Pdf the impact of cost control on manufacturing industries. Please note that while cost estimating in support of designbidbuild projects is covered in depth in this manual, there are certain other conditions, such as designbuild project delivery. Pdf cost control and its impact on the survival of nigeria firms. In order to minimize the trim loss it is necessary to optimize the cutting plan consists of a series of cutting patterns with an associated frequency 2 supply chain phenomenon presented by 38 production cost reduction through the use of information systems. Cost accounting includes not merely the maintenance of cost records for cost ascertainment but also for cost analysis, cost comparison, cost control and cost reduction. The research has been performed in the framework of a research program focussed on sheet metal manufacturing as part of the iopresearch program supported by the dutch ministry of economic affairs. The impact of cost control on manufacturing industries. Cost reduction strategies in marketing a using the computer for market. Then, referencing case studies of both contractors and owners in industries including. Techniques for cost control in manufacturing companies. Today, businesses and government agencies alike are demanding greater visibility into project and program performance. Control techniques americas is an ac drives manufacturer and a nidec motor corporation business. Contents introductior chapter 1 parti chapter 2 chapter 3. International journal of management and social sciences research ijmssr issn.
Project cost control in the nigerian construction industry. The costs of transforming raw materials into finished products are classified into two major categories manufacturing and nonmanufacturing costs. The primary objective of this research project work is to examine critically the various cost control measures being used by manufacturing organization using project development institute as a case study. Asaba aluminum and gbc murphy limited were used as case study. Managers at all level will know how to plan in terms of purchases, production, and marketing to embark on, in other to minimize cost. May, 2015 cost accounting includes not merely the maintenance of cost records for cost ascertainment but also for cost analysis, cost comparison, cost control and cost reduction.
Effect of cost control and cost reduction techniques in. Cost allocation is a method or combination of methods that results in a reasonable distribution of costs stewart, 1995a. Cost reduction and optimization for manufacturing and industrial companies. Study of cost control techniques used in construction. Cost control for an engineering project is limited to the cost of labor, equipment, materials and site overheads. Oct, 2015 cost reduction is not concerned with maintenance of performance according to predetermined targets. This article contains mainly some of the techniques of cost control and cost reduction in a very simple and in laymans terminology.
Managers at all level will know how to plan in terms of purchases, production, and marketing to. The future directions of cost studies of buildings some will attempt to argue that a few of these techniques merely limit expenditure and apply a range of cost control practices, i. Costing methods, techniques and systems represent the key instruments for measuring. Optimization of the manufacturing process dfa is a tool used to select the most cost effective material and process to be used in the production in the early stages of product. Control of cost and time should be linked together. Companies that implement quality programs can reduce the cost of quality by 25% in half in 18 months, and a further reduction in by half the other18 months. All manufacturing costs must be assigned to the units produced in order for a companys external financial statements to comply with u. Strategic management tools and techniques and organizational.
Pdf profitability in manufacturing companies in nigeria depends on the ability of. With your download, get the 14 best papers relevant to this one, including 14 top related papers. Cost estimation is not only getting the estimates right but managing changes to the quality and. Keep track of how much product your operation produces per person per hour, and look for variables that correlate with increased productivity, such as the number of workers on the floor at once, or the particular workers participating in a manufacturing process. The process of monitoring and regulating the expenditure of funds is know as cost control. Cost accounting helps the business to ascertain the cost of productionservices offered by the organization and also provides valuable information for taking various decisions and also for cost control and cost reduction. This research work tried as much as possible to look into the impact of cost control in manufacturing industries. The cost estimate prepared for the project during the bidding process is the basis for cost control. To indicate the trend for each cost code, that is, whether the unit cost involved has been increasing or decreasing evaluation of the effectiveness of cost reduction efforts. Under the scheme of cost control on manufacturing industries, some costs possess a dual short and longrun controllability characteristic. Introduction to cost accounting mit opencourseware. Project cost management processes there are three project cost management processes. Robust design takes into account the three dimensions of quality cost, expressed in total cost quality triangle.
Next, the tutorial goes through a simple, yet complete example of how to put all of the concepts together to execute a manufacturing cost analysis. Study of cost control techniques used in construction industry. Manufacturing costs are classified into three types. Cost control and its impact on the survival of nigeria firms. I wrote it for supervisors, managers, and executives. In pursuance of these objectives there will be head to highlight the followings. Distinctive competency toyotas distinctive competence is its production system known as the toyota production system or tps. The organization will know how to accomplish a programme at a reduced cost. Cost reduction techniques lbj school of public affairs. It provides the roadmap for implementing recommended actions with true and tried methods by taking a modern, allinclusive look at manufacturing processes. Cost management is one of the most significant issues in company. At the same time, the cost of the output can be planned and changes can be made where appropriate. Cost control is simply the prevention of waste within the existing environment.
For example, a fiveyear contract as to the price of a raw material, representing a longrun commitment is not immediately controllable and the contract may be negotiable only at a higher management level. Control techniques is a specialist company manufacturing ac and dc variable frequency drives, servo drive technologies and motion control for commercial and industrial applications. Cost drivers can be factors other than volume cost driver e. Cost control by management means a search for better and more economical ways of completing each operation. Budgetary, control, cost volume profit analysis, and standard costing are common to both. The impact of cost control on manufacturing industries profitability. The costs of transforming raw materials into finished products are classified into two major categories manufacturing and non manufacturing costs. In practice they do much more through refocusing the design and construction teams by adding value to the project.
