APPLICATION OF MARGINAL COSTING TECHNIQUES IN SELECTED MANUFATURING COMPANIES (A STUDY OF SELECTED COMPANIES IN ABIA STATE)

ABSTRACT

The  study   was   carried   out  on  the  application   of  marginal   costing techniques ﾿ in  the  Nigeria   Manufacturing   Companies.   The  study  was carried ﾿ out   to   determine    the   effectiveness    of   marginal    costing techniques, ﾿ the  top  managements   attitude  and the  extent  of separation of fixed costs from variable  costs  in the short-term  decision  making  by the  Nigerian   Manufacturing    Companies.   In  the  course   of  the  study, secondary  data, personal  interviews  and questionnaires   in 5 point'Likert scale were administered  to the respondent   in the selected   companies  to obtain relevant  information.  The instrument  were checked  for reliability using  test-re-test   method.   The  result  produced   by  the  cronbach   Alph techniques  of the SPSS version  19 gave a reliability  coefficient  of 0.93 on the  average,  showing  a high  degree  of  item consistency.   A sample size  of  44  was   determined   using   Tara  Yamene's    Formula   from   a population  of 50 drawn  from the junior  and senior  staff of the selected companies.  The data obtained  from the field survey were presented  and analyzed ﾿ using  frequency   distribution   tables  and  simple  percentage. The  test  of hypothesis   performed   at 5%  level  of  significance   and  28 degree ﾿ of    freedom    revealed    that    the    Nigerian     Manufacturing Companies ﾿ apply  the  marginal  costing  techniques   in their  short  term decision  making.  For the effectiveness  of the costing  techniques,  the Z• calculated  gave  12.82  against  the critical  value  of  1.96. Similarly,  the test  for top  management   attitude  gave  a calculated  value  of  2.93  and critical  value  of  1.96.  Also,  the  test  for  separation   of  fixed  cost  from variable  cost gave Z-calculated  value of 5.996   against  the critical  value

of  + 1.96.  to  this  end,  the    study  discovered   that  marginal   costing techniques   is  being   applied     in  the  short  run  decision   making   by Nigerian   manufacturing    companies     and  recommends   its  sustenance foe the development   of the Nigeria  economy

Declaration

Certification

Dedication

TABLE  OF CONTENT

Acknowledgement 

Table of content 

List  of table 

Abstract 

CHAPTER ONE

1.0               Introduction

1.1                Theoretical  background

1.2                The statement  of the problem

1.                      Purpose  of the study

1.4          Research  questions

1.5                Research  hypothesis

1.6                    Significance   of the study

1.7                Definition  of terms

CHAPTER TWO LITERATUREREVIEW

2.1 ﾿ General  review  of costing ﾿ 12

2.2. ﾿ Detergent ﾿ 7

2.3 ﾿ Origin  of marginal  costing ﾿ 18

2.4 ﾿ Contribution  margin  and decision  making ﾿ 19

2.5 ﾿ Theory  of marginal  costing ﾿ 21

2.6 ﾿ Relationship  of variable  costs to fixed costs ﾿ 24

2.7 ﾿ Marginal  costing:   its  features  advantages  and disadvantages ﾿ 25

2.7.2 ﾿ Advantages   of marginal  costing ﾿ 26

2.7.3 ﾿ Disadvantage   of marginal   costing ﾿ 28

2.8 ﾿ The counting  and economist  concept costing ﾿ of marginal ﾿ 29

2.8.1 ﾿ The economist view of marginal cost ﾿ 29

2.8.2 ﾿ Positive eternities ﾿ 30

2.8.1.3 ﾿ Negative externalities ﾿ 31

2.8.1.4 ﾿ Economic of scales ﾿ 32

2.9 ﾿ Marginal costing  and absorption costing ﾿ 33

2.10 ﾿ Marginal costing as a management ﾿

﾿ Accounting tool ﾿ 35

2.10.1 ﾿ Trade depression in the industry ﾿ 37

2.10 .2 ﾿ Application  of marginal costing ﾿ 38

2.10.3 ﾿ Marginal  costing application where there are additional fixed costs ﾿ 42

2.10.4 ﾿ Application of marginal  costing:  make or buy decision ﾿ 46

2.10.5 ﾿ Selecting production with key factor or limiting  factor ﾿ 47

2.10.6 ﾿ Selection  of suitable product mix ﾿ 48

2.10. 7 Diversification of products where a new products is to

be manufactured ﾿ 49

2.10.8   Closing  down or suspending activities ﾿ 49

2.10.9  Marginal  costing  application  and global  market ﾿ 50

CHAPTER THREE  RESEARCH METHODOLOGY

3.0               Introduction ﾿

3.1                 Research design ﾿ 52

3.2                 Scope ﾿ 53

3.3               Population of the study ﾿ 53

3.3 ﾿ Population of the study ﾿ 53

3.4 ﾿ Sampling techniques ﾿ 54

3.6 ﾿ Source of data ﾿ 59

3.6.1 ﾿ Primary source of data ﾿ 59

3.6.2 ﾿ Secondary source of data ﾿ 59

3.7 ﾿ Instrument of the data collection ﾿ 59

3.8 ﾿ Questionnaires administration ﾿ 59

3.9 ﾿ Validation of the research instrument ﾿ 60

3.10 ﾿ Reliability test ﾿ 60

3.11 ﾿ Methods of data analysis ﾿ 62

3.11.1 ﾿ The Z -test statistics ﾿ 62

3.11.2 ﾿ Reliability of the Z-test statistics ﾿ 63

3.12 ﾿ limitation of the study ﾿ 63

CHAPTER FOUR

4. 1 ﾿ Presentation Data ﾿ 65

4.2 ﾿ Analysis  of data ﾿ 66

4.3 ﾿ Test of hypothesis ﾿ 72

4.4 ﾿ Discussion  of result ﾿ 84

CHAPTER FIVE: DISCUSSION. s·UMMARY OF MAJORFINDINGS CONCLUSION AND RECOMMENDATIONS

5.1 ﾿ Summary of the work ﾿ 87

5.2 ﾿ Conclusion ﾿ 88

5.3 ﾿ Recommendations ﾿ 89

5.4 ﾿ Contributions to knowledge ﾿ 89

﾿ Bibliography ﾿ 91

﾿ Questionnaire ﾿ 95