Marginal Costing as a Tool for Management Decision Making (a Case Study of Anammco Ltd Enugu)
CHAPTER FIVE CONCLUSION AND RECOMMENDATIONS
This part of the study aims to summarize the findings that have emerged from the data analysis presented in chapter four. Regarding to the use of marginal costing, the company increases market share and success in making profit and wealth maximization to meet its objectives. About planning and controlling system, most respondents agree that the company gathered information to enable budgeting, use activity analysis to run activities as planned, use resources effectively and create good employees’ motivation. On the other hand, the company’s management control strategic and operational matters effectively and entertaining fine strategic planning and execution that helps to control costs. But the management has a trend of taking corrective actions .
From how helpful the marginal costing tools and techniques at pricing and marketing activities, the company uses to provide quality products, to compute well in the market, to create fair price for customer satisfaction, to create more revenue by reducing costs, to enhance the competitiveness of the company for responding the competitors action and to meet the customers need. But the market research or competitors’ marginal costing information for selling price purpose is weak and incentives are given only for some departments particularly marketing and sales.
Regarding to facilitating decision making process, majority of the respondents agree that marginal costing tools facilitate decision making process by delegation of responsibility provide relevant data to the management timely, meet the goals of organization and enhance decision making quality.
According to Ali (2010), marginal costing is the process of recording, analyzing, classifying, summarizing and allocating cost associated with a process and then developing various course of action to control the costs. Its goal is to advice the management on how to optimize business practice and process based on cost efficiency and capability. It also provides the detailed cost information that management needs to control current operations and plan for the future. The broad objective of this research was to assess the role of marginal costing in the process of decision making in Anammco LTD Enugu. Investigating the company‟s planning and controlling system, marginal costing tools and techniques at pricing and market activities and facilitate decision making process at Anammco LTD Enugu were the specific objective derived from the broad objective. From this study, the following major findings have been drawing:
- The company increases its market share and success in making profit and wealth maximization to meet its objectives.
- In the company, gathered information enables for budgeting and pm and activity analysis help to run activities as planned.
- There is optimum utilization of resources in the company and its management controls strategic and operation effectively. In the company, there is good employees’ motivation, controlling costs and fine strategic planning and excision.
- The company uses marginal costing tools and techniques to provide quality products, to compute well in the market, to create fair price for customer satisfaction and to create more revenue by reducing costs.
- It also uses to enhance the competitiveness of the company for responding the competitor’s action and to meet the customers need. But the market research or competitors’ marginal costing information for selling price purpose is weak and incentives are given only for some departments particularly marketing and sales.
- Majority of the respondents agree that marginal costing tools facilitate decision making process by delegation of responsibility provide relevant data to the management timely, meet the goals of organization and enhance decision making quality.
The following recommendations are forwarded based on the conclusion of the study:
- This is a case study. The researcher does not have enough sample size to come up with an all inclusive principle or conclusion. Thus, the researcher doesn‟t have a guarantee that the recommendation applies to other companies.
- Incentives are proved to have improved the motivation of employees. Although some of the company‟s departments incentivize their respective employees, particularly the marketing and sales department, there are others who do not. The recommendation is that they start using this highly efficient tool and implement it for every employee and department.
- From the findings it is recognized that the company does not usually consume competitor‟s marginal costing information for pricing. Using such information is advisable for a better competitive advantage.
- Although there is optimum utilization of resources in the company and its management controls strategic and operation effectively, the management does not take corrective action properly. So the company should give correction whenever necessary.
- The company should use marginal costing information for selling price and gives incentives for all departments since the market research or competitors’ marginal costing information for selling price purpose is weak and incentives are given only for some departments particularly marketing and sales.
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