THE IMPACT OF COST ALLOCATION METHODS FOR SERVICE-ORIENTED BUSINESSES IN NIGERIA
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Abstract: THE IMPACT OF COST ALLOCATION METHODS FOR SERVICE-ORIENTED BUSINESSES IN NIGERIA
This study explores the impact of various cost allocation methods on the financial performance of service-oriented businesses in Kano. The objectives are to identify the most effective cost allocation methods, assess their impact on profitability, and evaluate the challenges in their implementation. A survey design was employed, gathering data from 200 financial managers and accountants, derived using Taro Yamane's formula. A case study of a leading service company in Kano provided comprehensive insights. The reliability coefficient score was 0.87. Findings indicate that accurate cost allocation methods, such as activity-based costing and direct costing, significantly improve profitability by providing better insights into cost drivers. However, challenges such as data collection difficulties and high implementation costs were noted. Recommendations include providing more training on cost allocation methods, simplifying the data collection process, and ensuring regular reviews of cost allocation practices.
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