ASSESSMENT OF COST ACCOUNTING PRACTICE AND ITS IMPACT ON ORGANIZATIONAL PERFORMANCE IN CASE OF FIKR SPRING WATER PLC, WOLKITE, SOUTH ETHIOPIA

Abstract

The purpose of this research is to assess cost accounting practices and its impact on organizational performance in case of Fikr Spring Water PLC. It looks through the company’s management support, employees’ involvement, arrangement of cost and responsibility centers, tools and techniques of cost control and reduction, cost classification and allocation, methods of costing and its implementation, purchasing procedures and finally the use of cost information of the company’s. The finding of the research revealed that the company does not give chance for employees to participate in budget preparation and standard setting, it does not use target costing as cost control and reduction tools and techniques and reporting without relating of actual and planned information. Lack of assign costs to particular cost objects and each cost object has not separate measurement of cost, return back to store and inform the costing department when it has excess raw materials, use only traditional costing method and giving cost information for external users are other problems that found out in the study. So in light of the above problems, the following recommendations were forwarded. The company should try to include employees in budget preparation and standard setting, try to use target costing, and relate actual with planned information in reporting. It should also assign costs to particular cost objects and each cost object has separate measurement, return back to store and inform the costing department when it has excess raw materials, try to use modern costing method and in time of need give cost information for external users.