Effect of Cost Reduction Methods on the Profitability of Small-Scale Manufacturing Enterprises in Nigeria: A Case of Selected Small-Scale Businesses in Ekiti and Ondo States

Omula Godwin Gabriel, Talabi Amos Olatunbosun and Kareem Sodiq Kayode
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Omula Godwin Gabriel: Department of Accountancy, Federal Polytechnic, Ile-Oluji, Ondo State
Talabi Amos Olatunbosun: Department of Accountancy, Federal Polytechnic, Ile-Oluji, Ondo State
Kareem Sodiq Kayode: Department of SIWES and Industrial Liaison Unit, Federal Polytechnic, Ile-Oluji, Ondo State

International Journal of Research and Scientific Innovation, 2025, vol. 12, issue 2, 837-856

Abstract: This study examines the effect of cost reduction methods on the profitability of small-scale manufacturing enterprises in Nigeria, focusing on selected businesses in Ekiti and Ondo States. Small-scale manufacturing firms play a vital role in the Nigerian economy, yet many struggle with financial sustainability due to high operational costs. This study employs a survey research design, collecting primary data from 200 respondents, including operations managers, cost accountants, and senior executives. A structured questionnaire was used to assess the adoption of cost control techniques such as activity-based costing, budgetary control, and technological investment. The study utilizes descriptive and inferential statistical analyses, including regression analysis, to evaluate the relationship between cost reduction strategies and profitability indicators such as Return on Assets (ROA), Return on Equity (ROE), and Net Profit Margin (NPM). Findings indicate that most enterprises implement cost reduction strategies effectively, with technological investment playing a significant role in cost control. However, challenges such as resistance to change and external economic factors impact implementation. The study concludes that cost reduction methods are essential for financial sustainability and recommends strategic cost control measures to enhance profitability in the sector.

Date: 2025
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