Evaluation Of Cost Accounting Techniques: A Tool For Management Control (Case Study Of Doyin Investment Nigeria Limited Ilorin)

Project and Seminar Material for Accountancy / Accounting

Evaluation Of Cost Accounting Techniques: A Tool For Management Control (Case Study Of Doyin Investment Nigeria Limited Ilorin)

Table of Content

  • Title Page
  • Certification
  • Dedication
  • Acknowledgement
  • Table of Content

Chapter One


  • 1.1 Background of the study
  • 1.2 Statement of the problem
  • 1.3 Purpose of the study
  • 1.4 Significance of the study
  • 1.5 Scope of the study
  • 1.6 Research methodology
  • 1.7 Research question/hypothesis
  • 1.8 Plan of the study
  • 1.9 Definition of the terms

Chapter Two

Literature Review

  • 2.0 Literature framework
  • 2.1 conceptual frameworks
  • 2.2 The role of control in management
  • 2.3 Cost accounting techniques
  • 2.4 Cost accounting techniques as an aid to management
  • 2.5 The impact of breakeven point analysis in management control
  • 2.6 Analysis of total cost
  • Reference

Chapter Three

3.0 Research Methodology

  • 3.1 Brief history of Doyin investment Nigeria Limited
  • 3.2 Population size
  • 3.3 Sample and sampling technique
  • 3.4 Method of data analysis

Chapter Four

Analysis and Interpretation of Data

  • 4.0 Brief survey
  • 4.1 Data presentation
  • 4.2 Data analysis
  • 4.3 Analysis of other data

Chapter Five

Summary, Conclusion and Recommendation

  • 5.1 Summary
  • 5.2 Conclusion
  • 5.3 Recommendation
  • References
  • Questionnaire

Chapter One

1.0 Introduction

As a matter of fact, all aspect of accountancy has arisen from practical necessity. Ever since the use of money to replace barter, people have been concerned with costs. However, it was the concentration of manufacturing facilities into factories which gave impetus to the development of recognizable costing systems.

In other word, cost accounting is probably the field of accounting which has developed mostly within the half of this century and there can be no doubt about its growing importance. This is partly a reflection of the growing complexity of modern production methods, which result in a greater capital investment and a higher proportion of competition widening markets. All these factors necessitate the keeping of systematic and accurate records which will show the cost of goods produced or contract fulfilled.

In summary whilst the early development were almost entirely related to manufacturing concerns, nowadays costing is used very widely indeed, in hospitals, transport undertakings, local authorities offices, banks as well as in every manufacturing concern.

1.1 Background of the Study

Ever since the use of money is used to replace barter, people have been concerned with cost. As early as 4500BC in Mesopotamia, accounting documents such as stock inventories, wages list and tax assessment were in use. It is true to say that accounting methods have always reflected the degree of sophistication of the economic circumstances in which they were used.

By the end of middle ages, the main use of accounting method was by government in assessing settlements and individuals for taxation purpose. From the last 13th century awards, there was a tremendous increase in trading activity in Europe. The existing rudimentary methods of accounting were not sufficient to deal effectively with the many transactions that took place.

Cost accounting provides key data to managers for planning and controlling, as well as costing products and services, and cost accountant are increasingly becoming integral members of decision making teams instead of just data providers. Modern cost accounting provides information to managers for their decision making. It cuts across all facts of the organization which gives insight into both the manager’s roles and the accountant’s roles. It measures and reports financial and non financial information that relates to the costs of acquiring consuming resources by an organization.

1.2 Statement of the Problem

Cost accounting methods established in any organization do have some constraints that militate against its objectives despite its indispensability. When new costing system is introduced either in part of production control or either function employers may resent the system. This ensures if they were not consulted before the system is employed or just as a result of more hostilities from workers.

It has been argued that cost accounting means spending money which will both produce tangible benefit. The cost of installing costing system tends to be high and those of operation even higher.

However, in modern times there is recognition that efficient production requires planning and control. Workers often expect the result of a newly introduced system too soon. Once their expectations are not met, they tend to give up on the system and will not be ready to cooperate on the next trail. Some manufacturing industries in Nigeria do not recognize the value of cost accounting and take it as a more time wasting and do not create a department for it.

1.3 Objective of the Study

The main purpose of the study is to evaluate cost accounting techniques as it aid management control.
Management has an important role to play in ensuring that the organization is kept solvent through it control measures as in ascertaining the better price for its goods and services, ensuring that the desired volume of production is secured at the last possible cost in relation to the schedules quality of the product etc.

The measurement of the degree of which these objectives attained depends largely on the existence and effectiveness of the cost accounting system in the organization

1.4 Significance of the Study

The research work will help in widening the researcher’s knowledge of the application of cost accounting techniques in an organization for effective management control. This research work will as well add to the existing knowledge on this topic.

The study will also enhance the appreciation to cost accounting techniques as an effective tool for management control in manufacturing industries having taken DOYIN INVESTMENT NIGERIA LIMITED as case study and will also enable the readers to appreciate the importance of cost accounting system in any organization

1.5 Scope of the Study

The research work covers a wide range of selected textbooks and other materials as regards the topic particular reference to DOYIN INVESTMENT NIGERIA LIMITED.

