Cost- Volume- Profit Analysis And Profitability Target (A Survey Of Selected Manufacturing Companies In Rivers State).

ABSTRACT

This research was carried out to study the use and application of cost - volume-profit analysis in the setting of profitability targets by manufacturing firms in Rivers State. It was pertinent because manufacturing firms are usually faced with problems having cost, volume and profit implications. To achieve the foregoing, the major research instruments used were questionnaires, which were administered to 21 manufacturing firms in Rivers State. The findings revealed that cost volume-profit analysis is not used effectively in manufacturing firms in Rivers State because most of its assumptions do not conform to real life situations found in these manufacturing firms. Consequently, this study recommended that cost-volume - profit analysis should be used be short-run decision-making and also that manufacturing companies should operate and maintain a separate cost accounting system to ensure proper application of cost volume profit analysis. Furthermore seminars should be organized by professional bodies like Institute of Chartered Accountants of Nigeria (ICAN) to educate accountants and managers on other techniques which can aid them in setting good profit targets.