MARGINAL COSTING AS AN ESSENTIAL TOOL FOR DECISION MAKING IN A MANUFACTURING COMPANY FOR DECISION MAKING IN A MANUFACTURING COMPANY (A CASE STUDY OF ANAMCO ENUGU)

TABLE OF CONTENTS

Title page                                                                                i

Certification                                                                                     ii

Dedication                                                                               iii

Acknowledgment                                                                     iv

Preface                                                                                     v

Abstract                                                                                   ix

Table of contents                                                                     xii

  CHAPTER ONE

1.0     Introduction                                                                   1

1.1     Background of study                                                     1

1.2     Statement of problem                                                    4

1.3     Objectives of study                                                        5

1.4     Significance of study                                                      5

1.5     Scope of the study                                                                  6

1.6     Limitation of study                                                        7

1.7            Definition of terms                                                         7

1.8            Hypothesis                                                                             9

CHAPTER TWO

2.0     Review of Related Literature                                         10

2.1            Marginal Costing                                                           10

2.2            The Principles of Marginal costing                                15

2.3            Marginal costing and decision making                           20

2.3.1    Acceptance of special order                                           24

2.3.2    Add or Drop Decision                                                   27

2.3.3    Make or buy Decision                                                   31     

2.4            The contribution margin theory                                             36

2.5            Marginal versus Absorption costing                                      39

2.6            Marginal costing and profit                                           46

2.7            The breakdown Analysis and Decision making             48

2.8            Advantages and Disadvantages

of marginal costing references                                        61

CHAPTER THREE

3.0     Research Design and Methodology                                63

3.1            An Overview                                                                 63

3.2            Sources of Data                                                             64

3.3            Sample used                                                                            65

3.4            Method of Investigation                                                 65

3.5            Problem encountered in data collection process            67

CHAPTER FOUR

4.0     Data Presentation and Analysis                                             68

4.1            An Overview                                                                 68

4.2            Analysis of Responses                                                   69

4.3            Hypothesis                                                                             83

CHAPTER FIVE

5.0     Findings, Recommendation and Conclusion                          87

5.1            Summary of Findings                                                    87

5.2            Conclusion                                                                     88

5.3           Recommendations                                                                  90

CHAPTER ONE

1.0            INTRODUCTION

1.1     BACKGROUND OF STUDY

The reality of modern business management in a free enterprise economic system is the level of competition among all the enterprise, where only the filter enterprises survive.  The motive for maximization of profit in business and quest for Wealth Creation being in vogue, management continues to remain under increasing obligation to improve its share of the market, its assets, its credit worthiness and its overall potential.

These in turn require an improvement in the quality of decision. Therefore in order to respond effectively to the challenges of time, management requires good factors in business decisions.

This research work is a real attempt to investigate into the principle and practice of marginal costing as an essential tool for decision-making in Manufacturing Companies using Anambra Motor Manufacturing Company (ANAMMCO) as a case study.  

This study will critically examine the following:

-        The condition for analyzing cost into fixed and variable components.

  -      How the cost are normally controlled,

-        And how management decision in aided under the technique.

An appraisal is necessary in order to determine effectiveness and efficiency of the management accounting technique.  In carrying out this research work, data was got from questionnaire.

Information and analysis of the data, using the percentage method to analyze the response elicited from respondents.  Also the personal observation methods were used, together with relevant information from libraries.

BRIEF HISTORY OF ANAMMCO LIMITED

Against the background of rapid economic growth, the Federal Military Government in 1975 was faced with the enormous task of developing the country’s infrastructure from one geared toward peasant farming to one oriented towards mechanized agriculture and industry.

The Anambra Motor Manufacturing Company is the result of the economic and technological co-operation between the government and the people of Nigeria and DAIMLER-BENZ AG OF West Germany.  The company is located at Emene Industrial layout, Enugu.  The site covers an