It is a cornerstone of the cost leadership strategy that the company pursues. The problem in nigeria, many construction projects development have failed owing to the various technical and financial pressures of cost limit, quality and value optimization. Cost control and its impact on the survival of nigeria. Furthermore, an investigation of the relationship between cost management practices and firms performance in the manufacturing organizations in nigeria was carried out by oyerogba, et al 2014 using data from 40 manufacturing companies listed on the nigeria stock exchange during the period of. Accountant provides management with a format designed. It includes easytounderstand and easytoimplement costreduction concepts. Analysis of toyota motor corporation harvard university. Flexible manufacturing systems offer the hope of eliminating many of the weaknesses of the other three approaches but possible at a cost of cutting out many jobs. According to the ictad cida there were several documents which should maintain records for. Cost estimating and control to reduce expenditures a cost per direct labor b analyzing manufacturing costs c breakeven analysis d impact of parts shortages on labor costs e network analysis f pertcpm applications g pertcpm calculations h cost reduction ratios xii. Profitability in manufacturing companies in nigeria depends on the ability of the companies to grow their earnings and tame their cost profile through cost control techniques. The top 10 challenges to effective cost controls pmi.
Cost control techniques used on building construction sites. Manufacturing enterprises, economics and sociology, vol. With a right, soyou can reach world class status inthree years. Figure 1 gives the summary of presently practiced cost control techniques. Pdf cost control and its impact on the survival of. Cima, london has defined cost control as the regulation by executive action of the cost of operating an undertaking particularly where action is guided by cost accounting cost control is a process which focuses on controlling the total cost through competitive analysis. Costing techniques and pricing decisions of manufacturing. Contents introductior chapter 1 parti chapter 2 chapter 3 chapter 4 chapter 5 chapter 6 chapter 7 chapter 8 chapter 9. Cost control techniques used on building construction. Furthermore, cost control involves the management measures implemented to ensure that cost proceeds in accordance with management plan. Cost reduction and optimization for manufacturing and industrial companies covers all major cost reduction areas, providing easy to read examples and advice on steps to take. Paper presented at pmi global congress 2012north america, vancouver, british columbia, canada.
This paper is one of the few studies which investigate the relationship between management tools and techniques and. Cost reduction and optimization for manufacturing and industrial companies joseph berk s6rivenerwiley. Costing support and cost control in manufacturing university of. Cost control techniques will provide the management with economic ways of producing and marketing products. The purpose and objective of this work is to examine the inventory control techniques in an organization, and its impact on the profitability of the manufacturing industry in nigeria. Management accounting helps the management to conduct the business in a more ef. In other words, it means to regulate control the operating costs in a business firm. The research paper is based on a questionnaire survey obtained from the 91 companies. Production cost reduction through the use of information. The allocation of cost is important for a correct interpretation of costs. A method for quantifying the quality refers to the measurement of quality costs, or. Management techniques with the goal of improving business cost is normally forced to. In other words, it means to regulatecontrol the operating costs in a business firm. Cost accounting techniques adopted by manufacturing and service.
Classification of manufacturing costs and expenses introduction management accounting, as previously explained, consists primarily of planning, performance evaluation, and decision. Cost control is of utmost importance in every business concern, the. Part ii chapter 10 chapter 11 chapter 12 chapter chapter 14 chapter 15 part iii chapter 16. Project cost, cost control, construction industry, project abandonment, cost overrun, time overrun, project delay, project management. Manufacturing costs are the costs of materials plus the costs to convert the materials into products. Cost control, reduction and estimation in business. Analysis of overhead cost behavior journal of international studies. There will be examples that accompany each concept that will help you understand how you could apply it to a manufacturing project. The importance of cost control cannot be over emphasized as a survival technique for manufacturing companies.
Cost reduction and optimization for manufacturing and. To control the cost of labor, look for ways to improve worker efficiency. Pdf cost control and its impact on the survival of nigeria. This thesis is the result of five years of research in the field of costing support and cost control in manufacturing. The researcher recommends that inventory control techniques should upgrade from manual styles into computerized forms, rotation of inventory control staff to ensure integrity and appropriate guidelines should be put in place to avoid, excess stock, when to order and quantity to be ordered should be stated also. Dfm is the method of design for ease of manufacturing of the collection of parts that will form the product after assembly. Cost control techniques were identified as a tool of reducing cost overrun. Cost estimating and cost management tools continue to be developed and will be added to the departments estimating tool box as they become available. Managerial economics cost control and cost reduction 2. Does cost control and cost reduction scheme affect the quality of the product of the company. The resulting unit costs are used for inventory valuation and for the calculation of the cost of. This environment is made up of agreed operating methods for which standards have been developed. Unit manufacturing cost, cycle cost, life quality loss cost. This paper outlines the most significant hindrances to effective cost controls.112 701 374 1131 191 1380 120 186 1610 1352 1201 1204 1502 393 4 991 544 259 524 1569 1444 921 320 1183 709 1260 473 146 123 634 230 129 23