IIARD International Institute of Academic Research and Development

Journal of Accounting and Financial Management (JAFM )

E-ISSN 2504-8856
P-ISSN 2695-2211
VOL. 7 NO. 2 2021

---

Cost Management Practice and Financial Performance of Listed Deposit Money Banks in Nigeria

Eneisik Gogo Erasmus

---

Abstract

Competitive business environment require efficient financial management which underscore the significant of adopting cost management practice to enhance cost control and cost reduction. This study empirically investigated the relationship between cost management practice and financial performance of listed Deposit Money Banks in Nigeria. Cost management practice is proxied by activity based costing, target costing and standard costing while financial performance is proxied by profit before tax. The population of the study consists of 15 listed deposit money banks in Nigeria. The study adopts judgmental sampling techniques to select 10 banks as sample size for the study. The study adopts methodological triangulation research methodology. Primary data was obtained through a five-point likert scale structured designed questionnaire to elicit response from the respondent. Secondary data was obtained from annual financial report of listed Deposit Money Banks in Nigeria from 2010 – 2018. Hypotheses were tested using Ordinary Least Square Regression statistical tool with the aid of E-view 10 econometric statistical software. The finding shows that activity based costing had significant impact on profit before tax. Evidence shows that target costing had negative impact on profit before tax. Empirical evidence revealed that standard costing had positive significant impact on profit before tax. Evidence shows that cost management practice influence financial performance. The study concludes that cost management practice improved financial performance of listed Deposit Money Banks in Nigeria. Thus the researcher recommends amongst others that; banks should ensure routine training, seminars for their staffs on new and modern cost management practice to enhance effective cost control and cost reduction leading to financial performance. Management should adopt cost management practice that focus on cost control and cost reduction. Banks policy on cost manage

keywords:

Cost Management Practice, Financial Performance, Nigeria.

---

References:

Adeniji, A. A. (2009). Cost Accounting. A Managerial Approach. Lagos State, Nigeria: El-
Toda Ventures limited publishers.

Adler, R., Everett, A. M., & Waldron, M. (2000). Advanced management cost management
practices in manufacturing: Utilization, benefits, and barriers to implementation.
Journal of accounting. 24 (2), 131-150.

Ajibolade, R. S., (2013). Relevance lost: The rise and fall of management accounting.
Boston, MA: Harvard Business School Press.

Akintoye, I. R. (2010). Quick insight in to research methodology. Akoka-Yaba, Lagos,
Nigeria: Unique EducationalPublishers.

Alleyne M. L., & Weekes R. V., (2011). Cost accounting practice and profitability of
hospitality industry in Kenya. Journal of finance. 8(2), 300-400.

Appah, E. (2011). The role of manufacturing practices in mediating the impact of activity-
based costing on plant performance. Accounting, organizations and society, 33(1), 1-
19.

Asgari, M., (2002). Costing Systems with the Emphasis on the Pricing system and Costing of
Objective, Strategic Management Research, 2(9), 138-159.

Barid, M. K., (2007). Cost accounting practices and profitability of telecommunication
companies in Kenya. Journal of accounting. 4(1), 123-200.

Beng, D. R., (2014). A preliminary survey of management accounting practices in Barbados.
Journal of Eastern Caribbean Studies, 32(2), 50-72.

Blocher, E. J., Stout, D. E., Juras, P. E., & Cokins, G. (2012). Cost Management: A Strategic
Emphasis, (6th ed.), McGraw-Hill/Irwin, New York, NY.

Boris P and Petr N, (2011). Activity-Based Costing Application in an Urban Mass Transport
Company. Journal of Competitiveness, 6(1), 1-17

Brown, L. M., (2008). The choice of performance measures in annual bonus contracts. The
Accounting Review, 72(2), 231-255.

Cadbury, A. (1992). Report of the committee on the financial aspects of corporate
governance. London: Gee Enterprises.

Chung, H.M., & Khan P. (2013). Analysis of Activity-Based Costing (ABC) Project
Implementations. Long Beach: journal of management accounting research, 21, 234-
242.

Cletus O. A. & Thankgod C. A. (2015). Standard Costing and Cost Control in Nigerian Oil
and Gas Industry. Journal of Modern Accounting and Auditing, 11(4), 185-193

Cokins, G. (2002). Integrating target costing and ABC. Journal of Cost Management, 22-29.

Cokins, M. L., (2002). Advanced cost management practice and operational efficiency in
manufacturing firms in Kenya. Journal of finance and business 2(1), 90-100.

David, G. S., (2017). Contemporary management accounting practices in UK manufacturing.
Oxford: CIMA Publishing. Goddard Enterprises Limited (2010). Goddard Enterprises
Limited, History of Goddard

Egbunike, P.A. (2014). Management accounting techniques and applications. SCOA Heritage

Adeniji, A. A. (2009). Cost Accounting. A Managerial Approach. Lagos State, Nigeria: El-
Toda Ventures limited publishers.
Adler, R., Everett, A. M., & Waldron, M. (2000). Advanced management cost management
practices in manufacturing: Utilization, benefits, and barriers to implementation.
Journal of accounting. 24 (2), 131-150.

