted or standard cost with the actual cost.

Product costing which is closely linked with the budgeted ispredetermined per unit cost, usually analyzed into elements including DirectMaterial, Direct Labour and Factory overhead. Standard cost is an effective aid to control, due to the link with budget plans and decision making, because it represents anticipated cost, that is, a cost which will exist in the future and is likely to be affected by decisions made by the management.

According to Carroll (2003), product cost control always refers to as thecontrol of expenditures within predetermined levels, which entailsthe minimization of resources so as to achieve a given objective which is aided by cost accounting information.These controls should be a continuous activity aimed at improvingefficiency and quality by ensuring that the right resources areprovided and efficiently used. However, this research is aimed at determining the relationship between cost accounting information and product costing in some selected paint manufacturing companies in Port Harcourt, Rivers State, Nigeria.

1.2   Statement of the Problem

The private sector driven economic trend in Nigeria, calls for serious cost accounting information consciousness among manufacturing companies. In light of this, manufacturing companies in Nigeria are faced with the task of not only profit maximization, but a quest for survival through proper product costing amidst competition, legal, government, economic and environmental constraints.

Moreover, external factors such as inconsistency in fiscal policies do not lend themselves to be manipulated by manufacturing companies in Nigeria. For example deregulation has left Nigerian Manufacturing Companies with low capacity utilization with its attendant high cost of fixed overhead per unit production, high cost (fluctuations) of foreign exchange which causes high cost of raw materials and plants and machinery which will invariably influence product costing.

The effects of high cost of local quality products are that the consumers boycott these quality products to cheaper one on high quantity but low quality. These limits the scope of market for these manufacturing industries and in the unlikely prospect of export, the final consequences is rationalization of work force.Furthermore, nonchalant attitude of many managers or lack of professional cost accountants to cost accounting information, has affected the product costing of many Nigeria manufacturing companies, including government owned companies. Relevant, reasonable and unreasonable costs are incurred and charged to profits of the companies. This affects the growth of the companies, and also affects their products which are the greatest intents of the consumers. In the light of this, the researcher is out to examine the relationship between cost accounting information and product costing of some selected paint manufacturing companies in Port Harcourt, Rivers State, Nigeria.

1.3   Purpose/objectives of the Study  

The study seeks to examine the influence of Cost accounting information on product costing in selected paint manufacturing companies in Port Harcourt. The specific research objectives are:

1.     To examine the Cost accounting information and Product Costing in paint manufacturing firms

2.     To examine budget standard and product costing in paint manufacturing firms.

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