Effects Of The Application Of Cost-Volume-Profit Analysis On Profitability Of Manufacturing Organizations (A Study Of Selected Industries In Aba, Abia State)

ABSTRACT

Manufacturing firms in Nigeria do not give due consideration to the three variable and assumptions of cost-volume-profit (CVP) analysis in the decision process. This result in low quality decision and low performance/ profitability. This research work was set out to examine the application of cost --volume - profit analysis in manufacturing firms, and the resultant effect of inefficiency in its application. The research methodology was designed in a manner that ensured adequate representation of the manufacturing sector in Nigeria, hence the emphasis on PZ industries PLC and Nigeria breweries PLC which are the typical manufacturing firm in Nigerian. Simple regression was used for the test of hypothesis formulated for the study. The research finding established the long held speculation of lack of knowledge of CVP analysis by manufacturing firms and decision makers and inadequate exhibited where it is applied. In furtherance of the research objective, the of the research measure on how to revert the situation, increase profitability and the reaping of the resultant benefit thereof The focus of the recommendation is that each of the three variable of cost- volume-profit analysis (cost, volume, analysis) should be considered since no mean decision could be reached, if any of the variable is isolated especially for a manufacturing concern in the modem business environment. Finally, it was concluded that management of manufacturing firms must be able to apply and efficiently take the cost-volume profit analysis for increased survival, growth and profitability of the sector.