Review and Discuss the Ethical Issue 20-1 at the End of Cost-volume-profit Analysis

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Journal of International Business organization Inquiry and Marketing
Volume 1, Issue ane, November 2015, Pages 7-15

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Price-volume-profit Assay and Decision Making in the Manufacturing Industries of Nigeria

DOI: ten.18775/jibrm.1849-8558.2015.11.3001
URL: https://doi.org/10.18775/jibrm.1849-8558.2015.11.3001

^{1 2 3} College of Management Sciences, Michael OkparaUniversityof Agronomics, Umudike

Abstruse: This study determined the effect of toll-book profit assay in the determination making of manufacturing industries. The written report combined both survey research and longitudinal research blueprint. Both primary and secondary data were used for collection. They were analyzed using regression and correlation techniques. The results revealed that the sales value of a product and the quantity of the production manufactured has a positive effect on profit made on the product, as well that there is a significant relationship between the cost of production and turn a profit. The reorder and economic order quantity were also determined every bit a base for assessing decision making opportunities. Based on the outcome, the researcher recommends that manufacturing industries should e'er adopt cost-volume profit analysis in their decision making.

Keywords: Price volume-profit analysis, Decision making, Manufacturing industries

Cost-volume-profit Analysis and Decision Making in the Manufacturing Industries of Nigeria

1. Introduction

Toll- volume- profit analysis co-ordinate to Glautieret al (2001) is the systematic examination of the inter-relationship between selling prices, sales and production volume, toll, expenses and profits. The in a higher place definition explains cost-volumeprofit analysis to be a commonly used tool providing management with useful information for decision making. Costvolume-profit analysis volition also be employed on making vital and reasonable decision when a firm is faced with managerial problems which accept cost book and turn a profit implications. Such bug are in the areas of profit planning, product planning, make or purchase decision, expansion or contraction product line, utilization of productive capacity in a period of economical boom or depression.

More especially price -volume-profit analysis is used past managers to program and control more effectively and as well to concentrate on the relationship among revenues, cost, volume changes, taxes and turn a profit. It is also known every bit break-even analysis. Finally this study is aimed at examining the effect of costvolume-profit analysis on decision making process of some selected manufacturing industries in Nigeria. toll volume profit assay

The major problem encountered by manufacturing industries when toll-volume-profit analysis stands as a basis for conclusion making is managerial inefficiency and this includes ignorance of this concept ie inability of the management to utilise it in their decision making and also non knowing the importance of costvolume- profit analysis. Manufacturing industries are not relevant in their decision making process. Most manufacturing industries in Nigeria do not decide the extent to which cost-volumeprofit assay bear on their various decisions. Manufacturing industries is faced with the problem of how to make use of the available scare resources in order to achieve the objective of profit maximization. Another major problem manufacturing industries in Nigeria face, is when the awarding of costvolume-turn a profit analysis techniques are meant to apply, they don't apply it in their enhancement of managerial efficiency of manufacturing industries. To what extent is toll- book-profit analysis considered relevant in the decision making process of manufacturing industries? To what extent does the awarding of cost-book turn a profit assay technique in decision making process enhance managerial efficiency of manufacturing industries? To what extent does cost-book-turn a profit analysis affect the various decisions of manufacturing industries? To what extent does each of the identified approaches to price volume turn a profit analysis is being adopted in manufacturing industries? What is the decision making opportunities of the selected industries based on their reorder level and economic order quantity?

2. Conceptual Framework

Adenji (2008) states that price-book-profit assay are predetermined costs, target costs or carefully pre planned costs which direction endeavors to accomplish with a view to establishing or attaining maximum efficiency in the product process. Co-ordinate to him, price-volume-profit analysis is cost plans relating to a single toll unit. Considering cost-volumeprofitanalysis purports to exist what cost should exist, whatever deviation represents a measure out of performance. The predetermined costs are known as cost-volume-profit analysis and the departure between the price-volume-profit analysis and actual costs are known as a variance. Drury (2000) defines toll-volume-profit analysis as predetermined toll; they are cost that should be marred under efficient operating atmospheric condition. The cost volumeprofit analysis may be adamant on a number of bases. The main uses of price-book-profit analysis are in functioning measurement, command, stock valuation and in the establishment of selling prices. Cost-book-profit analysis is a target cost which should exist attained. The buildup of cost-volume-profit analysis is based on sound technical and engineering studies, knowing the product methods and layouts, piece of work studies and work measurement, materials specification and wage and material price projections. A cost-volume-profit analysis is not an average of previous costs. They are likely to contain the results of past inefficiencies and mistakes. Furthermore, changes in methods, engineering science and costs make comparison with the by of doubtful value for command purposes. In gild to aid the determination making of manufacturing industries in toll-volume-turn a profit analysis control, the price-volume profit assay organisation must first of all signal what is attainable by efficient performance and then highlight whatever area where accessible efficiency is non being achieved. The definition of cost-book-profit analysis as per the constitute of chartered accountants official terminology is "a predetermined adding of how much toll should be under specific working conditions in manufacturing industries. It is congenital up from an assessment of the value of price element and correlates technical specifications and the quantification of materials, labor and other costs to prices and/or wages expected to employ during the menses which the cost-book-turn a profit assay is expected to exist used.

