Effect of Standard Costing on Cost Reduction of a Manufacturing Firm: Case of Associated Foods Zimbabwe.

Author

Dapira, Aplonia R.

Title

Effect of Standard Costing on Cost Reduction of a Manufacturing Firm: Case of Associated Foods Zimbabwe.

Abstract

This research was carried out to analyse the effect of standard costing on cost reduction
of Associated Foods Zimbabwe (AFZ) a manufacturing firm. They has been an
increased discrepancies in cost variances in the manufacturing firms. The objectives of
the study were to determine the factors which are considered in standard costing, to
conduct a trend analysis of costs for a period of 5 years at AFZ, and to establish the
relationship between standard costing and costs of AFZ. It was assumed that the
standard costing practices and cost reduction are consistently being used in production
and also that standard costing impacts the effectiveness of AFZ. The research followed
a positivism research paradigm and a casual research design was employed. The
research used a case study approach in the data collection. The targeted population has
a total number of 32 participants from the accounts and finance department of the
company. Questionnaires were used to collect primary data which were issued to fill.
Secondary data was also used and was obtained from production feedbacks and
financial reports on the company’s website. SPSS version 28 and Microsoft Excel 2016
were used for data analysis and also ANOVA was used for quantitative statistics. The
findings of the research showed that factors affecting standard costing practices are
grounded in the understanding of standard costs / quantities, actual costs / quantities
and variances. The use of standard costing resulted in the reduction of operating costs
in the past 5 years and also the use technique of standard costing has led to exposure of
hidden costs of production. However, the author recommended that manufacturing
companies should make use of this technique and the policy makers should encourage
adoption, provide training and support research and development of standard costing. It
was concluded that it is of great importance for a manufacturing firm to know this
technique and understanding variances.

Date

2023

Publisher

BUSE

Keywords

Standard costing

cost reduction

cost control

Supervisor

Mr Onias