Overhead cost control in a sample of Uganda firms
Kyamanywa, Joseph R
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The present study was motivated by, and is based on, a rather evident belief that overhead cost control and cost control in general, were generally poor in most Ugandan firms, irrespective of type/group of industry. A possibility of lack of adequate qualified staff did not seem to adequately explain the cause of this situation. Viewed in the context of formal organizational control, cost control is a requisite to the success of an organization. Overheads usually constitute a significant proportion of total cost. The study seeks to confirm the said belief about overhead cost control in Uganda and to assess the seriousness of the situation. It also attempts to determine the problems that have led to the situation. Based on the nature of the problems, it is hoped that some solutions .might be suggested to improve the situation. In the study, a sample of large Ugandan manufacturing firms was used. The sample in fact comprised the 'population' of 'large' firms in Uganda. The study of such a population was used to provide a basis for suggesting that cost control would be worse for the smaller firms in Uganda. Maintenance costs are studied. Based on a logical understanding of the maintenance costs the results are used to· draw generalized conclusions about overhead cost. Two hypotheses are tested to confirm that: (a) The said problems existed irrespective of type/ group of industry and that, these factors would not be the cause for the said situation. (b) A possible lack of adequate knowledge about overhead control techniques would not have significantly influenced the situation. To do this a quantitative analysis is carried out. The results of these tests should highlight or otherwise provoke questions that are answered by the analysis of the facts and opinions given by key staff in the firms and other relevant sources in the country. The results confirm the original hypothesis that overhead cost control in Ugandan firms was generally poor and that no significant type of firm and/or industrial related problems existed thus indic ting that the said problems were well distributed in the country. The results further show that: knowledge about the control techniques the state of affairs. But this was not signtficantly true for all the overhead control technique at her reasons to account for the situation included the unfavourable economic and political environment Based on the results, suggestions for improvement are made. In all, it is ascertained that without a solution to the mentioned environmental problems} no , significant improvement could be achieved. Yet the environmental problems were beyond the means of , the Ugandan accountant and the accounting profession as a whole. Considering this, the poor overhead control In Uganda would not only remain, but, might even increase unless the environment was improved; Some limitations in the study are noted. The sample size used is considered rather small for conclusive statistical analysis. The inclusion of individual opinions is also considered a weakness in the results. Conclusions about overhead cost are drawn from a study of maintenance costs. Although a case is made for this, a potential weakness is possible. The three choices were, however, considered essential in order to achieve an in-depth enquiry into the state of overhead cost control in Ugandan firms.