Cost- book- profit assay, according to Glautier et al (2001), is the systematic examination of the inter relationship between selling prices, sales and production volume, toll, expenses and profits. The above definition explains toll-volumeprofit analysis to exist a commonly used tool providing direction with useful information for decision making. Costvolume-turn a profit analysis volition also be employed on making vita and reasonable decision when a firm is faced with managerial problems which have price volume and profit implications. Costvolume- profit analysis according to Hilton R.W (2002:230) is a mathematical representation of the economic science of producing a product. The relationship between a products acquirement and cost office expressed within the toll-volume-turn a profit analysis are used to evaluate the financial implication of a wide range of strategic and operational decisions.

According to Garrison et al (2003) toll-volume-profit analysis is a study of inter-relationship between the post-obit factors: princes of products, book or level of activity, per-unit variable price, total fixed price, mix of products sold. Also state further the toll-volume-profit assay is a central factor in many decisions including choice of products lines, pricing of product, marketing strategies and utilization of productive facilities.

Principles and Assumption of Cost-Volume-Profit Analysis
Underlying the operation of cost-volume-profit assay is a principle which states that "at the lowest level of activeness toll exceed income but every bit action increases income rises faster than cost and eventually the two amount are equal, subsequently which income exceed cost until diminishing returns bring toll above income once over again.This principle draw cost-book-profit analysis with curvilinear. Cost and revenue curves which thought theoretically audio lack practicability. Accountant found the need to bring in addition information relating to price beliefs and sales policy this was to ensure that practical model be develop out of this principles.

The followings are the underlying assumptions of cost-volumeprofit assay according to Horngen et al (2006).

• The behavior and revenues is linear.
• Selling price is abiding.
• All toll can be divided in to their fixed and variable element.
• Total fixed cost remains constant.
• Total variable toll is proportional to volume.
• Book is the simply drive of toll.
• Prices of product inputs (eg materials) are constant.

Methods of Cost-Volume-Turn a profit Analysis
There are two main approaches used in analysis cost-volume turn a profit.
Inter-relations. They include:

• The Graphical Approach
• The Algebraic Approach
• The Net Income Equation
• The Contribution Margin Equation
• The Margin Of Rubber Equation
• The Contribution Margin Ratio

The Graphical Approach
The toll-volume-profit graph tin can exist very useful because information technology highlighted price-volume-profit human relationship over broad range of activity and give managers a perspective that tin can be obtained in on other way. Such graph is referred to as preparing a break fifty-fifty nautical chart. This is correct to the extent that breakeven point is clearly shown on the graph. Garrison et al (2003).

Steps in Preparing Toll-Book-Profit Graph
This involves three steps:
Depict a line parallel to the volume axis to represent total fixed expenses; cull some volume of sales and plot the point representing total sales amount at the action level yous have selected; again choose some volume of sales and plot the point representing total sales corporeality at the action level you have selected. The anticipated profit or loss at any given level sales is measured by the vertical distance between the total acquirement and the full expenses line cross Garrison et al (2003) (figure i). Some managers prefer an alternative format to the cost-volumeprofit graph as illustrated in figure 2.

The Profit Graph
This is another approach to price-volume-profit graph. It is sometime preferred by some managers because it focuses more directly on how profit change with changes in volume. It has the added advantage of beingness easier to translate than the traditional arroyo. Information technology have the disadvantage of not showing every bit clearly how toll are affected past changes on the levels of sales.

