| Format: Ms Word | 1-5 Chapters | Appendix|
INSTANT PROJECT MATERIAL DOWNLOAD
Study Level: BTech, BSc, BEng, BA, HND, ND or NCE
Cost volume profit analysis is a distinct or unique discipline in the study of management. The cost volume profit has various application in industries from profit planning, formulation of marketing plans as well as decision making on volume.
In decision making, it must be understood that cost volume profit is an important tool in short term planning. It should be ascertained that the relationships that exist between the costs of carrying out a business, the revenue generated from such business as well as the sales of a firm. This is important because in the simplest form it is the cost definition of profit.
The cost volume profit analysis is vital to marketer as it guides in the formulation of plans and control. The treatment of break even point allows the market to know the cost revenue behaviors of the firm, while planning allows management of an organization to minimize risk and uncertainty.
In the study of cost volume profit, the technique used is called break-even analysis, it is concerned with the study of revenue cost in relation to sales volume and particularly the level of activities that produces neither profit nor loss, where revenue equals to cost is the break even point.
The break even point can only be achieved when there is a decision involving price, volume and cost that can be split into two classifications.
The cost volume profit relationship is needed because it represents what profit decision can be made. The company decision on price and output attempts to produce the goods efficiently. If the planning process is effective and efficiently utilized, a profit may result.
- BACKGROUND TO THE STUDY
Concerned has been on cost even since the existence of money replaced by trade by barter.
It was the concentration of manufacturing facilities into factories which gave impetus into the development recognizable cost system.
The early developments were almost entirely related to manufacturing industries. The analysis is used in different prostates i.e. hospital, transport undertaking, local authority’s offices, banks as well as manufacturing companies.
It was realized that the information from financial accounting was insufficient for the numerous decision by the management. Due to this inadequacy, the development of cost accounting of which cost volume profit analysis was used as a means of decision taking.
History had it that there were seven factors which were responsible for this development among which are the increase in industrial activities, the production of war equipment in a contract based on cost plus policy which were known as time and line contract in position of price control by government and competition.
History also had it that this method was use before and during the First World War and to a lessee’s extent during the Second World War. It was used frequently in building trade even in U.S.A at that time and frequently used in modern times.
Those entire factors combine to create a necessity to determine and analyze cost supported by accurate facts and figures to ensure that cost did not go beyond marketing price or contract price.
During the year, fundamental principle was divided for costing before setting up of a cost accounting system. Therefore, some preliminary investigation has to be made to stand in form of principle to guide management in setting up the system.
These principles are:
- It must be designed to suit the business
- The cost of the system must be considered in relative to the scope of the business and the benefit to be obtained.
- The requirement of the management and laying out of the factory should be considered
- The method of storing raw materials and of enumerates labour whether by hours or pieces of work or by the combination of the two must also be considered.
- The personalities of the key personnel and the capacity of the office staff should also be considered.
- STATEMENT OF PROBLEM OF THE STUDY
The main concern of this study or problem of this study is to view the impact or application of cost volume profit analysis method of a company’s product in the market it served. Basically the main issue is to know the extent in which cost volume profit analysis effort has led to increase in accountability aspect and profitability level of Nigeria breweries plc Ibadan.
This research work is embarked upon to carry out a critical appraisal and evaluating a current level at which cost volume profit analysis has changed the face of Nigeria breweries plc in terms of their business decision compared to what the organization is practicing before the advent of cost profit analysis as producer of consumable goods in Nigeria market.
- AIMS AND OBJECTIVES OF THE STUDY
Specifically, the aim of this study is to know or examine the application of cost volume profit analysis in taking business decision. To achieve this aim the following objectives shall be proved:
– To examine the impact or application of cost volume profit analysis method of a company’s product in the market it served
- To find out the extent in which cost volume profit analysis effort has led to increase in accountability aspect and profitability level of Nigeria breweries plc lbadan.
- Also to examine the appraisal and evaluate a current level at which cost volume profit analysis has changed the face of Nigeria breweries plc in term of their business decision compared to what the organization is practicing before.
- To also examine the adventure of cost profit analysis as producer of consumable goods in Nigeria
- SIGNIFICANCE OF THE STUDY
The significance of the study is to identify analyze and make recommendation on the application of cost volume profit analysis in taking business decision
The significance to Nigeria breweries plc is to be the first beneficiary to the recommendation given after the research.
The significance of the study to the research is to widen the knowledge of the researcher on the subject matter which is application of cost profit volume analysis in taking business decision, also to educate the researcher on application of cost profit volume analysis in taking business decision.
Finally, the significance of the study to the society at large is for reference purpose more so, for reading purpose for people that find it interesting.
In addition, estimation and application of sales volume is necessary to earn a normal profit, plans can be laid in the areas of marketing, purchasing, production and financing,
- SCOPE OF THE STUDY
The study of cost volume profit centers the usefulness and application of the accounting concept i.e. C.V.P cash tool for management in making business decision, and focus on how to calculate the cost volume profit analysis, computations of the C.V.P analysis as well as its basic principles. And not exempt the assumption behind limitations and the uses of the concept.
Finally a case study of the Nigeria brewery plc lbadan would be investigated under the concept of C.V.P analysis.
- LIMITATIONS AND CONSTRAINTS OF THE STUDY
This study has been hindered by a lot of problems, also the effectiveness of carrying out this research is hindered by the following factors.
- Poor response: – some staff of the company who are in adequate position to give adequate information declined in doing this. They claimed it is due to organization set up and personal perception, a side the fact that it’s meant for public consumption.
But personal observations are being carried out and consultation was also made on this study for broad analysis and for easy understanding.
- Claim of confidentiality: – in case where the staff agreed to respond to questions thrown to them, the information and factors supplied were not adequate. This is as result of confidentiality claimed by the personnel.
But promise were made to keep the investigation given as secret before they were to supply little information
- Non- availability of data: – this is another hindrance to the study. The data necessary for the study was not fully supplied and available, its validity is another problem.
But the sources of data for this project work were gathered mostly from textbooks, journals, library and secondary data were also adopted.
- Time and money constraint: – This project work requires time and money which are not available as a student; there is limit to the sources of income available to researcher.
But money was sourced from other means like borrowing and gifts from relatives to complete the research work. Also, one or two days was left out for the research work.