Cost Reduction Technique and Profitability of Manufacturing Firms in Developing Economy

AFRAG051

Cost Reduction Technique and Profitability of Manufacturing Firms in Developing Economy

Onuche, Sarah-Joy Eleojo Correspondence: sarah.edibo@gmail.com

+2347038061139

Onodi, B.E., Ph.D Obizuo, Chinwedu Judith

Department of Accounting, Michael Okpara University of Agriculture, Umudike, Abia State, Nigeria

the individual parameters indicated mixed results; labour cost and administrative over- head cost showed significant and positive effect while material cost showed a positive but insignificant effect on Net profit margin of manufacturing firms of developing economy. The study recommends that manufacturing companies should implement value analysis in order to reduce material costs and the implementation of cost      reduction      technique      in      all

manufacturing   companies   in developing

Abstract

+2347038061139

countries.

The study examined cost reduction technique and profitability in developing economy with reference to manufacturing firms listed on the Nigeria Stock exchange (NSE) as of December 31st, 2020. The study employed an ex-post facto research design.  We  extracted data from across ten

(10) manufacturing firms listed on the NSE. Material costing, labour and administrative overhead cost were used as measures for cost reduction techniques while profitability was measured by net profit margin of selected manufacturing firms. A regression analysis was conducted to determine the impact of cost reduction techniques on the profitability of manufacturing firms. Findings reviewed a positive significant effect between cost reduction   technique   and   profitability of

manufacturing  firms  in  Nigeria, although

Keywords: Cost reduction techniques, profitability, developing economy, manufacturing firms.

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