APPRAISING THE IMPACT OF COSTING TECHNIQUES ON PROFITABILITY (A STUDY OF MOSMANN WATER COMPANY LTD, UYO)

CHAPTER ONE

INTRODUCTION

1.1    BACKGROUND OF THE STDUY

Costing technique is the process depending upon the purpose for which management require information. Management information for a variety of purpose, such as control, decision making, predicting profits and price determination. Based on these, certain techniques and procedures are applied in order to have a comparative analysis about costs both directly and indirectly engaged in manufacturing service.

The Oxford Dictionary of Accounting 3rd edition (2005), defined costing techniques as techniques and procedures used in cost accounting and management  accounting to obtain the cost of service, products, processes, and cost centers to provide the information required to undertake performance measures, decision  making, planning and control. Costing technique is also termed as a technique of costing which is designed to suit the way goods are processed or manufactured or the way goods are provided, Lucy T. (2002). Therefore, each organization which uses costing techniques has unique features that will suit the company (firm).

Based on the above definitions of costing techniques an organization will field increase in profit if they apply the costing technique at where it is deemed appropriate. Therefore, this research is to examine costing technique as being applied in Mosmann Water Company Limited to see the impact it has created in the profitability of the organization.

1.2    STATEMENT OF THE PROBLEM

The rapid increase in competition among organizations has brought about an increase in awareness of profitability and the cost associated with the delivery of products and services.

These bring into question the relevance of traditional accounting information for decision making, conventional and managerial accounting information is largely driven by the procedures of the organizations reporting system which provides information that is to be aggregated and used. The problem is how to use this information to be planning and controlling of decision, vis avis profitability.

1.3    OBJECTIVES OF THE STUDY

The objectives of the study are to find out the following;

i) To examine if the impact of costing technique aid in the profitability of an organization. ii) To find out if the appropriate costing technique is being adopted by Mosmann Water Company Limited.

iii)      To determine whether costing techniques help in the ascertainment of costs of a specified thing.

iv) To find out the problems associated with the application of costing techniques in an organization. v) To make useful recommendations based on research findings. 

RESEARCH QUESTIONS 

i) Does costing techniques aid in the profitability of an organization?

ii) Does costing techniques help in the ascertainment of costs in an organization?

iii)      Which of the costing techniques is deemed appropriate to apply in an organization?

iv) What is the problem associated with costing techniques in an organization?