APPLICATION OF MARGINAL COSTING TECHNIQUE IN A MANUFACTURING COMPANY (A CASE STUDY OF NESTLE NIGERIA PLC)

APPLICATION OF MARGINAL COSTING TECHNIQUE IN A MANUFACTURING COMPANY (A CASE STUDY OF NESTLE NIGERIA PLC)  ABSTRACT

This research work examines the importance of application of marginal costing technique in a manufacturing company using Nestle Nigeria Plc as a case study. It shows that application of marginal costing technique is a survival tool in Nigeria present economic situation.

It also shows that effective control of production and distribution of operational cost arises from the intelligent application of operational control, adequate cost accounting systems, analysis of cost data and variances, formulation of product policies and using of already established budgets.

In carrying out this research work, primary and secondary data were used. The primary source of data was through questionnaires, which was administered to the targeted staff. The secondary data method was also used to collect information for this study and it involves engaging in desk research with review of relevant textbooks, journals and magazines

The research study revealed that application of marginal costing is a necessary tool for organization overall performance.

Based on the finding of this study, management should put adequate measure in place to ensure compliance with standard, appreciate the need for training of staff to improve their level of competence in order to discharge their duties effectively and efficiently.

TABLE OF CONTENTS

CHAPTER ONE

2.1     Introduction to the Study

2.2     Historical Background of Nestle Nigeria Plc

2.3     Purpose of Study

2.4     Significance of Study

2.5     Scope and Limitation

2.6     Hypotheses

CHAPTER TWO

2.0     Literature Review

2.1     Meaning of Marginal Costing

2.2     Theoretical Framework

2.3     The Importance of Marginal Costing To Management

2.4     Marginal Costing and Pricing

2.5     Advantages and Disadvantages of Marginal Costing

2.6     Pricing Strategy 

2.7     Marginal Costing Vs Absorption Costing

2.8     Principles and Applications of Marginal Costing Price Fixation 

2.9     Accounting Function, Cost Control and Responsibility Accounting

2.10 Break-Even Analysis

2.11 The Nigeria Present Economic Situation

CHAPTER THREE

3.0     Research Methodology

3.1     Research Design

3.2     Research Instrument

3.3     The Use of Questionnaire Method

3.4     Personal Interview

3.5     Population Characteristics

3.6     Sample Size

CHAPTER FOUR

4.0     Analysis of Data and Presentation

4.1     Introduction

4.2     Analysis of Data and Classification

4.3     Analysis of Data According To Test of Hypothesis

CHAPTER FIVE

5.0     Summary, Conclusion and Recommendation

5.1     Summary

5.2     Conclusion

5.3     Recommendation

Bibliography

CHAPTER ONE

1.0   INTRODUCTION TO THE STUDY

This project is designed to evaluate the application of marginal costing technique in a manufacturing company with special reference to Nestle Nigeria Plc as a case study.

It therefore examines the techniques of marginal costing as a tool of industrial survival in the Nigeria present economy. The project will also examine cost control system of Nestle Nigeria Plc so as to know whether or not a control system exists.

The effective control of production and distribution of operational cost arises from the efficient application of operational control, adequate cost accounting systems, analysis of cost data and variances, formulation of product policies and using of already established budgets.

Marginal costing techniques (MCT) will be ascertained in Nestle Nigeria Plc as related to:

1)       Various methods of valuing material issues.

2)       Labour remuneration.

3)       Determination of marginal costing per unit of a product.

4)       Purchasing procedures.

5)       Store routine, store control and issue of material.

6)       Ascertain actual cost per unit.

Marginal costing and its application

This is a well-known concept of economic theory. It may be described as the change in total cost which arises as a result of an increase and or decrease by one unit in volume of output. Marginal cost is an amount at any given volume of output by which aggregate costs are changed if the volume of output is increased or decreased by one unit.

Marginal cost is synonymous with variable costs, prime costs plus variable overheads in the short run but, in a way, would also include fixed cost in the planning production activities over a long period of time involving an increase in the productive capacity of business. Theoretically marginal cost and differential cost are the same. If there is no change in fixed cost then both of these costs will be same. Thus marginal cost does not include fixed cost at all whereas differential cost may include an element of fixed cost as well if fixed cost changes due to a decision.

Marginal costing is a very important technique of decision making. It is a comparatively new area in the field of accounting but it is gradually gaining more and more acceptance. It is the method of matching cost with revenue to determine periodic income. It is the ascertainment of marginal cost and of the effect on profit of changes in volume or type of output by differentiating fixed costs and variable cost. In this context it should be noted that it is not a system of costing like process or job costing but it is simply an approach to the presentation of accounting information meaningful to management. In this all cost are segregated into fixed and variable components. Only the variable costs are regarded as product cost and are used to value inventory and cost of goods sold. The fixed costs are treated as period cost and are charged directly to profit and loss account. Thus no part of fixed manufacturing cost is deferred to the next period as inventory. While preparing a profit and loss account.

Project Topics and Research Project Materials 

 

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How To Write Chapter Three Of Your Research Project (Research Methodology)

  • Methodology In Research Paper


    Chapter three of the research project or the research methodology is another significant part of the research project writing. In developing the chapter three of the research project, you state the purpose of research, research method you wish to adopt, the instruments to be used, where you will collect your data, types of data collection, and how you collected it.

    This chapter explains the different methods to be used in the research project. Here you mention the procedures and strategies you will employ in the study such as research design, study design in research, research area (area of the study), the population of the study, etc. You also tell the reader your research design methods, why you chose a particular method, method of analysis, how you planned to analyze your data.

    Your methodology should be written in a simple language such that other researchers can follow the method and arrive at the same conclusion or findings.

    You can choose a survey design when you want to survey a particular location or behavior by administering instruments such as structured questionnaires, interviews, or experimental; if you intend manipulating some variables.

    The purpose of chapter three (research methodology) is to give an experienced investigator enough information to replicate the study. Some supervisors do not understand this and require students to write what is in effect, a textbook.

    A research design is used to structure the research and to show how all of the major parts of the research project, including the sample, measures, and methods of assignment, work together to address the central research questions in the study. The chapter three should begin with a paragraph reiterating the purpose of research. It is very important that before choosing design methods try and ask yourself the following questions: Will I generate enough information that will help me to solve the research problem by adopting this method?

    Method vs Methodology

    I think the most appropriate in methods versus methodology is to think in terms of their inter-connectedness and relationship between both. You should not beging thinking so much about research methods without thinking of developing a research methodology.

    Metodologia or methodology is the consideration of your research objectives and the most effective method and approach to meet those objectives. That is to say that methodology in research paper is the first step in planning a research project work.

    Design Methodology: Methodological Approach

    Example of methodology in research paper, you are attempting to identify the influence of personality on a road accident, you may wish to look at different personality types, you may also look at accident records from the FRSC, you may also wish to look at the personality of drivers that are accident victims, once you adopt this method, you are already doing a survey, and that becomes your metodologia or methodology.

    Your methodology should aim to provide you with the information to allow you to come to some conclusions about the personalities that are susceptible to a road accident or those personality types that are likely to have a road accident.

    The following subjects may or may not be in the order required by a particular institution of higher education, but all of the subjects constitute a defensible in metodologia or methodology chapter.

    Click here to complete this article - How To Write Chapter Three Of Your Research Project (Research Methodology)

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