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CHAPTER ONE

INTRODUCTION

This project is talking about cost control system in the Nigeria manufacturing industry. It states how cost is essential in manufacturing and the way to utilize material in order to save cost and gives maximum profit to the shareholders.   The effective cost control system should aid and continuity of nay manufacturing. If this cost can be well contributed, the manufacturing should have very high turnover all over the country and good name as well.

1.1     Background of the Study

Basically, behind the set up of every business is profit motive and behind its continuity is increase in turnover and profit. It is the profit motive that drives shareholders into investing their capital. It is the profit motive that leads into goods and services being produced and it is the profit earned that ensures the continuity, existence and growth of the business.    It should, however be noted that there can be huge profit without cost reduction and proper cost control even high turnover.    
The manufacturing companies that have efficient and effective systems of cost of control as an essential factor in improving or reducing the cost of production in order to maximize profit are very few.   An efficient system of cost control is one essential factor for industry control under modern condition of business and as such may be regarded as an important part in the effort of any organization and management to secure business stability and maximized of profit.   Though the method of achieving this singular aim of maximized profit vary from one origination to the other due to the fact that organization differ in scope and operation, the activities of the organization so that the organization can gain its achievements.

1.2     Statement of the Problems

In the course of this study, some problems have been found to be affecting the profit motive of be typical Nigeria manufacturing industry in relation to cost control. These include: -    
I.   Ineffective cost system and the weakness  
II.  Ineffective purchase procedure and transferring and transferring pricing.   
III. Ineffective stock control.  
IV.   Ineffective method of employing and rewarding labour.  
V.    Problems of changing overheads to production.  
1.3     Research Hypothesis / Questions  
i.        Is cost control one of the best in measuring performance?  
ii.       Does a properly cost control system enhance the organization profits?      
iii.      Does the basic reason for cost is to guide against the nature of business climate?  
iv.      Does cost control depend on the activities of other function department?     
(1)     Ho: That cost control is not one of the best cares in measuring performance            
Hi: That cost control is one of the best cares in measuring performance  
(2)     Ho: That a properly planned cost control system will not enhance the organization profit.             
Hi: That a properly planned cost control system will enhance the organization profit.  
(3)     Ho: That the basic reason for cost control is not guide against the nature of the business climate.               
Hi: That the basic reason for cost control is to guide against the nature of the business climate.     
(4)     Ho: That cost control does not depend on the activities of other functional departments.
Hi: That cost control does depend on the activities of other functional departments.      
1.4     Purpose of the Study  
This project will give an insight into the application of cost control in Guiness Nigeria Plc, and the effectiveness of overall cost control system as well as to determine interest weakness in the system and how it can be controlled.    Assessment of cost control and indicate that a proper planned cost control system will enhance the organization profit.   In achieving this purpose, the following will be looked into: -    
I.     To verify the nature of cost control will enhance profit management.  
II.    To examine the nature of cost control and its weakness.  
III.  To determine the problems facing the management in establishing and effective cost control.       
1.5   Scope of the Study
This study would cover the manufacturing industry with focus on Guiness Nigeria Plc. The main focus of the study is restricted to the cost controls that were used in the organization and how to improve on its weakness.    
1.6     Limitation of the Study  
This study is constrained by time and finance in carrying out the research work, inadequate data collection due to have degree of research work concentrates mainly on the cost control in manufacturing industry.              
1.7     The Significance of the Study  
The study is very important because the research work explained in details cost control strategies which will enable all participants on the filed to maximize.   The study shall be useful to govern firms and individuals in taking inferences as well as be a foundation upon which more research work could emerge.      
1.8     Definition of Terms  
Overheads: These are cost which cannot be directly related to specific job.  
Remuneration: This is the stimulation of efforts by monetary inducement.  
Cost: These are expenses spent on production, job, and services for the smooth running of the organization.   
Economic Order Quality (EOQ): This is the service exchanged cost and caring cost.  
Transfer Pricing: Is the monetary value attached to goods and services exchanged between division.     
Caring Cost: Is the current asset item in an organization that constitute major of working capital.     
Lead Time: It is the level called procurement time. It is the period of time between ordinary of method and when the goods are available for use.

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