Wednesday, 29 June 2016

Appraisal Of Process Costing System In Manufacturing System Companies In Nigeria

CHAPTER ONE
1.0 GENERAL INTRODUCTION
1.1 BACKGROUND OF THE STUDY
No doubt that for any manufacturing company to grow easily, there must be as way to process their cost in order to achieve the organizational objectives.

Management needs a variety of information to plan for the future activities, assist in the measurement of efficiency and effectiveness in essence of machine
, men, materials and money ton control and to make decisions. Information regarding the financial aspect of performance in any organization is provided by the costing system. Cost per unit of running a section, department or factory, wages costs for unit of production or per period of production, scrap or rectification cost, behavior with varying levels of activities and so on are provided by costing system.

Ever since the use of money replaced barter, it is the concentration of manufacturing facilities into factories that give impetus to the development of recognizable costing system. The early developments were almost entirely related to manufacturing concerns but today costing is used very widely in the hospitals, transport undertakings, local authority offices, and banks as well manufacturing companies.

1.1 AIMS AND OBJECTIVE OF THE STUDY
i.  To examine the effect of cost system in the quality of the product of the company.
ii. To examine the effect of cost system on the production of the organization.
iii. To examine the significance of cost system control in the price to NBC profits.

1.2 PROBLEM OF THE STUDY
The main characteristics of manufacturing firms are that obtain raw materials and component and convert them into finished goods ready for sales. The problem arises as to how to account for the cost of these products. Problem also arises as to determination of the value or worth of raw materials and work inn progress at each process.  

1.4   SCOPE AND LIMITATION OF THE STUDY
The study intends to appraise eh process costing system in the manufacturing company as a whole with reference to NIGERIAN BOTTLING COMPANY (NBC) COCA-COLA ILORIN PLANT.

Manufacturing Company as a whole have little or no different in their costing system, hence effort will be made to pay s significant attention to the various accounting books and records most particularly the one involving cost kept by NIGERIA BOTTLING COMPANY (NBC) COCA-COLA ILORIN PLANT. The study will be restricted to the worker in the manufacturing mangers in the organization.

However, the major constraints in the confidentiality over certain vital documents which the company may not be willing to release for the fear of getting to the hand of the competitors cost for a broader and effective scope of the study is also a limiting factor. Therefore conducting the research in many materials that the researcher cannot afford, the researcher will also combine this study with academics work simultaneously.

1.5   DEFINITION OF TERMS
· Cost Accounting: The application of costing and cost accounting principles, methods and techniques to the science art practice of cost, control and ascertainment of profitability.
· Process Costing: Is a type of costing system that is used for uniform or homogeneous product.
·Cost: The amount of expenditure (actual or national) incurred on or attributed to a specific thing or activity.

COSTING
·  Cost Objective: Any activity for which a separate measurement of cost is ascertained.
·  Cost Unity: A quantitative unit of product or service in relation to which cost are ascertained.
· Cost Centre: A production or service location, function activity or item of equipment for which cost are accumulated.
· Production Cost Centre: A cost centre in which production is carried on.
· Actual Cost: (historical cost): These are amounts determined on basis of cost incurred as distinguished from produced or forecast costs.
· Cost Allocation: This is cost that can be directly identified or charged with a cost centre.
· Cost Apportionment: This is the division of cost among two or more cost centres with a presumed basis of apportionment.
· Overhead Absorption: This is a means of including overhead as part of the cost of production using a predetermined rate.
· Conversion Cost: The term is used to described the cost of converting purchased materials into finished or semi finished product.
· Value Added: This represents the worth of an alternation inform, location or availability of a product or service.
· Coding: A system of symbols designed to be applied to a classified set of items to give a brief references facilitating, entry, collation and analysis.
 
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