Steps in amalgam profit graph
Locate total fixed expenses on the vertical axis, bold o level of activity. This point would be in the "loss area", equal to the full fixed expenses expected for the period. Plot a point representing expected profit or loss at whatsoever called level of sales. Subsequently this point plotted depict a line through information technology dorsum to the point o vertical axis representing the total fixed expenses.

Effigy i: Cost-Book-Turn a profit Graph (Traditional Approach)
Source: Garrison et al (2003)

Effigy ii: Cost-Volume-Profit Graph (Modernistic Arroyo)
Source: Garrison et al (2003)

Figure 3: Pause-fifty-fifty point
Source: Garrison (2003)
Note: The break-even point is where the turn a profit line crosses the pause-even line.

The Algebraic Approach
The issues involved on this approach are the putting of marginal income argument format in formula, the incorporation of the contribution concept into the marginal costing income argument formula and the mathematical arrangement re-arrangement and evaluation of some of the basic price –volume-turn a profit factors.(unit of measurement selling cost, unit variable cost' stock-still cost' sales book). The marginal income argument employs the marginal costing technique where too much attending may be given to variable costs at the expense of disregarding fixed costs; in the long run
fixed toll must be recovered. cost volume profit assay

The formulae and ratios that constitute then algebraic approach include the following:

• The net income ratio
• The contribution margin equation
• The variable price ratio
• The contribution margin ratio
• he taxation adjusted ratio

The Internet Income Equation
This is a grade of marginal costing statement used in processing cost-volume-profit data. Marginal costing differentiates between stock-still costs and variable toll. In determination making, marginal costing is used but because stock-still cost is considered equally a sunk cost or historical cost which is incurred whether profit is made or not. The formula is stated thus:

NI=S-Vc – Fc
This tin exist regarded as;
S= Vc + Fc +_NI
Where:
S = sales
Vc = variable cost
NI = Net income

At breake-even point, the equation changes because at that point, net income is zippo, (no turn a profit or loss).
Therefore

The net income includes the interruption-even point, margin of safety and profit and loss at a given level of activeness and it is computed thus:

IN = Sn – Vn – Fn

Required quality to be produced and sold to obtain a target income; in order to compute the quality required to be manufactured and sold to obtain a target income this equation must be used:

Where: CM = S – V. Garrison (2003)

The Contribution Margin Equation
Contribution margin is the corporeality by which acquirement exceed the variable cost of producing that acquirement. Contribution margin per unit is the unlike between selling cost and variable cost per unit of measurement. Horngren et al (2006). Contribution margin is very important in decision making and information technology states that the planner ought to call back in terms of contribution margin rather than in terms of accented profit. It should exist noted that each additional unit sold of a item product contributes to a margin towards profit. The contribution margin equation could exist stated thus

Cm = S – V
Where:
CM= contribution margin
S= sales
V= variable toll

In contribution margin approach interruption-even point is calculated every bit
FC
CM

Sales unit of measurement to earn a desired profit to exist
(FC+Target profit)/CM

The Margin of Prophylactic Equation
Margin of represents the difference between intermission-even point and budgeted activity level. It indicate how much sales may decrease before a company will suffer a loss. Adeniji (2004). The formula for computing margin of safe is:
a. Nearly (unit) = Approaching unit – Pause –fifty-fifty Point (unit).
b. Most (sales book) = Budgeted sales – Break-even point (Sales volume)

The Contribution Margin Ratio
This is the ratio of contribution to a particular auction value is describe as contribution margin ration. Likewise referred to as profitvolume ratio. It is designed to measure out the level of contribution derivable from a specific amount of sales. It will be determined as follows:

Operating Leverage
Operating leverage refers to the extent to which an organization uses stock-still cost in its toll structure. According to Horngenet el (2006) operating leverage describes the effect that fixed cost have on changes operating income as changes occur in units sold and hence in contributed margin. Operating leverage is a mensurate of how sensitive net operating income is to per centum changes in sales. Operating leverage act as multiplier. If operating leverage is high, a minor percentage increment in sales can produce a much larger percent in cyberspace operating income Garrison et el (2003). Organizations with a high proportion of stock-still cost in their cost structures have high operating leverage. cost volume turn a profit analysis

The caste of operating leverage is given level of sales is calculator by following formula:

Caste of operating leverage= (contribution margin)/(Internet operating income)

