Effects of Cost Control Techniques on Profitability of Zimplow Ltd

Abstract

The study sought to investigate the effects of cost control techniques on profitability at Zimplow Ltd. The persistent rise in operational cost which reduces profitability of a company motivated the researcher to undertake the study. The objectives of the study were to; establish cost control techniques used in Zimplow, analyse the effects of cost controlling techniques on the profitability of Zimplow Ltd, examine the challenges of effective implementation of cost control techniques and recommend the best strategies of effective implementation of cost control techniques in Zimplow Ltd. The study adopted a descriptive research design, Data was obtained from primary sources and questionnaires were used as research instruments. Fifty staff members were used as research subjects. Purposive sampling technique and a sample size of 60 was used. The study findings on establishing cost control techniques used at Zimplow indicated that effective cost control techniques assist in controlling and regulating costs, assist management in decision making and improve company’s productivity. The study findings on effects of cost controlling techniques on the profitability concluded that cost control techniques have a positive impact on profitability through reduction of production and operational costs, provide avenues for a company to invest in profitable projects and increase sales volume. Data was analysed with chi-square the results reviewed a significant positive impact between the application of budgetary control, standard costing, variance analysis and profitability. The study findings on the challenges of effective implementation of cost control techniques showed that the problem of rise in costs was not in the techniques but was resulting from lack of; education and training in using cost control techniques, top management support and poor management of the techniques among others. The study recommends the involvement of staff in cost control initiatives, motivation, education and training programmes among others to ensure effective implementation of cost control techniques.