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Cited by 0Accounting and Organizational ManagementAccounting Theory and Financial ReportingAuditing, Earnings Management, Governance

Absorption costing and its effect on financial performance of manufacturing companies in Nigeria

Open access
Department of Accounting, Federal University Oye Ekiti, Nigeria, Oluwayemisi Ali-Momoh, Betty, Tosin Longe, Kehinde, Kayode Adediran, Ebenezer, Toyin, Charity Jamiu, Muyiwa, Victor Olubo, Seyi Olabanji, Faith, Ogunya, Omoniyi +2 more·2025·International Journal of Economics and Business Management
DOI 10.59568/ijebm-2025-1-2-41
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Abstract

This research was undertaken to investigate the effect absorption costing had on the financial status of manufacturing firms in Nigeria. In particular, the study determined how factors such as Total Manufacturing Cost per Unit (TMCU), Fixed Manufacturing Overhead Absorbed (FMOA), and Inventory Valuation Methods work to impact the profitability of listed manufacturing companies in Nigeria. This research took into consideration of period covering 2009-2024, utilizing quarterly data retrieved from the financial statements of selected firms listed on the Nigerian Stock Exchange (NSE). Secondary data were gotten from the annual financial reports of the companies and other industry publications. The study undertook an Autoregressive Distributed Lag estimation technique to study the short-run and long-run relationships between the variables. Results showed that Total Manufacturing Cost per Unit positively influences financial performance in short run with a coefficient of 0.24 (p < 0.05) and 0.35 (p < 0.01) in the long run. Conversely, Fixed Manufacturing Overhead Absorbed also exhibited a positive short-run effect of 0.18 (p < 0.05), which increased to 0.27 (p < 0.01) in times where financial effects are considered. Inventory Valuation Method declined with a negative and statistically significant influence, showing a coefficient of -0.12 with a statistical significance of less than 0.01 in the long run. These results indicate that proper cost management strategies particularly relating to manufacturing cost per unit and overhead absorption are essential to improve the financial performance of manufacturing firms in Nigeria. The study therefore suggests that companies should gear their efforts towards improving cost structure and efficient inventory valuation methods to enhance profitability and sustain themselves in the long term.

AI snapshot

Written from the paper’s full text.

TL;DR

This study examines whether absorption-costing components—Total Manufacturing Cost per Unit (TMCU), Fixed Manufacturing Overhead Absorbed (FMOA), and Inventory Valuation Method (IVM)—affect Return on Assets (ROA) of listed Nigerian manufacturing firms. It finds a statistically significant negative long-run and short-run effect for IVM, no significant effect for FMOA, and mixed/inconsistent evidence for TMCU.

Key findings

  • IVM had a statistically significant negative effect on ROA in the long run (coefficient = -0.000288, p = 0.0058) and short run (coefficient = -8.80E-06, p = 0.0054).
  • FMOA had no statistically significant effect on ROA in the long run (coefficient = 0.016200, p = 0.2558) or short run (coefficient = 0.000625, p = 0.1451).
  • The bounds test F-statistic of 4.211578 exceeded upper critical values at 10%, 5%, and 2.5%, indicating a long-run relationship; the ECM coefficient was -0.057436 (p = 0.0136), showing gradual adjustment toward equilibrium.
  • The discussion/conclusion state TMCU may influence financial performance, but Table 6 reports the TMCU/FMOA term as non-significant (long run 0.641768, p = 0.8828; short run 0.074331, p = 0.8916), an inconsistency in the paper.

Methods

  • Ex-post facto design using secondary data from audited financial statements of 15 purposively selected manufacturing firms out of 66 listed on the Nigerian Exchange Group; the study period is stated as 2009–2024, though the descriptive-statistics section says 2020–2024.
  • Independent variables: TMCU, FMOA, and IVM; dependent variable: ROA. The model is FPit = β0 + β1TMCUit + β2FMOAit + β3IVMit + εit.
  • Analysis used regression with robust standard errors, ARDL bounds testing for long-run relationships, an error correction model, and diagnostic tests including descriptive statistics, correlation, ADF unit root, autocorrelation, normality, serial correlation, and heteroscedasticity.

