Cost Management Practices and Firm’s Performance of Nepal Oil Corporation

Abstract

This study finds the relationship between cost management practices and firm’s performance in Nepal Oil Corporation using data from 2004 to 2014. The study relied on secondary data extracted from the audited financial statement of the Nepal Oil Corporation. Independent variables includes direct material cost, direct labour cost, selling and distribution overhead cost and office and administrative overhead cost while profitability (Return on assets) was taken as dependent variable representing the firm’s performance. Correlation and regression analyses were employed to test the hypothesized relationships between the cost management and profitability. The results found a strong support for hypothesized with the direct relationships between cost management and performance measure. The result indicates that a direct significant relationship between cost management practices and firm’s profitability. It is therefore recommended that if the profit maximization and wealth creation objective is to achieve, a cost reduction strategy with emphasis on selling and distribution overhead cost and office and administrative overhead cost should be embarked.