Evaluation of Cost Control Techniques and Profitability in Manufacturing Firm

8672 WordsNov 2, 201235 Pages
MAKERERE UNIVERSITY EVALUATION OF COST CONTROL TECHNIQUES AND PROFITABILITY IN MANUFACTURING FIRM CASE STUDY: CENTURY BOTTLING COMPANY LIMITED BY WASIKE DANIEL WAMUKOTA 07/U/15905/EXT SUPERVISOR: BY MR KITALE CHRIS APROJECT REPORT SUMITED IN PARTIAL FULFILMENT OF THE REQUIREMENT FOR AWARD OF DEGREE OF BACHERLORS OF COMMERCE OF MAKERERE UNIVERSITY June 2011 DECLARATION I, Wasike Daniel wamukota declare that the piece of work is my original effort and never been submitted to any institution known to me for any award. Signature…………………. Date……………………… Wasike Daniel wamukota Reg No :07/u/15905/ext APROVAL This is to certify that this report was done…show more content…
Cost control in manufacturing firms means that control of all items of expenditure by regular and frequent comparisons of actual expenditure with predetermined standards. This means that undesirable trends away from the standard can be detected and corrected at the early stage, (Horngren, 2002). Profitability is the total net gains from the business, which exceeds interest on capital at current rates (Marshall, 1998). Profit is regarded as the most common and theoretically plausible objective of business firms to the extent that some firms take it as the only objective (Dwivedi, 2002). As per Lipsy (2006), to an accountant, profit means the difference between total receipts and total costs of producing commodities. To the economic sense, profit means net increase in the wealth which is cash flow plus change in the value of the firm’s assets, (Pandey, 2005). According to Arora (1995), cost control techniques aims at improving efficiently by controlling and reducing costs to the lowest profitable figure. If the selling price remains constant, the reduction of costs involved results in a greater profit. When the commodities produced are sold, cost control as a preventive function aims to prevent costs from exceeding the predetermined target. In order to et an adequate return on capital employed, its essential to aim at minimum cost and maximum quality
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