Limitations

  • Stated: the study is limited to listed firms and the Nigerian setting, which may impede extrapolation; the authors call for further work in wider or different sectors.
  • Evident: the sample is only 15 firms; the period is inconsistently reported as 2009–2024 and 2020–2024; the methods text refers to “marginal costing practices” despite the absorption-costing focus; Table 6 and the discussion disagree on TMCU significance; residuals failed normality (p = 0.000) and autocorrelation appeared at lag 4 (p = 0.038).

Model-written summary. Check it against the paper before relying on it.

Integrity signals

Registry

Crossref · 10.59568/ijebm-2025-1-2-41

Cites

Statistics

Nothing to recompute.

Claims the paper makes

0 of 16 cited sources checked · 0 supported · 0 flagged

  • Findingown data

    In the short run, IVM had a very small negative coefficient of -8.80E-06 with p-value 0.0054, suggesting a slight negative impact on ROA.

    “In the short run, IVM shows a very small negative coefficient of -8.80E-06 (probability value = 0.0054), which suggests a slight negative impact on ROA, though the magnitude is minimal.”
    Quote in the paperNot a substantial claim
    • Rests on an assumption: The financial statement and cost accounting data used for listed Nigerian manufacturing firms accurately reflect their total manufacturing cost per unit, fixed overhead absorbed, inventory valuation method, and return on assets.
  • Findingown data

    TMCU and FMOA did not have a substantial long-run relationship, with coefficient 0.641768 and p-value 0.8828.

    “The TMCU to FMOA relationship has a coefficient of 0.641768 (probability value = 0.8828), which is not statistically significant, suggesting that Total Manufacturing Cost per Unit and Fixed Manufacturing Overhead Absorbed do not have a substantial long-run relationship with each other.”
    Quote in the paperNot a substantial claim
    • Rests on an assumption: The financial statement and cost accounting data used for listed Nigerian manufacturing firms accurately reflect their total manufacturing cost per unit, fixed overhead absorbed, inventory valuation method, and return on assets.
  • Findingown data

    The short-run relationship between TMCU and FMOA was not significant, with coefficient 0.074331 and p-value 0.8916, showing no meaningful interaction.

    “The relationship between TMCU and FMOA (coefficient = 0.074331, probability = 0.8916) is also not significant, showing that these two variables do not interact meaningfully in the short term.”
    Quote in the paperNot a substantial claim
    • Rests on an assumption: The financial statement and cost accounting data used for listed Nigerian manufacturing firms accurately reflect their total manufacturing cost per unit, fixed overhead absorbed, inventory valuation method, and return on assets.
  • Findingown data

    A long-run relationship exists between TMCU, FMOA, IVM, and ROA for listed Nigerian manufacturing companies.

    “In the context of listed Nigerian manufacturing firms, this indicates that a long-run relationship exists between cost accounting components-such as TMCU, FMOA, and IVM-and financial performance (ROA).”
    Quote in the paperSubstantial claim
    • Rests on an assumption: The financial statement and cost accounting data used for listed Nigerian manufacturing firms accurately reflect their total manufacturing cost per unit, fixed overhead absorbed, inventory valuation method, and return on assets.
  • Findingown data

    IVM had a statistically significant negative long-run coefficient of -0.000288 with p-value 0.0058, indicating that an increase in IVM leads to a very slight decrease in ROA.

    “IVM has a statistically significant negative coefficient of -0.000288, with a probability value of 0.0058, indicating that in the long run, an increase in the Inventory Valuation Method (IVM) will lead to a very slight decrease in Return on Assets (ROA)”
    Quote in the paperSubstantial claim
    • Rests on an assumption: The financial statement and cost accounting data used for listed Nigerian manufacturing firms accurately reflect their total manufacturing cost per unit, fixed overhead absorbed, inventory valuation method, and return on assets.
  • May combine two claims. 28
  • Classified as probably not a substantial claim. 8

  • May combine two claims.

