Standard Costing and Performance of Manufacturing Firms in Nigeria

Abstract

Standard costing is one of the traditional management accounting practices that has been considered irrelevant in the 21^st century business environment on the ground that its information is not relevant for managers' planning and control decision. This study examined whether the manufacturing companies in Nigeria are still practicing the techniques or not, and what is its effect on performance. We sent structured questionnaire to the management accountants of 200 manufacturing firms but received 130 useful responses. The descriptive analysis shows that manufacturing companies in Nigeria are still using standard costing techniques, and the regression results indicate that standard costing for sales and Direct labour have positive effect on performance, while the Direct material standard costing and overhead standard costing have negative effect. However, only the effect of Sales standard costing was statistically significant. We recommend that managers of manufacturing firms in Nigeria should selectively use standard costing as the situations arise.