Production Cost Control In Manufacturing Organisation
Effective production cost control in a manufacturing organization involves a comprehensive approach aimed at optimizing resources, streamlining processes, and minimizing wastage. This entails meticulous planning and monitoring of various cost elements, such as raw materials, labor, overhead expenses, and equipment maintenance. Implementing lean manufacturing principles, adopting advanced technologies like automation and data analytics, and fostering a culture of continuous improvement are crucial strategies. Regular performance evaluations, variance analysis, and setting achievable targets help in identifying areas for cost reduction and enhancing operational efficiency. Additionally, fostering supplier relationships, negotiating favorable contracts, and ensuring quality control measures can further contribute to controlling production costs while maintaining product quality and competitiveness in the market.
This research work is based on the production cost control in manufacturing organization.
The study was motivated on how to control cost in manufacturing industries in order to achieve the purpose of which the industry is establish.
To solve the research problem the researchers made use of only secondary source of data, since the guidelines for writing the ND research work in banking and finance was restricted to secondary source of data.
The research instrument used to collecting the data were textbook, journal, magazine, newspaper. Etc.
Also, based on data collection form secondary soruce, it is quite obvious that I have found out that for production cost control to fully and well carried out, there should be combination of man and material resources in efficient manner. Also, that the need for cost control is very important in the sense that it increase profitability of manufacturing firm.
Finally, I discover that may organization neglect the issue of internal control system in cost control and thereby call attention for immediate implementation of this in our manufacturing industry.
Title page
Approval page
Dedication
Acknowledgement
Abstract
Table of content
CHAPTER ONE
Introduction 1
1.1 Background of study 1
1.2 Statement of the problem 3
1.3 Purpose/objective of the study 3
1.4 Significance of the study 4
1.5 Limitation of the study 4
CHAPTER TWO
Review of Related literature 5
CHAPTER THREE
Research Design and methodology 20
3.1 Sources of Data (secondary sources only) 20
3.2 Location of data 20
3.3 Method of data collection 21
CHAPTER FOUR
Findings 22
CHAPTER FIVE
Conclusion and recommendation. 24
Bibliography 28
INTRODUCTION
1.1 BACKGROUND OF STUDY
The main aim of this research work is an attempt to verify the indiscriminate increase in the prices of commodities produced in this part of the country by manufacturing organization and companies. This continuous rise in prices has attracted the attention of many citizens, mostly those who have ignorant of the adverse effect of this continuous rise in the prices on the citizen and the country economy.
This research paper will therefore aim at giving a comprehensive account of the control of cost in the production field with emphasis on the manufacturing organization. The attribute of every organization is the pursuit of a goal and this goal exists in different forms. It is evident, therefore that every manufacturing organization be it sloe, partnership, corporation, among others have an objective and this primary objective is profit maximization other objective such as social is purely secondary and solely depend on the profit.
Profit is the surplus or excess of to all income over total cost during a specific period of time. It therefore follows that before any organization can make profit, they must exercise control over their production and services.
There are other one still under production and the best ingredients are used for production in PRODA. Administration and Staffing. Although the government Board has responsibility for general management as set out in the natural science and Technology, Act 1980, the day to day running of the institute is the function of the direct or research.
Administration, the institute is organized into divisions science, Engineering, ceramics and administration.
The activate division form the point of view of research and development functions are science, Engineering and ceramics.
In order, both their research and development work and their production work be given equally emphasis each of these activities division is in turn organized into research units.
1.2 STATEMENT OF THE PROBLEM
Many organizations operating in our country today try every effort to make use of they break even in order to make profit, still al these efforts seems t be worthless. They reduce their cost in order to maximize as suppose to be, why do so many organization still not breakeven, not to talk of making profit after all their efforts to control cost?
Does it mean that their cost control is not effective? The researcher will give answer to these questions in his subsequent chapters.
1.3 PURPOSE/OBJECTIVE OF THE STUDY
Some of the objectives of this research work is
i. To assess the various production cost control techniques and effectiveness as well s the efficiency.
ii. To know some of importance and need for cost control.
iii. To know cost control and reduction Technique in manufacturing originations.