    Findingown data

    FMOA had a small positive short-run coefficient of 0.000625 with p-value 0.1451, which was not statistically significant, indicating no significant short-term effect on performance.

    “FMOA has a small positive short-run coefficient of 0.000625 (probability value = 0.1451), but this is not statistically significant, indicating that FMOA does not significantly affect the short-term performance of listed manufacturing firms.”
    Quote in the paperSubstantial claim
    • Rests on an assumption: The financial statement and cost accounting data used for listed Nigerian manufacturing firms accurately reflect their total manufacturing cost per unit, fixed overhead absorbed, inventory valuation method, and return on assets.

  • May combine two claims.

    Findingown data

    All correlations were positive but not strong, implying that changes in one cost accounting element tend to move in the same direction as others.

    “While none of the correlations are particularly strong, the positive values across all pairs imply that changes in one cost accounting element tend to move in the same direction as others.”
    Quote in the paperNot a substantial claim
    • Rests on an assumption: The financial statement and cost accounting data used for listed Nigerian manufacturing firms accurately reflect their total manufacturing cost per unit, fixed overhead absorbed, inventory valuation method, and return on assets.

  • May combine two claims.

    Findingown data

    Most variables had high kurtosis and Jarque-Bera p-values below 0.05, so the data were not normally distributed.

    “However, the high kurtosis values across most variables indicate the data are not normally distributed, confirmed by Jarque-Bera test with significant p-values (all < 0.05)”
    Quote in the paperSubstantial claim
    • Rests on an assumption: The financial statement and cost accounting data used for listed Nigerian manufacturing firms accurately reflect their total manufacturing cost per unit, fixed overhead absorbed, inventory valuation method, and return on assets.

  • May combine two claims.

    Findingown data

    The F-statistic of 4.211578 exceeded the upper bound critical values at the 10%, 5%, and 2.5% levels and the 1% lower bound, but was slightly below the 1% upper bound.

    “The F-statistic value of 4.211578 is higher than the upper bound critical values at the 10% (3.2), 5% (3.67), and 2.5% (4.08) significance levels, and even surpasses the 1% lower bound (3.65) though slightly below the 1% upper bound (4.66”
    Quote in the paperSubstantial claim
    • Rests on an assumption: The financial statement and cost accounting data used for listed Nigerian manufacturing firms accurately reflect their total manufacturing cost per unit, fixed overhead absorbed, inventory valuation method, and return on assets.

  • May combine two claims.

    Findingown data

    FMOA had a mean of 528.09, skewness of 5.63, and kurtosis of 38.51, showing substantial variation in how listed firms allocated fixed overheads to production.

    “For Fixed Manufacturing Overhead Absorbed (FMOA), the mean of 528.09 and a highly skewed distribution (skewness = 5.63; kurtosis = 38.51)reveal substantial variations in how listed firms allocate fixed overheads to production”
    Quote in the paperNot a substantial claim
    • Rests on an assumption: The financial statement and cost accounting data used for listed Nigerian manufacturing firms accurately reflect their total manufacturing cost per unit, fixed overhead absorbed, inventory valuation method, and return on assets.

  • May combine two claims.

    Findingown data

    TMCU had a statistically significant long-run effect on financial performance, implying that production costs lower profitability.

    “It was found in the study that TMCU has a statistically significant long-run effect on financial performance; this implies that costs of production lower profitability in line with prior findings (Ibrahim, 2021;Olayemi & Adekunle, 2020).”
    Quote in the paperSubstantial claim0 of 2 sources checked
    • cites Ibrahim, 2021

      Couldn’t be matched to a paper in Crossref, so it can’t be checked.

    • cites Olayemi & Adekunle, 2020

      Couldn’t be matched to a paper in Crossref, so it can’t be checked.

    • Rests on an assumption: The financial statement and cost accounting data used for listed Nigerian manufacturing firms accurately reflect their total manufacturing cost per unit, fixed overhead absorbed, inventory valuation method, and return on assets.

  • May combine two claims.

    Findingown data

    The median ROA was 7.18 and the skewness was 4.67, indicating inequality in asset utilization efficiency across the sector.

