The Impact Of Cost Control On Manufacturing Industries(A Case Study Of Guinness Nigeria Plc, Benin City)




This study is primarily concerned with finding out the role of costi control techniques in the assessment of manufacturing company. The study however, was carried out to know the effect cost control has in the Benin branch of Guinness Nigeria Plc in particular. In order to achieve this objective, research questions were raised and related literatures were reviewed to enable the researcher have an idea of what authors have said concertinaing cost control and cost control techniques.

The research instrument used for this study was the questionnaire, copies of which were administered to the respondents i.e employees of the company under study, in order to collect data. The data collected from the respondents to the fifteen (15) items questionnaire was subjected to analysis after which the hypothesis of the study was tested. The statistical tool  used to test the hypothesis was the chi-square system of analysis. The test confirmed that costi control measures have an influence on the effective realization of costi control objective of the companies under study. From the analysis of data collected, it showed that cost control techniques are good indicators or effective tools for cost control in Guinness Nigeria Plc. This , the importance of costi control techniques in a manufacturing industry cannot be overemphasized.


Content                                                                                                           Page

Title page                                                                                                    ii

Approval page                                                                                           iii

Dedication                                                                                                  iv

Acknowledgement                                                                                                v

Abstract                                                                                                      vi

Table of content                                                                                          vii



1.1     Background of the study                                                                             1

1.2     Statement of Research Problems                                                      3

1.3     Objective of the study                                                                       4

1.4     Hypothesis of the study                                                                              4

1.5     Scope and limitation of the study                                                     5

1.6     Significance of the study                                                                             5

1.7.0  Historical background of Guinness Nigeria Plc                                 6


Literature review                                                                                        8

2.1            Concept of cost control                                                                     8

2.2            Cost Classification                                                                                     9

2.3            Cost Control Techniques                                                                            13

2.4            An overview of standard costing                                                      18

2.5            Budgetary control                                                                                       20

2.6            Variance Analysis                                                                                      25

2.7            Cost avoidance and cost reduction                                                   27


Research methodology                                                                               28

3.1 Research design                                                                                    28

3.2 Population of the study                                                                        28

3.3 Sample size                                                                                           29

3.4 Method of data analysis                                                                       29

3.5 Questionnaire design                                                                                      29

3.6 Techniques of data analysis                                                                  30


Data presentation and analysis                                                                            31

4.1 Presentation of data and analysis                                                                   32

4.2 Testing of hypothesis                                                                           40



5.1 Summary                                                                                              44

5.2 Conclusion                                                                                           45

5.3 Recommendation                                                                                  46




Cost control is all knows as cost management or cost containment, which is a broad set of “cost accounting” methods and management techniques with the common goal of efficiency and improving business cost at least restricting their rate of growth. Business uses cost control methods to monitor, evaluate, and ultimate enhance the efficiency of specific areas, such as department division of product line within their operation. During the 1990s cost control initiatives received paramount attention from cooperate America , often taking the form of cooperate restructuring, diversement of peripherals activities mass layoffs, or out sourcing, costi control strategies were seen as necessary to preserve or boost cooperate profit and to maintain or to maintain or gain a competitive advantage.

According to (wheldon 1994) which states that cost control is the activities of any business enterprise which the determining factor towards the realization of set objectives. Further more, cost control provides the measurement of the degree to which its aims and objectives is attained, thus it has a definite place in the activities of any organization. Costi control technique can help a company pose good financial results and overcome difficult situations with ease, though it is not essential to be a finance experts to understand the definition of cost control, planning and actual implementing the techniques can be quite a big challenge.

In the tie of recession, many firm resort to costi control techniques such as reducing the extra facilities to the employees such as recreational facilities. The technique might also include cutting down the expenditure incurred on traveling by air and luxury hotel accommodation in order the cash flow. As a part of the costi cutting measure, few firms may postpone or cancel their plans of acquiring new companies, investing in new business and buying new machinery or system. These techniques should be utilized to save money and bring back financial strength of the company.

Costi control is used by different organization are different and are largely dependent on their business model and strength of their balance sheet. The better the implementation of these techniques, the better would be the future of the concerned organization.


The statement of the research problems are as follows

1.     How can cost control techniques be used to improve organizational efficiency.

2.     Does cost control have any significance in a manufacturing.

3.     How does management practically make use of information.

4.     How is cost control justified in an organization.

5.     What are the problems and constrains associated with the efficient use of cost control.

6.     Are cost control good performance evaluators when used properly.


The objective of this study are as follows

1.     Ascertainment of cost: the primary objectives of cost control is to ascertain cost of each product, process, job,  operation or service rendered.

