Title:
Budgetary Control and Profitability of Listed Foods and Beverages Producing Companies in Nigeria

Authors:
Enyi Patrick Enyi, Ogundajo Grace Oyeyemi, Aremu Olabode Paul, Nigeria

Abstract:

This study examines the impact of budgetary control mechanisms specifically target costing, variance analysis, throughput accounting, and backflush accounting on the organizational profitability of Nigerian listed food and beverage companies, with a focus on Return on Equity (ROE) as the key performance metric. Drawing on empirical data from studies conducted and the trend analysis carried out, the research highlights the effectiveness of these budgetary control techniques in enhancing profitability within the sector. The findings reveal that target costing has significantly reduced production costs, leading to an average increase in ROE by 2.5% over two years. Variance analysis was found to be a crucial tool for managing costs and sustaining profitability, particularly in economically volatile environments, with companies reporting a 4% higher ROE on average. Throughput accounting improved production efficiency, contributing to a 15% improvement in ROE for firms facing production constraints. Backflush accounting was effective in optimizing inventory management and reducing accounting overheads, resulting in a 5% increase in ROE. The study concludes that the adoption of these budgetary control mechanisms is essential for improving financial performance in the Nigerian food and beverage sector. The evidence suggests that these tools are not only instrumental in managing costs but also in driving sustained profitability, offering valuable insights for companies seeking to enhance their financial outcomes in a competitive market environment.

DOI: https://doi.org/10.51505/IJEBMR.2025.9104