    “The median ROA of 7.18, significantly lower than the mean, further affirms this skewness (4.67), reflecting inequality in asset utilization efficiency across the sector.”
    Quote in the paperNot a substantial claim
    • Rests on an assumption: The financial statement and cost accounting data used for listed Nigerian manufacturing firms accurately reflect their total manufacturing cost per unit, fixed overhead absorbed, inventory valuation method, and return on assets.

  • May combine two claims.

    Findingown data

    The ROA series had a standard deviation of 11,364.13 and a maximum value of 77,115.00.

    “which is confirmed by the high standard deviation (11,364.13)and the extreme maximum value of 77,115.00”
    Quote in the paperNot a substantial claim
    • Rests on an assumption: The financial statement and cost accounting data used for listed Nigerian manufacturing firms accurately reflect their total manufacturing cost per unit, fixed overhead absorbed, inventory valuation method, and return on assets.

  • May combine two claims.

    Findingown data

    TMCU had a mean of 35.70 and a relatively symmetrical distribution with skewness of 0.68, suggesting more uniformity in unit cost practices among the sampled firms.

    “Total Manufacturing Cost per Unit (TMCU) has a more moderate mean of 35.70 and a relatively symmetrical distribution (skewness = 0.68), suggesting more uniformity in unit cost practices among the sampled firms.”
    Quote in the paperNot a substantial claim
    • Rests on an assumption: The financial statement and cost accounting data used for listed Nigerian manufacturing firms accurately reflect their total manufacturing cost per unit, fixed overhead absorbed, inventory valuation method, and return on assets.

  • May combine two claims.

    Findingown data

    IVM had a mean of 9,113.42 and a maximum of 191,207.00, indicating inconsistency in valuation practices among the firms.

    “Inventory Valuation Method (IVM), with a mean of 9,113.42 and an extremely high maximum value (191,207.00),indicates inconsistency in valuation practices among the firms”
    Quote in the paperNot a substantial claim
    • Rests on an assumption: The financial statement and cost accounting data used for listed Nigerian manufacturing firms accurately reflect their total manufacturing cost per unit, fixed overhead absorbed, inventory valuation method, and return on assets.

  • May combine two claims.

    Findingown data

    The F-statistic fell within the rejection region at conventional significance levels, providing strong evidence to reject the null hypothesis of no level relationship.

    “This implies that the F-statistic falls within the rejection region at conventional significance levels (10%, 5%, and 2.5%), providing strong evidence to reject the null hypothesis of no level relationship.”
    Quote in the paperSubstantial claim
    • Rests on an assumption: The financial statement and cost accounting data used for listed Nigerian manufacturing firms accurately reflect their total manufacturing cost per unit, fixed overhead absorbed, inventory valuation method, and return on assets.

  • May combine two claims.

    Premisecitation

    Many Nigerian firms struggle to apply absorption costing because they classify costs inconsistently, have weak internal controls, and document overhead absorption rates poorly.

    “Despite being accepted for financial reporting, several Nigerian firms have difficulties applying absorption costing in practice owing to inconsistent classifications of costs, weak internal controls, and poor documentation of overhead absorption rates (Oladele et al., 2020).”
    Quote in the paperSubstantial claim0 of 1 sources checked
    • cites Oladele et al., 2020

      Couldn’t be matched to a paper in Crossref, so it can’t be checked.

  • May combine two claims.

    Study design and conductown data

    Autocorrelation at lag 5 was not significant at the 5% level, with Q-statistic 10.239 and p-value 0.069.

    “Although the autocorrelation slightly continues at lag 5 (Q-stat = 10.239,p = 0.069), it is no longer significant at the 5% level but may be marginally significant at 10%.”
    Quote in the paperNot a substantial claim
    • Rests on an assumption: The financial statement and cost accounting data used for listed Nigerian manufacturing firms accurately reflect their total manufacturing cost per unit, fixed overhead absorbed, inventory valuation method, and return on assets.

  • Classified as probably not a substantial claim. May combine two claims.