Uses of Cost-Volume Profit Analysis
Besides providing direction with general information on the toll-volume-profit relationship of their firms , accountant tin can be besides use information technology to provide management with useful information necessary for selling, certain planning, control and special decision issues . The decision areas where this analysis is include:- profit planning monetary control, command, production replacement, pricing decision, selecting of distribution channels, setting volume, sensitive retain on investment target, entry into strange marker performance measurement. (Meigs and Meigs, 1996)

Turn a profit Planning: A firm first decides its sales, cost and activity beforecomputing the profit that will emerge, but information technology profit planning, the business firm start decides what turn a profit it wants and then considers the sales, cost and activity required to produce that profit. The items under consideration on turn a profit planning are toll volume-turn a profit variables. Garrison et al (2003). Here to conduct the bones cost-volume-turn a profit analysis (graphical or algebraic) using a forecast or planned economical structure of the house as data source and then examining how planned profit will change if fixed price, variable toll and sales volume are varied. cost book turn a profit analysis

.

Figure 4: Price-Volume-Profit Nautical chart (Profit Planning Graph)

This will enable management know if the inherent economic structure of the house and what direction changes are required. It is appropriate to present profit planning in cost-volume-profit assay in charts, the sample of such chart is shown below. price volume profit analysis

This chart but shows a single line that cuts the activity line at intermission-even point where the firm is neither making profit nor loss. The turn a profit planning cost-volume-profit analysis also involves the use of equation determine the minimum amount that industries need to reach its cash dividend payout target for the year. toll volume profit analysis

The equation is given as Revenue required to meet the dividend payment

F + PAD (ane – d)/CMR
Where
F = Fixed cost
PAD = Turn a profit afterward divided
d = dividend
CMR = contribution margin

The revenue gotten shows whether the firm will be able to pay the dividend or not, where its gets the revenue targeted, then it can pay such dividend.

Product Mix Decision: The selection of which products to products, which to abandon, and which to postpone is one of the almost critical determination confronting a firm's management. The products selected from the product mix decision determine the revenue, profit and greenbacks period of firm's operations. Perhaps equally important, the products selected make up one's mind on part the firm's competitive position vis-à-vis its competitive position from the products selected currently provide the funds required to develop and produce products in the future.

Price-volume-profit analysis is used to measure out the economics characteristics of manufacturing a proposed product. Based on accounting data, the cost-volume-turn a profit assay is used to determine the sales quantity needed to break even as well every bit the sales quantity required to earn a desired profit margin. Manager then compare a product'southward expected sales with the sales quantities required to break-even and earn a target turn a profit margin to determine whether the production should exist produced.

Budgetary Control: Budgetary command is the establishment of a budget relating to the responsibleness of the executives and to the requirement of the policy and the continuous comparing of actual with approaching result. J. O. Kalu (lecture notation book pg 11).Budgetary control takes off from where budget planning stops and aspirations continued in budget are achieved. Monetary control is concerned with employ of budget to command a firm'due south operational action either to secure past individual action the objective of policy or to provide a footing for its revision.

Cost-volume-profit analysis tin can be used in area of budgetary control to compare budgeted sales, volume, cost and profit with actual. The analysis of the variance is being computed simply for cost-volume-profit. The process of comparing bodily result with planned results and reporting budgetary control sets or control framework which helps expenditure to be kept inside agreed limits. Deviations are also noted so that cosmetic measure tin exist taken provided with a given data, one can compute the breakeven point, margin of safety and p/v ration for the approaching and actual acquirement. This helps management to know when it is deviated from its target point, information technology causes and how to have corrective measures.

Pricing Conclusion: Pricing conclusion are strategic decision that affect the quality produced and sold, and therefore the cost and revenues. To make these decisions, managers need to empathise cost behavior patterns and price drivers, they tin and then evaluate the value chain and over a products life cycle to accomplish profitability.(Horngren et al 2006).

According to Horngren et al (2006) the major influence on pricing determination are customers competitors and price. Customers influence toll through the upshot on the demand for a product or services, based on factors such equally the features of a product and its quality. Competitors influence pricing decision due to the fact that no concern operates in a vaccum but in an surroundings with many competitors, the company uses knowledge of their rivals technology, constitute capacity and operating policies to estimates its competitor'southward cost. A valuable information to set its own toll. Cost also influences pricing decision because they bear upon supply. The lower the cost of producing a product, the greater the quality of product the company is willing to supply and managers who understand the cost of producing their companies products set prices that brand the products bonny to customers while maximizing their companies operating income. In using costvolume-profit analysis in this expanse, it is necessary to examine the cost of products produced and the planned profit before making the pricing conclusion.

