Effect of Cost Determinants on Profitability-A Case Study

Profitability, Profit, Prime cost, Material cost, Labor cost, Overhead cost.

Every business is working for profit. The aim of business is to increase profitability and minimize the cost with an objective of increasing share holder value. The current research is an empirical study of Kombolcha Textile Share Company concerning the effect of cost determinants on the profitability of the organization. This study finds the relationship between cost determinants and profitability. Convenience random sampling method is adopted to carry out the study in detail. From the total population, 64 employees are selected and questionnaires were distributed to all the responsible personnel to know their opinions on each statement. The collected statistical data was analyzed by using SPSS. It suggests that those cost determinants either basics or related determinants should be controlled under the systematic manner to reduce their effect on the profitability. Thus from the questionnaires, the study shows small differences on each cost determinants have stress on the profitability of the company.