    Premisecitation

    Previous studies by Adebayo and Aluko (2019) found inventory management and overhead absorption to be strong indicators of financial performance.

    “These outcomes stand in contradiction to previous studies in related sectors by Adebayo and Aluko (2019) that found inventory management and overhead absorption to be strong indicators of financial performance.”
    Quote in the paperSubstantial claim0 of 1 sources checked
    • cites Adebayo and Aluko (2019)

      Couldn’t be matched to a paper in Crossref, so it can’t be checked.

  • May combine two claims.

    Study design and conductown data

    FMOA, IVM, and ROA were stationary at level, with ADF statistics more negative than the 5% critical values and p-values below 0.05.

    “On the other hand, Fixed Manufacturing Overhead Absorbed (FMOA), Inventory Valuation Method (IVM), and Return on Assets (ROA) are all stationary at level, as their respective ADF statistics are more negative than the 5% critical values, and their p-values are below 0.05.”
    Quote in the paperSubstantial claim
    • Rests on an assumption: The financial statement and cost accounting data used for listed Nigerian manufacturing firms accurately reflect their total manufacturing cost per unit, fixed overhead absorbed, inventory valuation method, and return on assets.

  • May combine two claims.

    Interpretationown data

    Cost accounting techniques impact the financial performance of listed manufacturing companies in Nigeria, with TMCU potentially influencing financial performance.

    “The findings of this study show that cost accounting techniques impact the financial performance of listed manufacturing companies in Nigeria, with Total Manufacturing Cost per Unit (TMCU) potentially influencing financial performance.”
    Quote in the paperSubstantial claim

  • May combine two claims.

    Interpretationown data

    FMOA and IVM had little to no significant impact on financial performance, and fixed overhead absorption and inventory methods did not directly influence ROA in the Nigerian firms' context.

    “On the other hand, FMOA and IVM have little to no significant impact on financial performance, presenting a case that, within the Nigerian firms' context, fixed overhead absorption and inventory methods do not directly influence ROA.”
    Quote in the paperSubstantial claim
    • Rests on an assumption: The financial statement and cost accounting data used for listed Nigerian manufacturing firms accurately reflect their total manufacturing cost per unit, fixed overhead absorbed, inventory valuation method, and return on assets.

  • Classified as probably not a substantial claim.

    Premisecitation

    Contingency theory holds that no single accounting method or management control system is best for all organizations; appropriateness depends on contingent factors such as industry, cost structure, firm size, and economic environment.

    “In this view, there is not any one best accounting method or management control system applicable to all organizations but rather depending on contingent factors such as type of industry, cost structure, firm size and environment-economical (Donaldson, 2021;Otley, 2016).”
    Quote in the paperSubstantial claim0 of 2 sources checked
    • cites Donaldson, 2021

      Couldn’t be matched to a paper in Crossref, so it can’t be checked.

    • cites Otley, 2016

      Couldn’t be matched to a paper in Crossref, so it can’t be checked.

  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Study design and conductreasoning

    The study used ARDL model for further robustness checks, especially for long-run relationships between variables.

    “The ARDL model is used for further robustness checks, especially for the existence of long-run relationships between the variables.”
    Quote in the paperNot a substantial claim

  • May combine two claims.

    Study design and conductown data

    There was no heteroscedasticity in the data, with statistic 0.310674 and p-value 0.9459, meaning the variance of errors was constant.

    “The Heteroscedasticity test, with a statistic of 0.310674 and a probability of 0.9459, indicates that there is no heteroscedasticity in the data, meaning the variance of errors is constant.”
    Quote in the paperNot a substantial claim
    • Rests on an assumption: The financial statement and cost accounting data used for listed Nigerian manufacturing firms accurately reflect their total manufacturing cost per unit, fixed overhead absorbed, inventory valuation method, and return on assets.

  • Classified as probably not a substantial claim.

    Study design and conductreasoning

    The chosen method is claimed to make the analysis of absorption costing and financial performance in Nigerian manufacturers reliable and comprehensive.