Problems of Cost-Volume-Turn a profit Assay
Regardless of the uses and the estimated benefit of cost-volumeprofit analysis to the management of a firm in various areas, at that place are a lot of factors which impact the utilize and validity of costvolume-profit analysis labour specialization and standardization. In other words manufacturing can be described as irresolute raw materials into finished goods. cost volume turn a profit analysis

• Consumer goods
• Industrial goods

Consumer Goods: Consumer goods are goods that are ready for consumption after its product. These goods are bought from retail stores for personal, family or household utilise. They differentiated on ground of durability. Durable appurtenances are products that have a long life such equally furniture garden tools etc. Non – durable goods are those that are speedily use upwardly or worn out or can get outdated such as food items, school supplies etc. Consumer appurtenances can likewise be grouped into sub-categories on the basis of consumer ownership habits. Convenience goods are items that buyers want to purchase with less amount of endeavor, that is as conveniently equally possible as possible. Most of these goods are low value that are frequency purchased in small quantities eg processed bars, soft drinks, newspapers Shopping appurtenances are purchased simply after the buyers compares the production of more than 1 store or looks at more than ane assortment of goods earlier making a deliberate buying conclusion. They are of higher value than convenience goods they are infrequently and are durable. Price, quality, style, colour are typical factors for buying them eg lawn movers, bedding, camping equipment etc. Specialty goods are items that are unique or unusual-at least in the mind of the buyer. Buyers known what they want and are willing to exert considerable endeavour to obtain it. Such goods include wedding dresses, antiques, fine jewelries, electronics, automobiles etc(Kalu et al 2004).

Industrial Goods: industrial goods are products that firms buy to make other products, which they later sell. Some are used directly in the production of products for resale, and some are used indirectly goods are classified on the ground of their use and they include: Installations are major capital items that are typically used directly in the product of goods, some installations such as convey or systems, robotics equipment and machine situations others like stamping machines big commercial ovens are built to a standard design but can be modified to meet individual requirement.

Raw Materials are products that are purchase on their raw country for the purpose of processing them into consumer or industrial goods e.g are iron, ore, crude oil, diamond, copper, wheat, leathers, some are converted straight into another consumer product while others are converted into an intermediate production to be resold for apply in another manufacture.

Accompaniment Equipment are capital appurtenances that are less expensive and accept short life span eg hand tools, compacted desk calculators, forklifts, typewriters etc. Made parts are items that are purchased to exist placed in the concluding product without final processing. Fabricated materials on the other mitt require boosted processing before being placed in the terminate products. Eg are batteries, sun roofs, spark plugs, steel, upholstery fabric etc.

Industrial supplies are frequently purchased expense items. The contribute directly to the production the product procedure. They include computer paper light bulbs, lubrication oil, cleaning and part supplies etc. Kaluet el (2004)

iii. Theoretical Framework

Assay of the interdependence of the cost-book-profit analysis is incorporated into the organization of computing the variable costs. In fact, the arrangement adding inside the variable costs rests on a contribution theory of managing concern event and its methodology encompasses the successful combination of costs and sales book in lodge to optimize financial results. The cost-volume-profit analysis is operationalized through the disquisitional pause even point of profitability. Break-even point tin be mathematically calculated and graphically presented with certain atmospheric condition. For our farther assay we consider more useful to graphically brandish the suspension-even signal. According to some, undoubtedly, great authorities in the surface area of cost management, cost-volume-profit analysis cannot be imagined without the post-obit assumptions:

• Full costs can be divided into the stock-still and variable component, respecting the level of activity
• Beliefs of total acquirement and full cost is linear inrelation to the volume of activities within the relevant range
• The selling price per unit, unit of measurement variable and full fixed cost is known and unchanging
• The assay refers to a product, and if at that place is a wider range of products, the implementation structure is constant
• Total costs and revenues are facing each other without involving the fourth dimension value of money
• Changes in the level of revenues and costs should be treated as the consequence of changes in the number of products or services that are produced and sold. Number of manufactured units of products (services) is carriers of revenues and costs.

