Strategic cost Management Practices and Organizational Performance: A study of Selected Manufacturing Firms in Nigeria

Abstract

There has been a lot of transformation in the
manufacturing industry.. Therefore, the use of
traditional cost management system such as standard
costing and predetermined overhead allocation system
in the Nigerian manufacturing industry has proven to be
ineffective in product costing, cost management, and
decision making. As a result of these developments, it
has become necessary to employ more refined product
costing techniques of strategic cost management. Some
of the strategic cost management methods are Activities
Base costing, Target Costing, Life Cycle Costing,
Balance Scorecard and Total Quality Management. The
implementation of the Strategic Cost Management
System has led to improved product costing analysis and
decision making, production efficiency, and improved
firm performance and market competitiveness. This
study examines the effect of strategic cost management
practices on organizational performance of Nigerian
manufacturing firms. The study was guided by two
research questions and two hypotheses. The survey
design was used in the study. The population of study
was 70 staff or respondents drawn from Guiness Nigeria
Plc, Cocoa-cola Nigeria Plc, Nigerian Breweries Plc
and Delta Glass Plc with a sample size of 60 using the
Taro Yamena’s formula Data analysis and stated
hypothesis were tested using Kruskal Wallis one way
analysis of variance by rank. The findings revealed that
strategic cost management practices positively cost
impact on the organizational performance of the
manufacturing firms under study. In light of this result
of study, it is recommended that manufacturing firms
still using the traditional costing methods should
consider implementing the strategic cost management
techniques to enhance their performance and
competitiveness.