Apportionment of factory rent in sustainability accounting: developing a departmental cost allocation framework for manufacturing firms in Lagos, Nigeria
Keywords:
Apportionment, Factory rent, Cost efficiency, Allocation strategies, Manufacturing industry, Lagos, Resource optimizationAbstract
In general, cost allocation is a challenge even more so in the manufacturing sector worldwide, where costs such as factory rent can be shared among multiple users. As industrialization progresses in the rest of the world, especially in developing countries, controlling costs becomes essential for profitability and viability. The focus of this research was on the distribution of factory rent within Lagos manufacturing firms. A descriptive survey research design was used to study the existing status of and obstacles faced by a stratified random sample of 50 manufacturing firms in the food/beverage, chemicals, plastics, and textiles industries. Thus a total of 76 departmental heads of the finance, operations and production units filled in structured questionnaires. Quantitative data were analyzed using descriptive statistics and regression analyses while qualitative data were organized and coded thematically using SPSS version 26. Cost efficiency was found to have a, positive and significant, effect on allocation methods, at β = 0.498, t = 4.559, p < 0.001 as shown in the regression analysis section above, suggesting that higher cost efficiency predicts higher use of appropriate allocation methods. On the other hand, common practices exhibited a positive but non-significant effect of the use of common techniques (β = 0.165, t = 1.511, p = 0.135). The implication is that cost efficiency can be an important factor in constructing and applying effective rent allocation mechanisms. It also concludes that cost is to be managed efficiently in order to allocate resources within departments effectively. It advises that firms focus on cost efficiency, spend on up-to-date systems of cost-control, and support data-based allocation methods. A way this could be done would promote cost efficiency measurements throughout the industry.
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