Figure 5: Cost-Volume-Profit Graph

In addition to these assumptions other can exist made, such as stability of the full general price level, unchanging labor productivity, the overall synchronization between production and sales is indisputable, and also the principle of reagibility costs (fixed and variable).

The main purpose of Cost- volume- profit assay and profitability break-fifty-fifty signal is to provide data to the direction in planning the target turn a profit inside the relevant range of activities nether conditions of short-term. cost volume turn a profit analysis

4. Empirical Framework

Cost-book-profit analysis is management tools that would be employed in making plausible decisions which have costvolume (level of activity) and profit implications. There is no doubt that if management do not sufficiently employ cost-volumeprofit analysis in their decision making process, it volition result to substandard decisions low functioning and profitability. The purpose of this study was to discover if the application of costvolume- profit analysis techniques has any effect on profitability, to explore the relationship between toll-book-profit analysis and the profitability of manufacturing industries and also to determine whether toll-volume-profit analysis techniques principles are existence adopted and practiced in Nigerian manufacturing industries. Underlying the operation of price volume-profit analysis is principles which country that, at the everyman level of activity toll exceed income but as activeness increase income rises faster than price and eventually the ii amount are equal, after which income exceed cost unit of measurement diminishing returns bring cost above income in one case once more. This principle describe costvolume-turn a profit analysis with curvilinear. Price and revenue curves which though theoretically sound lack practicability. The study combined both survey enquiry and longitudinal research pattern. Determine whether cost volume-turn a profit analysis techniques principles are being adopted and practiced in Nigerian manufacturing industries. Underlying the operation of costvolume-profit analysis is principles which country that, at the lowest level of activeness price exceed income but every bit activity increase income rises faster than toll and eventually the two amount are equal, afterwards which income exceed toll unit diminishing returns bring cost in a higher place income once again. This principle describe costvolume-profit analysis with curvilinear. Cost and acquirement curves which though theoretically sound lack practicability. The study combined both survey research and longitudinal research design.

five. Methodology

The elementary linear module has to do with the causal relationship between two variables ane dependent and the other independent which related with a linear role. The formula is represented thus

Y = α + βx

Where; 10 = the dependent variable; Y = the independent variable; α = the bespeak where the regression line or equation crosses y – centrality; β = the gradient of the regression line.

This technique was used to test the reliability of data in Ho1 and Ho2.

Decision dominion: if T cal > T tab we reject the zilch hypothesis but if T cal < T tab, we take the nada hypothesis.

This technique measures the degree of relationship existing betwixt variable. The correlation co-efficient(r) lies between i and -1 (-1<R<ane).

The formula is given as

Where r = coefficient of correlation
northward = number of years
10 = dependent variable
y = independent variable

This technique was used to residuum the reliability of data in Ho2. The decision rule is to rejected Ho if T cal> T tab and take Ho if cal< T tab.

6. Information Analysis

The R value of .856(85.six%) is shown to exist significant at 5% level (table 1), implying the existence of a potent positive human relationship between sales value of bottled and sachet water volition invariably increase the profit made on them. The coefficient of determination (R2) indicates that about 73.ii modify in the profit made on bottled and sachet h2o are owing change in the sales value of bottled and sachet water. The F-ration 27.380 is significant at v% probability level and highlights the ceremoniousness of the model specification. With t-value of 5.233 being pregnant at 5% level. The researcher therefore rejects the null hypothesis concludes that sales values of bottled and sachet water significantly impact the profit made on them. cost volume profit analysis

Tabular array 1: Regression analysis result on the effect of sales value of a production on profit fabricated on the product

Source: Extracted from appendix B

Testing for relationship between price of product and profit made.
H₀: There is no meaning relationship betwixt price of product and profit fabricated past manufacturing industries.

In testing this hypothesis, correlation analysis was employed and test results were extracted from appendix C.

From appendix C the correlation co-efficient of .884*** is pregnant at 0.01 level, this indicates the existence of positive loftier association between toll of product of bottled and sachet water and profit made on them. The researcher therefore refuse null hypothesis and concludes that there is a pregnant relationship betwixt price o productions on bottled and sachet water and profit made on them.

Testing for the effect of the quantity of a product manufactured and profit fabricated on product.

H₀: The quantity of a product manufactured does not significantly later on turn a profit made on the product.
In testing this hypothesis, regression analysis was employed and test results were extracted Appendix D

Table 2: Regression analysis outcome on the outcome of sales value of a product on profit made on the production

Source: Extracted from appendix B

The R value of .759(75.9%) is shown to be significant at five% level, implying the existence of a potent positive relationship between the quantity of bottled and sachet water manufactured and profit fabricated on them.

