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PROJECT TOPIC- RELEVANCE OF COST ACCOUNTING INFORMATION IN MANAGEMENT DECISION MAKING

PROJECT TOPIC- RELEVANCE OF COST ACCOUNTING INFORMATION IN MANAGEMENT DECISION MAKING

ABSTRACT

This research is centred on “Cost Accounting” as a yardstick for management decision-making. A Case Study of Guinness Nig. Plc, Bensin City. We shall endeavour to examine critically what is exactly meant by cost accounting and how far it is used by most management when making decisions. The objectives and purpose of preparing cost accounting statements can only be just fled and accomplished if the user of such statements is able to interpret and read meaning to the figures contained in the statements. It is therefore, our aim to look into how Cost Accounting satisfies these purposes as a tool for decision making It is our hope that after going through this project, it will improve the degree of knowledge and understanding of our prospective reader on the importance and sign finance of cost accounting information in management decision-making. The project will reveal the necessity for managers of all business functions to understand the essential principles and conventions of cost accounting if they have fulfill part in the development of system of planning and controlling which must have a financial as well as a costing basis. Even this untrained in cost accounting and related subject will find by a review of this project that the principles, conventions and practice of cost accounting are not mysteries but amendable to the logic of common sense. Finally, meaningful suggestions were not put forward on the basis of the analysis and findings to ensure a more efficient adoption of an appropriate costing system that can lead to profitability and maximization of the value of a firm.

CHAPTER ONE

INTRODUCTION

  • 1 Background to the Study

Guinness (Nig) Plc, Benin was opened in 1972 after the incorporation of it’s headquartering at Ikeja, Lagos State in the year 1962. The original name of incorporation was Guinness (Nig) Ltd. It was changed to Guinness (Nig) Plc due to government directives to distinguish public limited liability companies from other limited companies. Guinness (Nig) Plc, Benin is located along Benin-Agbor Oregbeni Housing Estate, Ikpoba Hill, Benin City.

The objectives of the company are:

  1. To provide employment for members of the community.
  2. To contribute to the general welfare of the community by providing good quality bear and non-alcoholic malt.
  • To contribute to economical development of the economy.

The total number of full time staff as at this date is 2600. In addition about 360 casual workers is employed on a weekly basis. However, as workers are of the senior management level. The board is made up of 16 members (Directors).

  • 2 Statement of Problem

The growth of business activities in production process and information provision, aid management in taking timely, accurate and effective decision which brought out the need for an appropriate cost accounting system that will meet the need of the organization as an entity.

When an appropriate system is installed, output is increased, efficiency and profit maximization is recorded, and therefore, this study aims to highlight the relevance of cost accounting system using Guinness (Nig) Plc, Benin as a case study.

1.3   Research Questions

The following research questions were raised for the study:

  1.     Has there been any impact or relevance of cost accounting information in management decision making?
  2.     Has the implementation of cost accounting information helped in effective and efficient management decision making?
  3.     Has cost accounting information helped to achieve the goal and objective of the organization?
  4.     Why are organizations interested in cost accounting information?

1.4   Objectives of the Study

  1.      What is the place of cost accounting in business organization?
  2.     Is the system in use appropriate for the need of the organization under study?

iii.    What is the rationale behind the adoption of the use of the system?

  1.    A view of the system to find out the control system put in place by management.

PROJECT TOPIC- RELEVANCE OF COST ACCOUNTING INFORMATION IN MANAGEMENT DECISION MAKING

1.5   Statement of Hypothesis

The hypothesis of this research is divided into two as Null (Ho) and Alternative (HI). If the Null hypothesis were rejected, then the alternative hypothesis is accepted and vice-versa.
The hypothesis is to be tested as follows:

Ho:   Cost Accounting is not relevant in management decision making.

HI:    Cost Accounting is relevant to management decision making.

1.6   Significance of the Study

The significance of the study is to be able to ascertain the relevance of costing system in an organization overall performance. It’s specific function and contribution to efficiency in production processes.
It will enable management to know the importance of costing system, thus ensuring them to look at the purchase department with seriousness in any organization in which it is found.

This project will also be relevant to both the students and Government. For the Government, it will help in the prudent management of scarce resources and for the interested student, it will equipped them more on the understanding of costing system as a concept.

1.7   Scope of the Study

As a result of time constrain, it will be delimited to those areas that are necessary for the purpose of this research. Hence, the relevance of cost accounting and costing system or techniques will be covered. This study focuses on the cost accounting department of Guinness (Nig) Plc, Benin City, Edo State.

1.8   Limitations of the Study

During this research work, a lot of constraints and limitations were encountered. During the course of such academic exercise, some of these constraints encountered were unusual and boring. Collection of primary data for this study was a major constraint, as the researcher has to be on field personally in all the data collected processes. Inadequate internet facilities on the research work.

1.9   Definition of Terms

Cost Accounting: It is also defined as ‘the establishment of budgets, standard costs, actual cost of operations, processes, activities or products and the analysis of variances, profitability or the social use of funds’.

Cost: Cost is the value of economic resources used as a result of producing or doing the thing being costed.

Cost Unit: A Cost Unit is a unit of production or services to which cost can be related. The nature of the cost unit will obviously depend on the type of goods being produced or the type of services by the business concerned.
Cost Centre: According to Abohi (2002), Cost Centre can be defined as “a location, person or item of equipment (or group of these) for which costs may be ascertained and use for the purpose of cost control”. It can also be defined as a department or geographical area, a machine or person to which cost can be related.

Cost Control: This refers to the ability of management to monitor and supervise expenditure (i.e. current and capital) in order to ensure that things are going according to plan and that actual results are obtained for comparison against planned result so that appropriate corrective action (s) can be taken on the variance that is bound to arise before it is too late.

Activity Level: Activity Level constitutes the main basis for forecasting costs especially where changes or future changes are to be measured.

Variance: This is the difference between an actual amount and a predetermined standard amount. That is where actual cost is different from the estimated standard cost.

Decision Making: According to Reason (1990), is the mental process resulting in the selection of a course of action among several alternative scenarios. 

PROJECT TOPIC- RELEVANCE OF COST ACCOUNTING INFORMATION IN MANAGEMENT DECISION MAKING

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