    “This methodology, assures the reliability and comprehensiveness of the analysis between absorption costing techniques and financial performance in Nigerian manufacturing firms.”
    Quote in the paperSubstantial claim

  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Interpretationreasoning

    The contradiction with prior studies could be due to differences in sample size, methodology, or the chronological and economic setting of the studies.

    “The reason for this could be found in differences in sample size, methodology (cross-sectional versus time-series), or the chronological and economic setting of the studies.”
    Quote in the paperNot a substantial claim

  • Classified as probably not a substantial claim.

    Study design and conductown data

    Regression analysis was used to understand the impact of absorption costing techniques on financial performance while controlling for firm size and market conditions.

    “Regression analysis was used to understand impact of absorption costing techniques on the financial performance of firms and controlling for variables such as firm size and market conditions.”
    Quote in the paperSubstantial claim

  • Probably not a substantial claim: may not pass S3 (load-bearing).

    Study design and conductnone given

    The study used robust standard errors to account for possible heteroscedasticity.

    “The study uses robust standard errors to ensure that the possibility of heteroscedasticity is accounted for.”
    Quote in the paperNot a substantial claim

  • May combine two claims.

    Study design and conductown data

    TMCU was non-stationary at level but became stationary after first differencing, with ADF statistic -7.779278 and p-value 0.0000, making it integrated of order one, I(1).

    “the Total Manufacturing Cost per Unit (TMCU) was non-stationary at level but became stationary after first differencing, as indicated by the ADF statistic of -7.779278 with a probability of 0.0000, which is less than the 5% critical value of -2.912631.This means TMCU is integrated of order one, I(1).”
    Quote in the paperSubstantial claim
    • Rests on an assumption: The financial statement and cost accounting data used for listed Nigerian manufacturing firms accurately reflect their total manufacturing cost per unit, fixed overhead absorbed, inventory valuation method, and return on assets.

  • May combine two claims.

    Interpretationown data

    For listed Nigerian manufacturing firms, cost-related accounting practices and financial performance indicators remained relatively stable over time, except that unit cost could fluctuate due to inflation or operational changes.

    “For listed manufacturing firms in Nigeria, this means that the companies' cost-related accounting practices and financial performance indicators remain relatively stable over time, except for variations in unit cost, which can fluctuate due to inflation or operational changes.”
    Quote in the paperSubstantial claim
    • Rests on an assumption: The financial statement and cost accounting data used for listed Nigerian manufacturing firms accurately reflect their total manufacturing cost per unit, fixed overhead absorbed, inventory valuation method, and return on assets.

  • May combine two claims.

    Interpretationown data

    IVM had a statistically significant long-run effect on ROA, while FMOA and TMCU showed weak or no significant effects on performance in both the short and long term.

    “The result shows that Inventory Valuation Methods (IVM) have a statistically significant long-run effect on financial performance (ROA), other factors such as Fixed Manufacturing Overhead Absorbed (FMOA) and Total Manufacturing Cost per Unit (TMCU) show weak or no significant effects on performance in both the short and long term.”
    Quote in the paperSubstantial claim
    • Rests on an assumption: The financial statement and cost accounting data used for listed Nigerian manufacturing firms accurately reflect their total manufacturing cost per unit, fixed overhead absorbed, inventory valuation method, and return on assets.

  • May combine two claims.

    Interpretationown data

    The ECM suggests that firms were adjusting toward long-run equilibrium, but the speed of adjustment remained slow.

    “The Error Correction Model (ECM) suggests that while the firms are adjusting towards long-run equilibrium, the speed of adjustment remains slow”
    Quote in the paperSubstantial claim
    • Rests on an assumption: The financial statement and cost accounting data used for listed Nigerian manufacturing firms accurately reflect their total manufacturing cost per unit, fixed overhead absorbed, inventory valuation method, and return on assets.

  • May combine two claims.

    Interpretationown data

    The findings address the research questions by confirming that TMCU significantly impacts financial performance, while the effects of FMOA and IVM are less direct.

