Authors : Emmanuel C. Ebe, Moses O. Ede, Virginia N. Onyeka, Jeremiah C. Aleke, John J. Agah, Ugo C. Amauchechukwu and Francisca N. Ogba
Abstract: This study sought to evaluate the effect of cost volume profit on the profitability of manufacturing firms in Enugu state. The specific objectives of the study were to examine the effect of cost volume profit analysis on profitability, cost of production and sales of manufacturing firms. The study adopted the ex-post facto research design and data were obtained from the annual reports and accounts of two manufacturing firms for the period 2003-2012. The Ordinary Least Squares Regression (OLS) were used to test the hypotheses stated. The result emanating from the hypotheses tested were mixed for sampled firms (Innoson Industrial and Technical Company and Emenite Ltd. It was revealed that while contribution margin ratio had positive and significant effect on profitability it had positive and non-significant effect on cost of production and sales. The implication of these findings is that CVP application among manufacturing firms in Nigeria varies and this cloud be as a result of lack of awareness, low education levels and technical knowhow on the parts of directors. The study therefore concludes that as an analytical tool, it is useful as it enables the firm to determine the quantum of sales that will assist the firm not only to make profit but to break-even. The research therefore recommended that relevant directors should be sent on in-services training and short term courses on CVP application technique. Moreover, government should put a standard that would guide CVP application on manufacturing firms, so as to curtail price fluctuation’s among them in Nigeria business environments.
Emmanuel C. Ebe, Moses O. Ede, Virginia N. Onyeka, Jeremiah C. Aleke, John J. Agah, Ugo C. Amauchechukwu and Francisca N. Ogba, 2020. Evaluation of the Effect of Cost Volume Profit on the Profitability of Manufacturing Firms in Enugu State Nigeria. Journal of Engineering and Applied Sciences, 15: 2199-2211.