Modify in the quantity of bottled and sachet water manufactured volition equally change the profit made on them .the co-efficient of determination (R2) indicated that above 57.seven%increases in profit of a bottled and sachet h2o are attributable to change in the quantity manufactured of bottled and sachet water.

The f-ratio of 13.360 is significant at v% probability level and highlight ceremoniousness of the model specification. With tvalues of 3.692 been meaning at v% level. The researcher concluded that the quantity manufactured of bottled and sachet h2o significantly impact the production made on them, thereby rejecting HO.

7. Conclusions and Recommendations

Based on the research conducted in this study, information technology has been observed that cost-volume-profit assay is a veritable tool in the decision making process of manufacturing industries well-nigh especially in a competitive surround like ours. It was also observed that price-book-profit analysis has a very large effect on decision fabricated by the management of manufacturing industries in Nigeria. In the grade of this study the researcher examined the effect of toll-volume-turn a profit analysis on kechis water (a division of Ulovr international Resource), and Big Chief Fast Food industries limit Umuahia and the following findings were fabricated.

1. The study revealed that price-volume-profit analysis is considered to a big extent in the conclusion making process of manufacturing industries and hence impact the various decisions fabricated by manufacturing industries. It was also found these manufacturing industries adopt both graphical and algebraic approaches to cost-book- profit assay.

2. The study farther revealed that the application of cost-volumeprofit analysis techniques in decision making procedure to a very large extent enhance managerial efficiency of manufacturing industries. In add-on it was revealed that the benefits derived from the application of price-volume-profit assay include: efficient cost control, loftier productive capacity and increment in profitability.

3. The report likewise revealed that the sale value of a product and the quantity of a product manufactured has an effect o the profit made on the product and there is a relationship betwixt the toll of product and profit made past manufacturing industries. Finally the re-club level and economical order quantity of the selected manufacturing industries were adamant.

ix. Conclusion

In this inquiry study, the researcher has attempted to examine critically the effect of toll-volume-profit assay on the decision making process of manufacturing industries in Nigeria. We discover from the study that the management of manufacturing industries in Nigeria accept non adequately and successful applied the technique of cost-volume-profit analysis in their industries and this has atomic number 82 to this technique not having its full effect in the decision making process of manufacturing industries. Deductive from the written report finding is that some management and staff of these manufacturing industries are ignorant of the concept of cost-volume-profit assay and hence do not apply information technology. This enquiry study has too made findings that cost-volume-profit analysis is a commonly used tool providing management with useful data for determination making and information technology volition also exist employed in making vital and reasonable determination when a house (especially manufacturing firm) faced with managerial problems which take cost, volume and production implication.

10. Recommendations

In the light of our finding in this study, some recommendations been fabricated, they include:

• Each of these chemical element; cost, volume and turn a profit should exist taken cognizance in the procedure of making managerial decisions. They should non exist treated in the isolation this is because plausible decisions are unrealizable by employing any of the elements in isolation but rather exist analyzed in a course called cost-volume-profit assay.
• The management of manufacturing industries and other users of cost-volume-profit analysis should determine the all-time approach to cost-volume-profit analysis (whether graphical or algebraic) to adopt.
• Manufacturing industries should present previous years' cost-book-profit result in a trend analysis and this
  should be used for comparison with present and witother industries performance.
• In order to enhance managerial efficiency in manufacturing Industries, toll-volume-turn a profit assay technique should be applied in their decision making process.
• The benefit of efficient cost-command, high productive capacity and increment in profitability will merely be derived if there should be acceptable awarding of cost-volumeprofit assay.
• In order to maximize profit, manufacturing industries should endeavor to increase the quantity of output produce and also increase sales volume which will and so increase sales value.
• Manufacturing industries should endeavour to cover the consultancy service offered by research and consultancy unit of nearly university and higher institution in Nigeria. This will make decision maker to update their knowledge in strategic determination making.
• Manufacturing industries should use experts with requisite knowledge of the concept and application of management accounting principles and techniques.
• Manufacturing industries should in addition to costvolume-profit analysis employ other managerial tools similar activity based costing, inventory/ stock control, linear programming etc. in their decision making procedure.

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cost volume turn a profit assay

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