ABSTRACT

The topic of this research is on the application of standard costing technique with respect to cost reduction and profit maximization. The purpose of this study was to discover if the application of standard costing techniques has any effect on profitability and cost reduction, to explore the relationship between standard costing and the profitability of manufacturing companies and to examine the application of standard costing system to loss minimization of manufacturing companies. The design of this study is descriptive survey method and the study was conducted at Nestle Nigeria Plc which is the case study of this research work. The instrument of data collection was analyzed using the multiple regression method. The researcher discovered the following as his data findings application of standard costing leads to profit maximization and cost reduction, standard costing technique helps manufacturing companies to manage and handle their stock to a required level as well as erasing lapses and machine break down, it also study shows that standard costing technique leads to early detection of inefficiency which leads to increase in productivity and profitability of the company and setting of standards makes for easier supervision thereby serving as a guide for efficiency and effectiveness even in the absence of supervisors. The researcher recommends that the line managers of the company should be sensitized on the need for the application of standard costing which results to increase in the profit maximized and reduction in the cost and the need for proper application of standard costing should be encouraged by regulatory bodies. This should be facilitated by ICAN and also practiced during the mandatory continuing professional education (MCPE). The researcher came to a conclusion Standard costing techniques leads to achievement of early detection of inefficiency thereby producing a profit which is a measure of organizational profitability and standard costing have effect on cost reduction in the areas of material costing, overhead, maximizing labour time of work by providing motivational incentives and performance evaluation.