CHAPTER ONE
INTRODUCTION
1.1 BACKGROUND OF THE STUDY
The pursuit of an objective and the accomplishment is the
characterizes and every organization and this objective and accomplishment
exist in dimensions. Every business organization whether sole trade (one man
business) partnership, company or comporting therefore most have objectives and
expected accomplishment. The primary objective of every business organization
in a capitalist or mix-economy is to make profit, and meet their
accomplishment.
Profit is described as the excess of total revenue over
total cost during a specific period of time. For firms (Mostly competitive) to
make profit, they most have control over the cost of their production and
services.
In many business organizations some supervisors, always from
and query why accountants usually scrutinize their expense and other cost they
present for payments, when the money does not come from the accountants
pockets. Accountants scrutinize claims, voucher etc in order to satisfy
themselves that a particular item of cost is reasonably necessary and wholly
for the operations of the enterprise. Just like any one of us as individuals,
we try to satisfy all our necessary requirements without throwing ourselves
into financial mess before the inflow of another income, the scammers why
individual requirement applies to partners in partnership, companies etc when
an accountant queries cost incurred in ones department or cost center, all he
is trying to do is to ensure that reasonable cost are being incurred for the
level of the enterprises’ performance.
The researcher believe that each one of us manages cost in
our respective homes and by so doing we are exercising the function of a
financial manager through at domestic levels. If one gives his wife a
reasonable monthly allowance to run the home and two weeks later, she asks for
more money because she has finished the amount given to her, certainly the
husband would from at her for not controlling her spending habits. The common
excuse house wives give is that things are expensive, but then a cost anxious
husband before giving additional money would ask the wife whether she has tried
alterative market or alterative food stuffs. In the some manner, Accountants
Managers enterprise finds. While in the process they are not unnecessarily
rigid but ensure that limited overall objectives of the organization are achieved.
Cost control can therefore be described as the prevention of
within the existing environment in an organization. The main methods employed
in controlling cost are budgetary control, cost reduction technique and value
analysis. It is the intention of the project researcher to emphasize more on
cost reduction. Although both budgetary control and cost reduction go hand in
hand because it is difficult to demarcate where cost control? And budgetary
control ends both terms are concerned with improving efficiency and increased
profitability. However, it is pertinent to note that effective and reasonable
cost reductions for present output serves as standard for future production.
The researcher has decided to use LAKE CONCRETE INDUSTRIES
LIMITED ENUGU as a case study, the establishment has been operating at loss for
over five (5) years now which means that the objective of setting up the
business is been defected. The researcher would then find out whether cost were
substantially responsible for the loss. This will entail the analysis of cost
incurred in its products so as to find out the area of weakness and hen suggest
ways at improvement for the purpose of internment of the enterprise objective
and their accomplishment.
1.2 STATEMENT OF
THE PROBLEMS
This project study titled “analysis of business objectives
and their accomplishment through effective cost control” intends to investigate
the cause of the persistent loss in business operations of lake concrete
industries limited.
The company has been experiencing high rate of labour
turnover, since it could not pay it workers regularly. There is also great
number of debtors to the company and the situation has resulted to shortage of
operating capital, so the researcher wants to find out the exact causes of the
problems and patter suggestion to them.
1.3 PURPOSE
OF THE STUDY
In simple and direct terms this research work has purpose /
objectives which are as follows
(a) To have on
in-depth study on business objective and their accomplishment through cost
control
(b) To investigate the causes or under mining factors
responsible for the persistent loss being encountered by lake concrete industry
LtdEnugu.
(b) The study
aimed to emphasis through analysis the importance of effective cost control in
lake concrete industry ltd and all other manufacturing industries.
(c) To highlight how
effective cost control can help lake concrete industry in resizing and accomplishing
her set objective or goals.
(d) The study also aimed at proposing some ways of enabling
manufacturing industries, lake concrete industry invasive to attain and achieve
their gods do as to be in the business.
1.4 SCOPE OF THE
STUDY
The scope of this study is apparently carried with lake
concrete industry limitedEnugu.
The study dealt with the ability of the company lake
concrete limited to achieve the set objective through effective cost control.
It covers area of profit mating, cost and budgetary limitedEnugu.
1.5
RESEARCH QUESTIONS
In other to have a sound basis for this research project,
the researcher considers it imperative to build up a hypothesis.
Lakeconcrete industries limited which is a case study at the
researcher has been incurring loss for over three years now. The researcher is
considering that there should be relationship between cost control and loss,
whether cost has been responsible for the loss or not.
To this effect the researcher has to design a research question
which will be administered in form of questionnaire to staff and management of
lake concrete industries limited, to ascertain if cost control is responsible
for the industries’ loss over these years.
These questions include some of the following:
What is the major problem facing the industry?
Does the industry has
specialist who does her purchase for her?
What strategy does
the industry adopt to the coerces of taxing the product to the market for sole?
Is the company presently achieving its objectives?
How effective is the budget control of the firm?
Are the firms objectives clearly take to promote to the
workers?
What measure does the firm take to promote staff’s morals
and boast their productivity in the industry?
How often does the firm accomplish their objectives?
Does the industry acidly engage in cost control in their
operation?
1.6
SIGNIFICANCE OF THE STUDY
The study would help the lake concrete industries limited in
strengthening of its plan for it’s achievement in particular and other
organization in general.
The study will also may choose to go further in the study.
Under this study emphasis is held towards the practical
acquisition skills, knowledge and its application there by complementing the
theoretical aspect of the student’s work. This work no doubt will lead to an
increase in the subsequently since the primary object is to make profit, their
accomplishment of this gods will also lead to expansion of any business enterprise
and also the enhancement of the employment base.
Government expensive which is the greatest in nation
building is dependent on government revenue. The project is invaluable to the
government for the taxation on the profit that can now be generated by lake
concrete in particular.
1.7 DEFINITION OF
TERMS
BUDGETARY OF CONTROL: The establishment of budgets relating
the responsibilities of a policy and continues comparison of cuticle with
budgeted results, either to score by individual action the objective of that
policy or to provide a bases for its revision.
CARRYING COST: These cost that arises with large inventories
and the cost associated with it are the cost of capital tied up in inventory,
storage cost, insurance cost, property taxes and deprecation and obsolescence.
COST CENTER: A cost center is convenient intermediate point
usually physical or geographical entity to which cost can be charge.
DIRECT MATERIAL: Any used material that can be traced in the
economically feasible manner to a product or job is direct materials.
ECONOMIC ORDER QUANTITY (EOQ) This is the optional or
minimum purchase size
FIXED COST: Fixed costs are those cost a relevant range of
at put, while to the cost per unit varies with output.
ORDERING COST: Those cost that decline with higher
inventories and are associated with placing an order. They include inter-office
memo, long distance telephone call.
PRECAST: Any concrete cost in a different place outside the
point of use.
RELEVANT RANGE: Various level of production in which contain
factory overhead cost tends to remain constant.
VARIABLE COSTS: These are cost in which the total cost tends
to change in direct proportion to changes in volume, or out- put, while the
unit cost remain constant.