Ajibolade, R. S., (2013). Relevance lost: The rise and fall of management accounting.
Boston, MA: Harvard Business School Press.

Akintoye, I. R. (2010). Quick insight in to research methodology. Akoka-Yaba, Lagos,
Nigeria: Unique EducationalPublishers.

Alleyne M. L., & Weekes R. V., (2011). Cost accounting practice and profitability of
hospitality industry in Kenya. Journal of finance. 8(2), 300-400.

Appah, E. (2011). The role of manufacturing practices in mediating the impact of activity-
based costing on plant performance. Accounting, organizations and society, 33(1), 1-
19.

Asgari, M., (2002). Costing Systems with the Emphasis on the Pricing system and Costing of
Objective, Strategic Management Research, 2(9), 138-159.

Barid, M. K., (2007). Cost accounting practices and profitability of telecommunication
companies in Kenya. Journal of accounting. 4(1), 123-200.

Beng, D. R., (2014). A preliminary survey of management accounting practices in Barbados.
Journal of Eastern Caribbean Studies, 32(2), 50-72.

Blocher, E. J., Stout, D. E., Juras, P. E., & Cokins, G. (2012). Cost Management: A Strategic
Emphasis, (6th ed.), McGraw-Hill/Irwin, New York, NY.

Boris P and Petr N, (2011). Activity-Based Costing Application in an Urban Mass Transport
Company. Journal of Competitiveness, 6(1), 1-17

Brown, L. M., (2008). The choice of performance measures in annual bonus contracts. The
Accounting Review, 72(2), 231-255.

Cadbury, A. (1992). Report of the committee on the financial aspects of corporate
governance. London: Gee Enterprises.

Chung, H.M., & Khan P. (2013). Analysis of Activity-Based Costing (ABC) Project
Implementations. Long Beach: journal of management accounting research, 21, 234-
242.

Cletus O. A. & Thankgod C. A. (2015). Standard Costing and Cost Control in Nigerian Oil
and Gas Industry. Journal of Modern Accounting and Auditing, 11(4), 185-193

Cokins, G. (2002). Integrating target costing and ABC. Journal of Cost Management, 22-29.

Cokins, M. L., (2002). Advanced cost management practice and operational efficiency in
manufacturing firms in Kenya. Journal of finance and business 2(1), 90-100.

David, G. S., (2017). Contemporary management accounting practices in UK manufacturing.
Oxford: CIMA Publishing. Goddard Enterprises Limited (2010). Goddard Enterprises
Limited, History of Goddard

Egbunike, P.A. (2014). Management accounting techniques and applications. SCOA Heritage

LesiHertati, (2015). Internal control and ethics of quality management system accounting
information and implications on the quality of accounting information management:
proposing a research framework. International Journal of Economics, Commerce and
Management. 3(2), 44-60.

Lucey, D. E., (2009). Empirical managerial accounting research: Are we just describing
management accounting practice. Journal of Accounting. 11(4), 787-794.

Maskson, T. C., (2018). Battles in the costing war: UK debates, 1950-1975. Accounting,
Business and Financial History, 13(3), 305-338.

Meshack, S. I. (2011). Studies in management accounting and finance, Owerri, Shack
publishers.

Neely, A., (2012). Applying overhead: How to find the right bases and rates, Journal of
Management Accounting. 1(3), 40-43.

Nelson C. O., (2011). The role of activity based costing on organizational pricing system – a
case study of foam and mattress industry, Liberia. Monrovia: journal of accounting.
(1(2), 33-40.

Nitin, K. &Dalgobind, M. (2013). Current trends of application of activity-based costing
(ABC): A Review. Solan: Global Journal of Management and Business Research (D)
8(3), 136- 150.

Nooteboom, N. J., (2016). Using the contribution margin aspects of menu engineering to
enhance financial results. International journal of contemporary hospitality
management. 9(4), 161-167.

Ogbuu, C. U., (2016). Effect of ABC on organizational Performance of Manufacturing
Companies in Nigeria. (Unpublished M.Sc Seminar) NnamdiAzikiwe University,
Awka.

Oluyinka I. O.,(2016). New management cost management practice and financial
performance of manufacturing company in Kenya. Journal of business and finance
2(1), 30-50.

Omoeregie, S., (2011). The activity-based costing method developments: state-of-the art and
case study. The IUP Journal of Accounting Research and Audit Practices.

Parker, R. S., (2018). Management accounting change in the UK. Management Accounting,
77(3): 28-30.

Parlato, I. T., & Paggies, K. P., (2008). Cost accounting practice and financial performance of
insurance companies in Kenya. 7(6), 50-60.

Rotch, L., & Allen, P. (1982). Advanced management accounting. Boston: Harvard Business
School Press.

Sarokolaei, A. M., &Rahimi poor, A. (2013). Studying the obstacles of applying a target
costing

DOWNLOAD PDF

---

Back