COST MANAGEMENT PRACTICES IN MANUFACTURING COMPANIES (IN CASE OF BGI ETHIOPIA PRIVATE LIMITED COMPANY)

Abstract

The competitive pressures of the world made increasingly companies focus on the cost management that has always been a basic component of any successful business strategy. Cost management practice has an effect on the manufacturing firms’ performance. This study focuses on examining cost management practices in reducing and controlling of manufacturing costs of BGI Ethiopia private limited Company (PLC). In doing this descriptive case study research design, mixed research approach were used. Data were collected from 32 BGI Ethiopia PLC employees. The study relied on primary and secondary data. The primary data collected using interview and questionnaires. The secondary data collected from documents and reports of the company. Data analyzed with descriptive statistics such as frequencies, percentages, mean and standard deviation through statistical tool SPSS version 21. The data presented in tables and charts. The study found out that the importance of top management support, employee involvement and responsibility accounting in reducing and controlling manufacturing costs. It also discovered that manufacturing companies can reduce costs and maintain quality products by the use of effective cost control and reduction tools and techniques such as budgetary control, standard costing, quality control and target costing. The study recommends that manufacturing companies should understand the importance of top management support, employees’ involvement and responsibility accounting in controlling and reducing manufacturing costs. It also recommends that manufacturing companies should implement cost control and reduction tools and techniques in their cost control schemes.