THE ROLE OF COST VOLUME PROFIT ANALYSIS ON THE MANAGERIAL DECISION-MAKING IN MANUFACTURING FIRMS IN MOGADISHU – SOMALIA

Abstract

The Purpose: The study examined at how manufacturing firms used cost-volume-profit analysis while making managerial Decisions. Design, Methodology, and Approach: An online survey and a quantitative methodological approach were used to gather the study's primary data. The target market consists the Manufacturing Firms in Mogadishu, Somalia. 88 respondents who worked in the accounting and finance departments of manufacturing firms provided the information. The data were examined using the regression method of data analysis and the social science statistical program SPSS (version 24). Findings: The study showed the importance of cost volume profit analysis in any production firm's decision-making. The results also show a positive relationship between unit variable cost and managerial decision-making, as well as a significant relationship between total revenue and managerial decision-making. These findings suggest that manufacturing firms should use their understanding of cost volume profit analysis when making managerial decisions. Finally, the researchers suggested that Manufacturing firms look at their CVP analysis, which consists of (unit variable cost and total revenue), and analyze it effectively before undertaking managerial decisions in order to attain an effective profit. They also suggested that results from cost volumes analysis of a firm should be put into practice in order to ensure that the firm does not lose in their cost of production.