THE RAMIFIED FACTORS AFFECTING THE CONCEPT OF PROFITABILITY AS A GUIDE TO POLICY DECISION IN ACCOUNTING A CASE STUDY OF SOME MANUFACTURING INDUSTRIES IN OSHIMY SOUTH L.G.A OF DELTA STATE

CHAPTER ONE

INTRODUCTION

The concept of profitability can be defined as that concept which provides management with alternative course of action according to the various degrees of profitability stating dearly in relevant cost accounting forms, the costs and benefits associated with individual project which enable management for select the most profitable. It is obvious that majority of the policy decisions of manufacturing industries are generally directed towards profitability. The policy decision made under this concept has direct impacts on increasing and enhancing the general profitability of the manifesting industries concerned. The origin of this concept can be traced back to era of industrial revolution most business grew from the usual family arrangement to large groups. Resources were pulled together and handed out to other people to manage for the real owners. Naturally, resources owners must expect a profitable return from their investments. The urgent obligation forced management to seek ways of carrying the activities so as to make profitable reforms to the resource owners. The growth and completing in the individual sectors gave rise to the needs for policy statement or decision on certain issues.

Materials must have to be bought in enough quantity to avoid stock out and at the same turn check over stocking. Labour which is one of the factors of production, must be allowed to operate in a conducive environment so as to reap the benefit of hiring labour. Prior to communication general ecological consideration must reviewed. There after site is augured structures erected, machine and equipment installed. One take of the manifesting industry must more the champing technology, meet its social responsibilities, operates under government regulations, pay tax as of and when due, meet the expectations of the shareholders. Moreover, high administrative cost of champing technology, hence competitions, cost of government restrictions, poor capital base and the needs for maximization of shareholders wealth must be highlighted and adjusted in such a way that the total cost of manufacturing a product will not only be less than sales revenues but also gives a good profit margin.