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Cost Accounting Models As Tools For Managerial Decision Making
[A CASE STUDY OF NIGERIA BOTTLING COMPANY PLC, ILORIN]
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1.5 RESEARCH QUESTIONS
The word research has been defined as an investigation into problem with a view of finding out facts on the areas of study. The area under research is “cost accounting model as a tool for managerial decision – makingâ€.
Models in general are beginning to gain recognition in modern time as major source of information.
According to the report of the committee on managerial decision model. “The judicious use of decision model supplements institution and implicit guides with explicit assumptions and criteria if the decision can be depicted by a mathematical model and if the models builder, captures within his models is like to lead to decision that are more consistent with a firm’s objectiveâ€.
The main purpose of this study therefore is to relate the theoretical aspect of the study with the practical aspect that is matched as closely as possible. The model within the actual operation in the bottling industry. Suing the Nigerian Bottling Company Plc as a case study and putting into model, all those cost factors that are important as far as the choice of policy is concerned, leaving out all the irrelevant factors that contribute litter or nothing to total picture under research is “cost accounting model as a tool for managerial decision – makingâ€.
In a research work like this, it is normal to collect statistical data and information relevant to the study in order to makes the research more reliable. It is also a fact that success in a research work of every nature largely depends on how extensive the scope of coverage is spread and position of sources of information.
1.6 scope of the study
The cope of the research is to concentrate on the Nigeria Bottling Company Plc, Ilorin and their operational effect on manufacturing company in Nigeria.
Furthermore, its covered the various cost accounting models used as tools for managerial decision making with particular reference to model that are particular and applicable to the Nigeria Bottling Company Plc, Ilorin Branch been the case study for this project research, which will emphasis on their operation for 5 years, i.e. (1998 – 2002) as well as its various branches all over the federation.
1.7 limitation
Due to time and financial constraints this research study would be limited to the NIGERIA BOTTLING COMPANY PLC, ILORIN and is hoped that any findings of the research would be applicable to other branches of the company and the bottling industry in general.
1.8 study plan
This project work is based on the important of cost account models as a tool for managerial decision making (A case study of Nigeria Bottling Company Plc, Ilorin).
The researcher believes that the result of their study will highlight the importance of cost accounting and costing as a crucial tools used in decision making by the management in achieving their main motive of minimizing cost and maximizing profits. It will be study under five different chapters.
Chapter one, throw light on the general introduction of the research study which is the background of the study, the objectives and motives of carrying out the research programmes, the significance of the study, statement of research problems, research questions scope of the study definition of key terms and finally, the limitations and problems encountered in carrying out the research programme.
Chapter two, contains review of the related literature.
Theoretical framework, appraisal of literature review.
Chapter three, is basically on the explanation on the historical profile of the case study, research hypothesis, data specification, methods used in gathering information i.e. data collection population and sample size, sampling techniques and finally, method of data analysis.
Chapter four, throws light on the discussion of the analysis, hypothesis testing and discussion of findings.
Chapter five, is the summary of the finding that is, the conclusion and recommendation of the study and suggestion for further study.
The researcher believes that this project will be useful as a basic of analysis the importance of costing and cost accounting to the management and the organisation.
1.9 DEFINITION OF BASIC TERMS
The under listed terms has been defined to suit the context of this writing in order to avoids certain misconception that may arise.
a. Cost: This is amount of expenditure incurred on or attributable to a specified thing or activity and at the simplest level. A cost is determined by two components “the quantity and the priceâ€.
b. Cost unit: As defined by ICMA is a “quantitative unit product or service in relation to which cost are ascertained†whether costing is carried out, the focus is to determine the cost unit of the product or the service.
c. Cost allocation: This is the charging of discrete and identification of item of cost centres of cost unit. It is the allotment of whole item of cost to centre or cost unit that is responsible for its authorization.
d. Cost Ascertainment: This is the identification of the right or appropriate cost unit or cost centre where an expenses has been incurred for proper costing activity without ambiguity.
For example if the total salary per month of the staff in a factory is N60,000 out of this what it cost to pay the nurses salary may be N20,000 or the word cleaners may receive N10,000 and doctors receives N25,000.
e. Cost Absorption: This refers to cost that has been accumulated in a cost centre by either allocation or appointment and are absorbed into cost unit.
f. Cost Apportionment: This is the process of sharing a commonly incurred expenses proportionately where two or more cost centre are involved, based on the amount of benefit each cost centre derived from it.
g. Cost control: This is an act of making necessary adjustment after comparing the actual cost with a standard or targeted cost. Where the actual exceeds the targeted cost a reduction in cost may become necessary.
h. Costing Centre: As defined in the terminology, it is a location person or items of equipment in respect of which cost unit for control purpose.
i. Cost Codes: As defined by ICMA is a “System of symbols designed to be applied to a classified set of item to gives a brief accurate reference facilitating entry, collation and analysisâ€. Such symbols may be mainly series of numbers or alphabets or mixture of both.
j. Fixed cost: This is a cost, which does not change with the change in the level of activity. It remains static over a period of time, unaffected by variations in the volume of production.
k. Variable cost: This is a cost which changes in line with the changes in the level of activity. Any increase or decrease in the volume of production results in a proportionate change in cost.
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