Iv To know the use of budgetary control system manufacturing organization.
V To know the use of budgetary control system in cost control
1.4 SIGNIFICANCE OF THE STUDY
This research work as carried out by the research on production cost control in manufacturing organization will be of great important to so many manufacturing firms in the area of cost control in order to maximize profit. Also individuals who are interested in entering into the business manufacturing will equal benefit from this project.
1.5 LIMITATION OF THE STUDY
The following limitations were faced by the researcher and limit efforts in elaborating the researcher work.
Finance: The researcher is a student with no souce of income and has been discouraged from traveling to all the labour market in Nigeria to collect dta for this study. She ahs therefore chosen Enugu metropolis because of proximity and ease of contract to the workers.
Time: This project work has just one semester time limit. It would have been desirable for a longer time to complete the topic and extend the coverage but it was not possible.
Pressure from Academic Work: The student was jam-packed with other academic activities and at the same time writing this research work and this brought little difficult in finishing this research work on time.
Production Cost Control In Manufacturing Organisation:
Production cost control is a critical aspect of managing a manufacturing organization’s operations effectively. It involves implementing strategies and practices to manage and optimize the costs associated with producing goods while maintaining product quality and meeting customer demands. Here are some key steps and strategies for effective production cost control in a manufacturing organization:
- Cost Analysis and Tracking:
- Begin by conducting a thorough analysis of all production-related costs, including direct materials, labor, overhead, and other variable costs.
- Implement a robust tracking system to monitor these costs on an ongoing basis. This could involve using specialized software or tools designed for cost management.
- Budgeting and Forecasting:
- Develop a detailed budget that outlines the expected costs for each production process, department, or product line.
- Regularly compare actual costs with the budgeted figures and identify any significant deviations. Adjust the budget or production processes as needed.
- Process Optimization:
- Identify inefficiencies and bottlenecks in the production process that contribute to higher costs. Streamline workflows and eliminate waste.
- Implement lean manufacturing principles to minimize non-value-added activities and reduce cycle times.
- Supplier Management:
- Establish strong relationships with reliable suppliers who offer competitive pricing and consistent quality.
- Negotiate favorable terms, discounts, and bulk purchasing arrangements to lower material costs.
- Inventory Management:
- Avoid overstocking or understocking of raw materials and finished goods. This can lead to unnecessary holding costs or production delays.
- Implement just-in-time (JIT) inventory systems to reduce carrying costs while ensuring a steady supply of materials.
- Labor Efficiency:
- Cross-train employees to perform multiple tasks, reducing the need for specialized workers and enhancing flexibility in resource allocation.
- Monitor employee productivity and address any performance issues promptly.
- Energy and Resource Conservation:
- Implement energy-saving practices and technologies to reduce utility costs.
- Focus on waste reduction and recycling to minimize disposal costs.
- Technology Adoption:
- Embrace automation and advanced manufacturing technologies to improve efficiency and reduce labor costs.
- Invest in predictive maintenance to prevent costly equipment breakdowns and downtime.
- Continuous Improvement:
- Foster a culture of continuous improvement where employees are encouraged to identify and propose cost-saving ideas.
- Regularly review and update production processes based on lessons learned and changing market conditions.
- Quality Control:
- Ensure that products meet or exceed quality standards to avoid costs associated with rework, returns, and customer dissatisfaction.
- Data-Driven Decision Making:
- Use data analytics to gain insights into cost drivers and identify opportunities for cost reduction.
- Base decisions on accurate and up-to-date information rather than assumptions.
- Risk Management:
- Anticipate and plan for potential disruptions in the supply chain, regulatory changes, or other external factors that could impact costs.
Remember that production cost control is an ongoing effort that requires collaboration across different departments within the organization. Regularly reviewing and adjusting your strategies based on performance metrics and market conditions will help ensure the long-term success of your manufacturing organization.