The study covers the role of material control in the company and the various raw materials used for its product. How efficient is the company in the adequate use of raw materials?

Moreover, the operation of the company’s budget was also examined. Most importantly is the examination of the company’s standard costing in the effective management control?

The study also covers the aid of accounting technique as an effective means for management control in the company.

1.6 Research Methodology

To achieve the objective of this study evaluation of the trading activities of Doyin Investment Nigeria Limited and appraisal of the listing requirement are very important. The examination would be based strictly on the Doyin Investment Nigeria Limited.

The study will also examine the performance of the manufacturing on the area of all industry.

1.7 Research Question / Hypothesis

The researcher used both the primary source of information and the secondary source of information to gather the information required for the study.

The primary information is obtained from the case study. The personnel manager is interviewed and questionnaire was given out to be filled by some of the key officers of the company to gather information on the cost accounting existence and system in the company .The information gathered through the questionnaire is analyzed in chapter four using percentage method.

1.8 Plan of the Study

  • Chapter one deals with the background of the study. It introduces the readers to the topic. It discusses the statements of the problem and highlights the purpose of the study. The scope of the study is also discussed in the chapter as well as the research question.
  • Chapter two incorporates the literature review of the subject matter and analysis of the importance of cost accounting for effective management control. References are made in this chapter from textbook which will help in testing the researchers finding in chapter four.
  • Chapter three gives brief historical background of the Doyin Investment Nigeria Limited as well as data collection method, sample selection, questionnaire design and data processing techniques.
  • Chapter four deals with the facts obtained from the investigation analysis of the issues involved in the subject matter are embodied in the chapter. This chapter however proves the test of the researcher’s findings.
  • Chapter five deals with the summary, conclusion and recommendation with references.

1.9 Definition of Terms

Cost Accounting:

According to ICMA, it is defined as the establishment of budget ,standard cost and actual costs of operations, process, activities or product and the analysis of variance, profitability or the social use of fund


According to ICMA, it is the technique or process of ascertaining cost.


Is defined as the amount of expenditure actual/national incurred on or attributable to a specified thing or activity.

Cost Unit:

According to the institute of cost and management accounting ICMA, It is “a quantitative unit of product or services in relation which cost is ascertained”.

Chapter Five

Summary, Conclusion and Recommendation

5.1 Summary

The researcher evaluates the importance of cost accounting techniques as a tool for effective management control in a company using Doyin Investment Nigeria Limited as the case study.

Meanwhile, for its importance to be justified, some related literature have been carefully reviewed and used as a guide for the researcher’s findings. The researcher is able to gather information on the two major accounting techniques which are;

  1. Marginal costing techniques which charge variable costs to costs units and the fixed cost written off in full against the contribution for that period and
  2. Absorption costing techniques which absorb all cost of production with no distinction between fixed cost and variable cost. It was discovered that cost data help the management in fixing the selling price of its product. Once the demand schedule is total cost lumped together and not distinctly separated, The management will find it difficult to locate areas that require control measure.

Hence, the researcher observed that for an effective control to be affected in a manufacturing company like Doyin Investment Nigeria Limited, which could assist to achieve both its short term and long term objectives value should be placed on cost accounting department and create one if there is none for the vital roles it plays as a tool for effective management control.

5.2 Conclusion

Based on the study devaluation made in this project work, the researcher is of no doubt that you would agree and appreciate the fact that cost accounting techniques serve as a tool for effective management control. It is necessary tool that helps management in determining the cost of its goods and services and computation of its profit statement.

A company like Doyin Investment Nigeria Limited can adopt a cost accounting system that will embrace all the operations of its organization such as production and sales department, financial control, store control and so on for effective management control.

The researcher based her study on Doyin Investment Nigeria Limited. It was discovered that the company does not involve a cost accountant used in ascertaining cost of production of each products; instead it has a statistician who helps in computing its cost of production. The researcher was not privileged to have an interview with the statistician.

The researcher has come into final conclusion that the method in use as adopted by the statistician in ascertaining its cost in Doyin Investment Nigeria Limited is fair for effective management control.

Nevertheless, Doyin Investment Nigeria Limited still needs the service of a cost accountant because the statistician cannot be as effective as a cost accountant.

5.3 Recommendation

Based on the study carried out in this research work, efforts have been made to show the essence of cost accounting techniques as aids to management control.

Based on this, the researcher has come into conclusion by giving constructive recommendation which is to be looked into for further modification and improvement of the cost accounting system of the company, thus;

  1. A cost accounting should be created in the company and competent cost accountant should be employed to fill the unit. The reason is that the cost accountants are professionals in term of cost classification and ascertaining the cost of each cost centre.
  2. A computer unit should be created. Here all the cost ledger of each departments are transferred to serve as a means of determining the total cost for effective management control.
  3. The company should also enlighten the senior staff on the costing system of the company and should continue to train its staff. This will of course increase the skills and working efficiency of the work and hence, greater productivity.

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