THE RELEVANCE OF STANDARD COSTING IN NIGERIAN ORGANIZATION – A SURVEY OF SELECTED FIRMS IN UGHELLI, DELTA STATES

Ojuye Thomas E.

Department of Accountancy

Delta State Polytechnic, Ozoro

E-mail:thomasojuye@gmail.com

ABSTRACT

Responsibility accounting systems provides the manager with information that helps control operations and evaluates the performance of subordinates. There are two ways of identifying achievement; either being effective or efficient. Effectiveness relate to whether a particular Job was done or an objective achieved, while efficiency is a more complex concept of performance because it incorporate the cost required to accomplish task. The efficiency of management depends to a larger extent upon the effective control of cost. The system of standard costing is the most efficient way of controlling cost, as it provides criteria to evaluate and compare the operating performance of set objectives and goals. Thus the study examines the relevance of standard costing in Nigerian Organizations. Structured questionnaire was employed in the cause of gathering relevant data for the study and administered on 90 staffs of five manufacturing firms in Ughelli, Delta State. Data analysis was made using simple percentage and chi square (x²) statistical techniques. The analysis revealed among others, significant relationships between the application of standard costing and growth in manufacturing organization. Recommendations made for effective and efficient standard costing in organization includes the establishment of cost centres with clearly defined areas of responsibility, classification of accounts, liason between many departments, formation of standing committee to assist the cost accountant in his task of setting standards for effective implementation of standard costing in manufacturing organizations.

Keywords: Responsibility Accounting, Standard Costing, Cost Control, Performance Evaluation and Effectiveness.