THE IMPACT OF STANDARD COSTING ON THE PROFITABILITY OF LISTED CONSUMER GOODS FIRMS IN NIGERIA
Keywords:Standard cost, raw material cost, labour cost, manufacturing overhead, Profit after tax, consumer goods firms in Nigeria.
This study aimed to determine to what extent standard costing improves the profitability of consumer goods companies in Nigeria. This was achieved by investigating and analysing the relationship between the cost of raw materials, the cost of labour, and the cost of manufacturing overhead on the profit after tax of listed consumer goods firms in Nigeria. Data availability has led to the selection of fifteen (15) consumer goods companies retrieved from the financial statements of these firms. Secondary data have been collected over a ten (10) years period, from 2012 to 2021. Panel estimation methods (pooled OLS, fixed effect estimation, and random effect) and a post estimation test were used to examine the compiled data. The results showed that profitability of firms in the consumer goods industry in Nigeria was significantly correlated with its manufacturing overhead costs, but negatively correlated with its raw material costs and labour cost. The research indicated that cautious consideration of raw material costs and the maintenance of effective standard costing across all labour costs were essential to attain the desired results