INTRODUCTION
The purpose of this research is modes of attempt to verify the discriminate increase in the prices of commodities produced by manufacturing organization in the part of the country which has attracted the attention of many citizens, especially those who know the implications of this continuous rise in prices on the people and on the nation’s economy.
This rapid increase in price of manufactured goods can be attributed to cost of production of goods and it is for this reason that the need for the control arise. Moreover, in compliance with the current drive towards Structural Adjustment Programm (SAP), these organizations are now caught up in the need to control their production costs.
This research paper will, therefore, attempt to give a comprehensive accounts of the control of costs in the field of production with particular emphasis on manufacturing organizations.
The features of every organization is the pursuit of a goal and this goal or objective exists in different dimensions.
It is evident, therefore that every manufacturing organization, whether sole, partnership, corporation, among others, must have an objective and the primary objective of these organization is to maximize profit. Any other objective such as social service is purely secondary and generally dependent on profit.
Profit is the excess of total income over total expenditure during a specific period of time. It follows therefore, that for organizations to make profit, they most control over the cost of their production and services.
Manufacturing is the transformation of materials into finished goods though the use of labour and factory facilities. It is clear that currently, the price of materials are so exorbitant to the extent that manufacturing companies are in a serious profit squeeze. They are struggling to maintain satisfactory earnings in a situation where costs are rising but some industrialist content that profit increase are becoming more difficult to obtain ever at less proportionate degree to costs. Foreign and domestic competition as well as governmental efforts to prevent further inflation put serous restraints on additional increase. In addition to these, are governmental (both or statement and federal levels), stabilization measures aimed at restructuring and improving the economy and their attention affect some of these measures like the second tier foreign exchange market (SFEM) and structural adjustment programme have had effects of not only causing increased prices as a result of increased cost of inputs, but have gone further to multiply in built imported inflation by the incremental exchange, rate of the naira against the convertible currencies that are used in importation.
These government structure re-adjustment measured have contributed to a great in rendering most profit seeking long range plan of companies ineffective. Thus, must, of these companies are compelled by the prevailing economic circumstances to be more interested in research and development for the expansion of profit margins of already existing products. This will as well help them to avoid diversification. This quest for increased profit margin in the light of the near fixed nature of revenues, implies that the achievement of same depends wholly on products management of costs.
REVIEW OF RELATED LITERATURE
COST CONTROL
This is the process of ensuring that performance is close to existing standards as much as possible. The control of cost involved the adoption of standards of comparison usually the procedures is to pre-determined cost and to compare the actual cost incurred with the pre-determined cost. Control is then achieved by efforts to keep the actual costs in line with the pre-determine standard and by the comparison of actual with these to reveal out-of-line performance in order that steps may be taken to identify and if feasible remove the responsible factors. The achievement of profit making objective will not be possible if the firm could go on to incur cost without control. The effective and efficient cost control is a major determined for the achievement of objective which is profit maximization.
The control of cost is a process which pervades all level of a business enterprises and engages the attention and support of every member of the organization. From the top members of the board of directors exercise cost control in making decisions with respect to capital investments, areas of operation and other basic policies.