BUDGET DECISION IN MANUFACTURING COMPANIES (A CASE STUDY OF UNION AUTO PARTS, IBETO GROUP, NNEWI).
ABSTRACT
Business Organization is facing shift competition and as a result are adopting every strategy for their survival. One of these strategy is by budgeting the operations. The writer decided to find out wages in which budgeting affects organization and contribute to the profitability of their operation and management efficiency, thus the topic.
“Budget Decision in Manufacturing Company” Chapter one brought to line light the general problems facing the Nigeria economy and the resultant effect in our manufacturing companies which made obvious the need for adequate budgetary system.
Chapter two received the related literature of budgeting the concept, historical background, I definitions and its various usage by different people it equally discussed the entire budgetary procedure from the propagation stage to the point where master budget is drawn its objectives, benefits and problems.
Chapter three dealt on collection of data and the method employed in the data and information analysis and the distribution of questionnaires and conclusion.
TABLE OF CONTENT
Table page i
Approval page ii
Dedication iii
Acknowledgement iv
Abstract v
Table of contents vi
Chapter one:
Introduction 1
1.1 Statement of problem 2
1.2 Aims and objective of the study 3
1.3 Significance of the study 4
1.4 Scope and limitation of the study 5
1.5 Definition of terms 6
Reference 8
Chapter Two:
Literature Review 9
2.1 Budgeting and overview of the concept 9
2.2 Historical back ground or origin of budgeting 12
2.3 Definition and evaluation of budget 12
2.4 Planning co-ordination and
control as tool management 15
2.5 Various usage of budget 17
2.6 Objective of budgeting 19
2.7 Budge manual 20
2.8 Budget time table 20
2.9 The budget period 21
2.10 Types of Budget 22
2.11 Principal budgeting factors 22
2.12 Administration of cost budget 29
2.13 Principle budgeting factor 33
2.14 Effective budget administration 33
2.15 Conditions for successful budgeting 35
2.16 Benefit of budgeting 36
2.17 Problems and dangers of budgeting 37
References 40
Chapter Three:
Research Design and Methodology 41
3.1 Introduction 41
3.2 Mode of data collection 41
3.3 Location of study 42
3.4 Restatement of Hypothesis 44
3.5 Conclusion 45
References 48
Bibliography 49
CHAPTER ONE
INTRODUCTION
Organization exists in a complex environment. They therefore requires growth and forward direction for them to sustain their existence. This invoices articulation of the objective of the organization which can be budget the operations of the organization.
A budge specifies the objective it equally provides a system of monitoring the process of achieving them. Budgeting involves accounting process and managerial process. The accounting process mainly concerned with the performance of manger and others in the course of preparing and using budgets. These tow aspects of budgeting must be integrated to arrive at a decision. This translated the overall objectives of the organization into detailed, feasible plans of actions.
Budgeting is a process of qualifying organizations plans of action in monetary terms to show it’s expected income and expenditure during a certain period of time it is a feed forwards process which management uses to stimulated action for effective and efficient operation.
It is aimed at bringing numerous benefits over a range of time when adequately put into practices. The question is, do organization derive these benefits as aimed at when budgeting.
1.1 STATEMENT OF PROBLEMS
The state of Nigeria economy (that is the under developed nature of the economy) is the major problem facing Nigeria in general and organization in particular. Noticeable are the high depending ratio on imported materials. The over expenditure on oil and global glub in oil market, and the recently adopted foreign exchange market (FEM) resulting in a high exchange rate of naira (N). All these have negative impact on the economy.
As a corrective means, the federal government directed the manufacturing sector to back forwards solutions, thus stiffing the competitiveness in the suppliers. Therefore, organization ought to adopt effective and efficient method of operations if they are to survive.
The question is how to the manufacturing sector achieve this desirable fact, particularly in even changing and turbulent political social economic environment. This must be done through effective and efficient planning. They must budget their operation. However, budgeting as “a systematic and formalized approach for accomplishing the planning, co-ordination and control responsibilities of management”. It was some inherent problems and this study seeks to identify them.
1.2 AIMS AND OBJECTIVES OF THE STUDY
It is certain that most, if not all manufacturing companies make use of budgeting in arriving at decision, of which union auto parts, Ibe to Group, Nnwei, it is not an exemption. The researcher ratend to scrutinize the budgeting decision of union. Auto parts and compare it with the related literature to find out.
1) Whether budgeting as a management tool achieve what it is set to achieve in out manufacturing companies.
2) The creditability of using budgeting as a management tool a forecast operations.
3) The impact of the under developed nature of the economy on companies budgeting decision and practices.
1.3 SIGNIFICANCE OF THE STUDY
There exist evidence to show that the nations economy is depressed. The return on invest is declining daily in our companies causing reduced interest. In investment of individuals and corporate bodies.
This study is directed towards finding out ways in which budgeting decision and practice affects our companies and contribute to the profitability of their operations and management efficiency.
This study will further educate our present and future planner and implementers on the effects of their responsibilities and bring to time light the benefit denied by budgeting operations.
HYPOTHESIS
In every study of this kind hypothesis often time serve as guide tot eh researcher. It tend to serve as “assume answer to the principal question of the study, the correctors of which the assessed in the course of his study”.
The writer will study the following hypothesis.
1) Budgeting decision are functional tools of manufacturing companies is the topics of this study.
2) Budgeting practice enhance management performance
1.4 SCOPE AND LIMITATION OF THE STUDY
Company budgeting decision in manufacturing companies is the topic of the study procedure. The preparation of functional budget up to the point where master budget is produced.
The scope of the study is restricted to the operations of Unions-Auto parts Ibeto Company, Nnewi from which deductive generation would be made on other manufacturing companies.
The methodology of data gathering in this research was chosen to get an independent unbiased opinion of the Union – Auto pats, staff about budgeting decisions as perceived by them. The research is therefore limited to the companies budgeting decisions.
The researcher encountered numerous problem and hindrance, these includes.
1) Shortness of times as programmed by the school authority.
2) Financial constraints
3) The quality of interviews needed for such study (those knowledgeable enough in budgeting system).
4) The sector size required
To reach the quality of people for the study took quite a time and of course when some were reached, they turned to be interested to help. Some might be interested to help but for want of time may not help. However the researcher was finally able to reach enough sample size when the questionnaires were administered to.
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