The Role of Budgetary Control on the Profit Performance of Companies

CHAPTER ONE

INTRODUCTION

1.1     BACKGROUND TO THE STUDY

          Any research inquire is aimed at empirical reality which exist outside the mind of the observe. The aim of this research therefore is to understand the significance effect of budgetary control on the profit performance of Nigeria company.

          The success of an enterprises depends largely on the establishment and execution it’s quantitative and qualitative course of action prepared and approved prior to the defined period of time (Lucet, 2004).

          Budgetary control is therefore sees as a wheel that rolls the organization towards the achievement of it’s long and short term cooperate objective it is therefore evident from the above assertion that the effectiveness of budgetary control can not be over emphasized.

          Over the tears the budgetary controls have not been able to achieve the desired result due to certain inadequate and deficiencies which constitute both technical and human defects (omolehinwa, 2000).

          Most industries in Nigeria today are face with the problem of forecasting future event like inflation rate and cost behaviour due to unstable economy especially since the introduction of structural adjustment programmes (SAP) In 1986 Lated in Omolehinwa 200).

          This project work therefore look into the effect of budgetary control on the profit performance of company in Nigeria with focus on manufacturing industries and how the aforementioned inadequate and deficiencies could be rectified.

1.2     STATEMENT OF RESEARCH PROBLEM

          The following are some of the problem of this research

• is the attitude of management towards budgeting process a positive one?
• What has been the performance of budgeting as a managerial control tool in manufacturing industries?
• What are the problem been faced in relation to budgeting control in organization
• How could the problems associated with budget can be could in other to achieve the stated objectives of the organization
• To what extent has budgeting achieved its objective in organization
• Does budgeting really same time and aid quick production and effective performance in an organization
• Has budgeting system been able to achieve the objective of cost reduction and revenue maximization.

1.3     OBJECTIVES OF THE STUDY

          The main objectives of this research work is to analysis critically the effect of budgetary control of the profit performance of company in Nigeria in a manufacturing industry and the general problem of effect of profit performance of modern business organization and suggested possible solution.

          Specific objective of this project work include the following

1. To ascertain the effect of budget on revenue generation in manufacturing industries
2. To examine the problem being faced in relation to effect of budgeting control in organization and provide likely solution.
3. To know the contribution of budgetary control in achievement of organization objective
4. How budgeting control has its own deficiency when its being affected by economic condition these are inflation and seasonal variation government pronouncement and others
5. To identify whether the budgetary control system has brought about cost reduction in production and services rendered by the organization.

SCOPE OF THE STUDY

          The project on the effect of budgetary control on the profit performance o the company with a case study of Nigeria bottling co plc 7up.

          Research work to be carried out includes the analysis of the effectiveness of budgetary control in the profit performance of the company and direct question on how it affect the Nigeria industries

1.5     SINGNIFICANT OF THE STUDY

          the study has enable us to know the significant of the budgetary control and effect of profit performance in Nigeria company. It also help us to know the relevant of budgetary control in Nigeria industry.

          On the completion of this research work it will serve as a reference of part of several institution and person. It will be better appreciated by Nigeria industries and entire public enterprise those body should seek to improve on the are of lapses and where the role of budgetary control has been undermined as they shall be highlighted in this research work.

          It will also serve as a pouter for potential weal and foreign company who will discover the humorous opportunities that derived from this research work.

          The government will also benefit from this research work as it shall attempt to encourage public participation in budgetary planning.

          Scholars will greatly benefit from this work because it shall add to their existing knowledge of budgetary control on how it affect the profit performance of Nigeria company.

1.6     HYPOTHESIS TESTING

          Hypothesis 1

          It is a test performed in order to very whether an hypothesis is true or false it is also populated for the purpose of accepting or rejecting of an assumption.

          Ho – Budgetary control does not contribute to the accruement of organizational objective.

          HA – Budgeting is no longer useful in managerial control of cost reduction and revenue generation.

1.7     LIMITATION OF THE STUDY

          Here are limitation attributed to the problems under the study- these are

1. Time constraints
2. Cost

• The information which may not be released by companies staff due to the agreement of secrecy and confidentiality.

1. For the purpose of this research effect of budgetary control in manufacturing companies, for cursed, it is for cused in operating and financial budget which is otherwise know as “master – budget rather than capital budget”.