2.     Ascertainment of profitability: Cost control determine the profitability of each product, process, job, operation or service rendered. The statement of profit or loss and balance sheet are submitted to the management periodically so as to know the cost control ascertainment of the organization.

3.     Classification of cost: Cost control classifies cost in to different elements such as material, labour, and expenses. It has further being divided as direct cost and indirect cost for cost control and recording.

4.     Control of cost: Cost of control aim at controlling cost by setting standards and compared with the actual, the deviation or variation between two is identified and necessary steps are taken to control them.

5.     Fixing of selling price: Cost control guides management in regards to fixation of selling price of the product. It is also helpful for preparing tender and quotations.


The hypothesis of this research work are:

Hypothesis I

Ho: Cost control does not have a significant effect on the effective realization of the objective of Guinness Nigeria Plc.

Hi: Cost control has a significant effect on the effective realization of the objective of Guinness Nigeria Plc.

Hypothesis II

Ho: Cost control measures are not indispensable tool for effective management decision making.

Hi: Cost control measures are indispensable tool for effective management decision making.


It must be mentioned in this point that lot problems were encountered in the course of this research work.

a.     Time: this research work was carried out during second semester, it wasn’t easy at all, this research work was in great depth in my heart due to time limit.

b.     Financial Constrains: the finance available to the researcher at the time of this research was inadequate. The researcher intends traveling to other similar business enterprise to source for additional information but all efforts was made due to lack of finance.

c.      Insufficient data: the entire staff of Guinness Nigeria company is not an exception of enterprises which are unwilling to disclose information or reporting their activities to outsider for fear of the collector or authorities.

d.     Response from others interview also posted a problem as the researcher was upholding in collecting questionnaire, most managers of the enterprise granted while other business participant administered questionnaire could not be found where they kept theirs.


This study will be to

i.            Ensure that from the finding management decision can be made thereby leading to a more viable company

ii.            Managers whose interest is basically to achieve an overall operational efficiency, thereby establishing and closing the gap between the objective of variance analysis and its application.

iii.            Student of accounting and finance are also experts in the field of management accounting.


Guinness Nigeria Plc is a company engaged in the bottling and marketing of  products such as Guinness, Harp lager beer, Extra smooth, Gordons spark, Malta Guinness. The first five products are alcoholic beverages, while the last is none alcoholic beverage. However, some of this products are not readily available in the market.

The original Guinness breweries at St. James Ghate in “Dublin”, republic of Ireland was founded in 1859 and 1936, the second brewery was opened in London. Guinness Nigeria Plc to import and distribute Guinness Stout from Dublin in Ireland for sale in Nigeria. Following the great success of the trade in Nigeria, a decision to build spinally brewery in Nigeria was taken and later in 1960 construction of the Ikeja brewery started.

In 1962, the stout brewery at Ikeja was opened and was commissioned on 16th of March, 1963 by Dr. Nnamdi Azikiwe (the then governor general of Nigeria). Making only the third place in the world (after Dublin and London) where Guinness was known as at that time. Following the increase in the demand of the product of Nigeria, Guinness breweries was opened in Benin_ City and Ogba in Lagos in 1977 and 1982 respectively. A brewery for Harp Lager was opened in Benin City in 1994.

As at 1999, Guinness Nigeria Plc had three breweries. The first one, the Ikeja brewery located at Oba Akran avenue, industrial estate in Lagos, the Ogba Brewery located at Acine road, industrial estate along Benin Asaba road, Benin city. But in 2004 a new brewery was built and commissioned at Abia state. This is jointly owned and managed by Nigerians and foreign investors but Nigerians own majority of the shares. It is a public quoted company in Nigeria. Stock exchange (SEC) with % of it shares owned by Nigerians. Guinness overseas limited and attomta limited own the remaining 40%. Guinness Nigeria plc is trying to minimize cost on imported, barely malt and sought and maize. This resulted in the successful lunching of merit lager beer in 1986. Guinness Nigeria plc thus became the first brewery company in the whole of country to achieve 100% local sourcing.

Guinness farm division came into existence in 1986 by the acquisition of 4000 hectares of land in Kudu village, in Niger state to provide for the local sourcing of local raw materials. The farm cultivate and grow maize and sorghum as main crops in an addition to growing crops in an addition to growing crops like cowpeas and soya beans for local consumption. Guinness Nigeria plc contributes to Nigeria’s economy which has help in providing direct employment to over 6000 Nigerians engaged in the production of crowns, corns, cartons, bottles and crates   but also in the employment created for transporters and suppliers of raw materials. The company also provide social amenities such as health care service, water supply to host communities, sponsorship of educational programs e.t.c. the company also generate internal revenue to government through tax to government thorough tax and excise duties.

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