ABSTRACT
In this time of rising prices, brewery like any other manufacturing company needs an efficient system of cost control as an essential factor in reducing the cost system of production in order to maximize profit. Due to inefficient cost control system some companies just manage to break even or in most cases make substantial losses hence our assessment of cost control in Nigeria manufacturing at Guinness. As a result of this, our finding is to show the appropriate system of cost control which can be used to minimize production system of cost and its effect under the manufacturers condition.
The entire study consist of five chapters, chapter one introduced us to the study, highlighted the background, purpose of the study and an insight into the historical background of Guinness Nigeria plc. Chapter two is a relevant literature on cost while chapter three briefly discuss the research method applied. A detail of data obtained in chapter four, chapter five the last chapter, contains summary, conclusion and recommendation.
CHAPTER ONE
Introduction
Nigeria Commence and Industry are passing through a period of economic recession, they are struggling to maintain satisfactory earnings in a situation where cost are raising and some industrialist complained that price increase are becoming more and more difficult to obtain even at less proportionate degree with cost.Foreign and domestic competition as well government effort to prevent further inflation put serious resistance and additional increase. In addition to those are government (both at the state and federal levels) stabilization measure aim at re-strutting and improving the economy and their attendant effect.Some of those measures like the second tier foreign exchange market (S.F.E.M) having had the effect of not only causing the increase price as a result of increased cost of inputs they have ever gone further to multiply in built imported inflation by the incremental exchange rate of the naira against the convertible currency that are used in those importation market.
To maintain earnings or increase earning in the face of those conditions, many companies are taking strong steps to control cost if not reduce cost and eliminating waste and increase productivity. Automation and improvement in technologies are helping to control and reduce cost but are often insufficient.The top managements of many companies a consequence are putting pressure on their organization at every point to reorganize the role of cost accounting jobs are being timed and standards set in manufacturing department where timing and standard did not exist previously. These procedures are also being made more detailed. They are tighter, religiously adhered to and are not controlled more vigorously.Economies are sought all through the organization in this wise, the manufacturing companies are not left out. In order to endure their survival and also to create more positive impacts on the economic growth many method of cost control are being utilized.
The purpose of this research work therefore, is to examine critically the various roles/significant of cost account information in the manufacturing industry in Nigeria, it study of Guinness Nigeria plc. Benin City.
HISTORICAL BACKGROUND OF GUINNESS NIGERIA PLC
Prior to the establishment of Guinness Nigeria plc. Ikeja, Guinness stout was for many years imported into Nigeria by a number of merchant houses (Companies) the Guinness company conjunction with the United African Company (UAC) decided to build a brewery of the cost of two millions and four hundred thousand naira (2.4m) of Ikeja in 1961, this brewery was commissioned and started production in 1962, there by marketing Ikeja (Nigeria) the third after Dubai and London where Guinness in brewery.
The Guinness Company limited became a public company in 1965 and was one of the companies to be quoted on the Lagos stock exchange which share was offered. Nigeria acquired some share totaling 20% of the equity of the company at the time in 1971 a decision was made by the management to establish in BeninCity in 1974 at the cost of twelve million (N12 m) to brew the “Harp” larger beer In 1976, a Guinness stout Brewery was built in Benin at the cost of (N 30 million) approximately, this was in addition to one built in 1971 which was producing “hap” large beer it was the brewery to build in Nigeria from the scratch. T
he project was financed from the following sources.
– Sale of 4,000,000 shares Nigeria participation increased from 40%.At this time the degree was yet to be promulgated.
– N10,000,000 1% for montages debenture 1960
– N 6,000,000 second debenture 1978/91
– N8.8million from internal reserve
As a consequent of ever growing demand, another brewery was commissioned in 1983 for the brewery of harp larger it is sited in Ogba in Lagos state. The business of the company is the conversion of raw material mainly Malta Guinness.
Today, the company is with authorized capital of N96% million total shareholder funds however is N 194,242,000 made up of paid up capital of N96 million capital reserves of N 99.42 million.
Revenue reserve of 69.822m and turnover of about N 958.2m (Source Annual Report and Account Guinness 1994)