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Impact of Cost Accounting Information on Price Determination

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Impact of Cost Accounting Information on Price Determination.


This research study was conducted to determine the impact of cost accounting information on price determination in some manufacturing companies in Nigeria. The objectives of the study were to determine the components of manufacturing cost information and also to identify the lapses therein.

Literature review on the topic was aimed at cost determination, cost control concept, cost performance evaluation, direct and indirect cost and fixed/variable cost.

Data collected were analysed using frequency table and chi-square. The result of data analysed showed that cost accounting information contribute a lot on price determination of products.


Title page
Table of Contents———————————————————06
Abstract ——————————————————————-07
Chapter One – Introduction———————————————- 8-17
Chapter Two – Literature Review—————————————–18-51
Chapter Three – Research Methodology———————————52-59
Chapter Four – Data Presentation and Analysis——————-60-75
Chapter Five – Recommendation, Findings and Conclusion—-76-82


Background of the Study

The studies of modern cost accounting yield an insight into both the accountant and management roles in an  organization.  Management in most cases wants to know how performance is measured and often depend on accounting information for guiding their decisions.

Decision making in this context is defined as making purposeful choosing from among a set of alternative cause of action in light of some objectives.

Cost accounting has a main purpose of accumulating cost of an organizational products and services. Managers of manufacturing companies can use product cost information as a guide in setting selling prices and for inventory valuation and profit determination.

According to Adeniyi (2000:10), cost control/reduction involves the predetermination of cost and comparison of predetermination budgeted or standard cost with the actual cost.

Standard cost which is closely linked with the budgeted is predetermined per unit cost, usually analyzed into elements: Direct Material, Direct Labour and Factory overhead.

Standard cost is an effective aid to control, due to the link with budget plans and decision making, because it represents anticipated cost, that is, a cost which will exist in the future and is likely to be affected by decisions made by the management.

Carroll (1953), Cost control information always refers to as the control of expenditures within predetermined levels, which entails the minimization of resources so as to achieve a given objective.

These controls should be continuous activity aimed at improving efficiency and quality by ensuring that the right resources are provided and efficiently used.

It is on this basis of this cost accounting information functions, that, this research is embarked upon to ascertain to what extent some Nigerian Manufacturing Companies “Nigerian Breweries plc, Aqua-Rapha Nig. Ltd, and Anammco Nig. Ltd.” have used this cost accounting information in the determination of its product prices.


Allan R.T Drobin: Management Accounting, an Introduction Pitman BOOKS London 1961 pg. 28

Charles T. Horngren:  Cost   Accounting  a    Managerial  Emphasis (Presentice Hall India) sixth Edition (1990

Rotch I. and Ballen: Cases in Management Accounting and Control Systems (Richmond Dame India) 1982 pg, 241

Louis E. Boom and Warren Haynes: Pricing Decision Business Management Research summary (1966) Washington DC.

Adeniji  A.A.(2001)  An Insight into  Management Accounting Corporate Publishers, Yaba Lagos.

Bathy J. (1979) Analysis of Manufacturing Variances In Standard Costing MacDonald & Evans Ltd. London

Jones C.L. (1976), Management  in Financial Management for Managers

Armond L.W.: (1984), Cost Accounting Analysis and Control. London Macmillan Publisher Ltd.

Nwabuzor  R.:  (2001) ICAN   preparatory  Note and Management Accounting

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