    “The findings also address the research questions by confirming that while TMCU significantly impacts financial performance, the effects of FMOA and IVM are less direct”
    Quote in the paperSubstantial claim

  • May combine two claims.

    Study design and conductown data

    Except for TMCU, the variables did not exhibit unit root problems and were suitable for regression analysis in level form.

    “These results suggest that, except for TMCU which needed to be differenced, the remaining variables do not exhibit unit root problems and are suitable for regression analysis in their level form.”
    Quote in the paperSubstantial claim
    • Rests on an assumption: The financial statement and cost accounting data used for listed Nigerian manufacturing firms accurately reflect their total manufacturing cost per unit, fixed overhead absorbed, inventory valuation method, and return on assets.

  • Classified as probably not a substantial claim. May combine two claims.

    Study design and conductreasoning

    The ARDL approach was selected because it can handle variables of mixed orders of integration and is suitable for time-series data.

    “The ARDL approach is selected because it can deal with variables of mixed orders of integration and is apt for time-series data.”
    Quote in the paperSubstantial claim

  • May combine two claims.

    Study design and conductown data

    The ARDL model was stable or ergodic, as the CUSUM blue line fell between the red lines, indicating good specification.

    “The ergodicity of the selected ARDL was examined using cursive Ramsey and it is overt that the blue line fall in between the red lines.This implies that the model are stable or egordic which indicates good specification.”
    Quote in the paperSubstantial claim
    • Rests on an assumption: The financial statement and cost accounting data used for listed Nigerian manufacturing firms accurately reflect their total manufacturing cost per unit, fixed overhead absorbed, inventory valuation method, and return on assets.

  • May combine two claims.

    Study design and conductown data

    The residuals of the model were not normally distributed, with normality statistic 303.3216 and p-value 0.000.

    “Normality test reveals a high statistic (303.3216) with a probability of 0.000, indicating that the residuals of the model are not normally distributed.”
    Quote in the paperNot a substantial claim
    • Rests on an assumption: The financial statement and cost accounting data used for listed Nigerian manufacturing firms accurately reflect their total manufacturing cost per unit, fixed overhead absorbed, inventory valuation method, and return on assets.

  • May combine two claims.

    Premisenone given

    A method that results in higher closing inventory value, such as FIFO in rising prices, lowers cost of goods sold and increases net income.

    “A method that results in a higher closing inventory value (e.g., FIFO in times of rising prices) will lower the cost of goods sold (COGS) and increase net income.”
    Quote in the paperNot a substantial claim
34 of 34

  • The paper relies on this without support.

    The 15 purposively selected listed manufacturing firms are representative of all 66 listed manufacturing companies in Nigeria, so findings can be generalized to the Nigerian manufacturing sector.

    “From this population, fifteen (15) firms were purposively selected based on their financial transparency, consistent availability of audited annual reports, and industry representation.”

  • The paper relies on this without support.

    The audited financial statements of the selected firms accurately and consistently report the variables used (TMCU, FMOA, ROA).

    “Data were obtained solely from secondary sources, audited financial statements of the selected firms.”

  • The paper relies on this without support.

    Return on assets adequately represents the financial performance of the selected manufacturing firms.

    “Return on Assets (ROA) was the dependent variable representing financial performance.”

  • The paper relies on this without support.

    The financial statement and cost accounting data used for listed Nigerian manufacturing firms accurately reflect their total manufacturing cost per unit, fixed overhead absorbed, inventory valuation method, and return on assets.

    “Income Statement, Cost of Sales of listed manufacturing firms”
    “Cost Accounting Records, Audited Financial Statements of listed firms”
4 of 4

Self-check

Percentages, sums and reported differences re-computed from the paper’s own numbers.

Each contradiction between two passages listed here was confirmed by an independent check.

  • IVM statistics conflict with its stated 1-3 coding

    Major

    The model defines IVM as a category coded 1, 2, or 3. A variable with only those values cannot have the reported mean of 9,113.42 or maximum of 191,207.00.

  • Descriptive-statistics period differs from the study period

    Major

    The methods state that the study covers 2009 to 2024, but the description of Table 1 says its statistics describe firms from 2020 to 2024. The text does not identify Table 1 as a restricted-period analysis.

