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ABSTRACT In modern industries where we have advanced state of competition and rivalry, management makes use of predicted costs that is in a meaninful manner. Since fixed costs are substantial proportion of costs in modern industry, business organizations face hard times due to the continual draw down on profits that arises as a result of the arbitrary allocation costs to cost centers. This study evaluated and appraised the effectiveness and efficiency of marginal costing application as a tool to decision making in manufacturing company with the Anambra Motor Manufacturing Company Emene as the case study. In the investigation of the above, data were collected through the administration of questionnaires to some staff of the company. The percentage analysis method was utilized in the analysis of the responses that were elicited from respondents. Some staff o the company were equally interviewed on the subject matter. The researcher found out that the company employ marginal costing because of its simplicity in operation and that the under and over absorption of overhead is almost entire avoided. It was equally ascertained that the technique of marginal costing shows meaningful and more realistic profit position of the company as the technique writes of fixed costs in the period that they are incurred. From the findings of the study it is recommended to the management that the company’s budgetory control technique should be supported with the standard costing in control of material and labour costs. CHAPTER ONE INTRODUCTION 1.1 BACKGROUND OF THE STUDY One pronounced reality of the modern business management in the advanced state of competition and rivalry whereby only the fittest enterprise survive, management however, employs predicted cost which is put in a meaningful manner. Essentially, while making a decision between a number of alternatives, management is always, more concerned with the cost and income difference between alternatives rather than the absolute total themselves. Due to wealth creation and the satisfaction of business motives management continues to increase its shares assets and generally it credit worthiness in the entire economy. These in turn requie an improvement in the quality of decisions. Therefore in order to respond effectively to the challenges of the times, Management reuire good decision analysis leads to this research work. This research work is principally concerned with investigating into the principles and the application of marginal costing technique at Anambra Motor Manufacturing Company, Emene. The study will principally examined. - The criterion for analysis costs into fixed and variable components - How these costs are control and - How prices are determined employing the principle. - How decision making is aided under the principle. An appraisal was necessary in order to determine efficiency and effectiveness of this management accounting technique. In carrying out this research work, data was got from questionnaire in formation and analysis of same, employing the percentage method to analyse the responses elucidated from the respondents. Also, personal observation method was used coupled with relevant information from libraries. 1.2 STATEMENT OF PROBLEMS Fixed costs are substantial and increasing proportion of costs in modern industry. Business organizations are therefore facing hard times as a result of the continual draw down in profits arising from the arbitrary allocation of costs to products and cost centres. This arbitrariness in the allocation of cost has given rise to high cost of production, high cost of products and low turnover rate in the light of this the future of business organizations in Nigeria is bleak. The pertinent issue therefore, is diametrically linged in planning and controlling costs through an efficient cost planning and reduction method. This study will therefore try to ferret answers to the following questions. - Can marginal costing reduce the arbitrary allocation of production cost? - With this technique of marginal costing, can production not be increased without increasing the amount of fixed cost. - When management is faced with decision about two alternatives is marginal costing a useful tool to select or choose the alternative that better? 1.3 OBJECTIVES OF THE STUDY The technique of marginal costing is the one that differentiates costs clearly into fixed and variable elements. Bearing this in mind the objectives of this study inter-alia, includes: - Evaluating the marginal costing technique in order to ascertain effectiveness and equally its efficiency. - Any efficiency in the application of the technique - To determine the criterion for cost, control and analysis - To generally examine how product decisions are made by management under the technique. 1.4 HYPOTHESES OF STUDY In order to get a classical analysis of the study, the following hypotheses are hereby proposed for this research work. Hi: The principles of marginal costing aid prudent management decision making Ho: The principles of marginal costing do not aid prudent management decision making Hi: The statements that are prepared employing the principles of marginal costing are easier to understand by management. Ho: The statements that are prepared employing the principles of marginal costing are not easier to understand by management. 1.5 SCOPE AND LIMITATIONS OF THE STUDY The study is limited to the survey of how the technique or marginal costing in generally operated at the Anambra Motor Manufacturing company, Emene otherwise known as (ANAMMCO) and how effective and efficient the technique is to the company. However, this very investigation should not be taken as being diametrically exhaustive. It is just a drop in the ocean because the information that was available to the researcher was very much limited. Due to the limited nature of the information that is available, this research can not be considered as an end itself, rather as a means to an end. Data that were required to have a profound evaluation of the subject. The constraint stemmed from the obvious fact that since (ANAMMCO) very risky in divulging all the information that were required. In carrying out a research of this magnitude, adequate time is needed to do enough justice to the study, however, the time allocated to the study was insufficient to facilitate thorough investigation on the study and subject matter. 1.6 SIGNIFICANCE OF THE STUDY One established fact is that any technique of costing that a profit oriented business organization decided to adopt must be related to profitability in view of the above fact, any effort that is therefore geared towards establishing how the technique helps in the realization of the profit of the organization will be worthwhile. Since this have a reciprocal effect, any suggestion towards the improvement of the costing technique should at least, have a modicum of bearing one the improvement of profit. If productivity is to be enhanced considerably and the satisfactory of profit guaranteed, therefore a knowledge of cost behaviour and equally the analysis is completely necessary. The researcher believes that based on the findings of this very study and the proffered suggestions that the management of the ANAMBRA MOTOR MANUFACTURING COMPNAY in particularly, if it attaches strong importance to the suggestions that they will go a long way toward enhancing their profit position. The manufacturing industries will equally benefit from the findings of the study. It is equally hoped that future researcher of this subject matter will find this work of gatuam importance towards carrying out their respective research works. 1.7 DEFINITION OF TERMS Manufacturing industry: A manufacturing industry is one that acquires raw materials and intermediate goods and transforms them to finished goods through and industrial process. This very definition of manufacturing industry can equally be viewed as one that it’s primary or cardinal aim is the transformation of materials into other goods through the employment of labour and factory facilities. Marginal cost: marginal cost is the amount of any given volume of output by which aggregate cost are changed if volume of output is increased or decreased by one unit. The marginal cost of a product is alternatively known as its variable cost which includes direct materials, direct labour, direct expenses and equally the variable parts of the overheads. Fixed cost: Fixed cost are cost which remain fixed over a given range of a productive activity and also for a given time period. They are therefore period costs since they relate to a given time period and they are equally capacity costs because they relate to a particular range of productive activity. Fixed costs are generally fixed in total as they decrease unit –wise as output is increased. Contribution margin: Contribution margin is simply the difference between sales and the marginal or variable cost of a product.