  • Discussion denies IVM's significant effect

    Major

    The discussion says IVM has little to no significant impact on financial performance, whereas Table 6 reports a statistically significant negative long-run IVM effect on ROA.

  • Discussion reverses the reported TMCU result

    Major

    The discussion calls TMCU's long-run effect statistically significant and says production costs lower profitability. Table 6 reports a positive TMCU-related long-run coefficient of 0.641768 with a probability of 0.8828, which is not significant.

  • Not all Jarque-Bera p-values are below 0.05

    Minor

    The text says all Jarque-Bera p-values are below 0.05, but Table 1 gives TMCU a probability of 0.050735, which is above that threshold.

  • Methods call absorption-costing variables marginal-costing measures

    Minor

    The methods describe TMCU and FMOA as measuring marginal costing practices, although the paper defines them as elements of absorption costing and contrasts absorption with marginal costing.

  • Serial-correlation conclusions disagree

    Minor

    The autocorrelation analysis finds statistically significant fourth-lag autocorrelation in the model residuals, while the later diagnostic interpretation says the model errors are not autocorrelated.

7 of 7

Cites

The publisher hasn’t deposited this paper’s reference list.

Research works printed but not linked: 17

  1. Adebayo, O. S., & Aluko, O. A. (2019). Inventory management practices and financial performance of manufacturing companies in Nigeria. International Journal of Business and Management Studies, 11(1), 56-67.
  2. Ademola, A. S., Adeboye, A. M., & Akinbode, R. O. (2023). Cost accounting techniques and financial reporting quality of manufacturing firms in Nigeria. Journal of Accounting and Finance, 15(2), 112-127.
  3. Adeniran, O. J., & Hassan, M. K. (2021). Costing techniques and profitability of manufacturing firms in emerging markets. African Journal of Business Research, 10(1), 84-97.
  4. Ahmed, M. A., & Usman, S. T. (2020). Cost accounting techniques and profitability of listed manufacturing companies in Nigeria. Nigerian Journal of Management Research, 15(1), 45-60.
  5. Bamidele, T. J., Akinyemi, A. O., & Salami, K. O. (2024). Absorption costing practices and operational efficiency: Evidence from Nigeria's textile and food manufacturing sectors. African Journal of Accounting and Management Studies, 18(2), 88-104.
  6. Chukwuma, R. I., & Okonkwo, C. N. (2021). Fixed manufacturing overhead absorption and firm performance: Evidence from the Nigerian cement industry. Journal of Contemporary Accounting and Economics, 17(1), 25-41.
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Related

Authors
Department of Accounting, F. U. O. E., Oluwayemisi Ali-Momoh, B., Tosin Longe, K., Kayode Adediran, E., Toyin, C. J., Muyiwa, V. O., Seyi Olabanji, F., Ogunya, O., Eniola, J. B., & Niyi Oladipo, O.
Affiliations
Federal University Oye Ekiti (NG)
Venue
International Journal of Economics and Business Management
Publisher
Kampala International University
Published
2025-05-17
Volume
1
Issue
2
Pages
616-633
ISSN
3079-4218 (ISSN-L)
DOI
10.59568/ijebm-2025-1-2-41
OpenAlex
W4413779032
Semantic Scholar
4370633efd03721e34fd8982c058e58f394a98ed
Cited by
0
References
0
FWCI
0.00
Type
journal article
Language
en
Open access
Locations
  • International journal of economics and business management (publishedVersion)
  • Public Administration and Regional Studies (publishedVersion, cc-by)
Topics
  • Social Sciences › Business, Management and Accounting › Management Information Systems › Accounting and Organizational Management
  • Social Sciences › Business, Management and Accounting › Accounting › Accounting Theory and Financial Reporting
  • Social Sciences › Business, Management and Accounting › Accounting › Auditing, Earnings Management, Governance
Keywords
full costing, financial performance, manufacturing companies, inventory valuation methods, profitability, cost management, Nigerian listed companies

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