The Impact of budgeting and budgetary control on

the Profitability of a Manufacturing Company

Submitted By: Mohamed Hassan Mohamed kulmiye

&

Abdifitah Mohamed Ibrahim Hoshow

Mogadishu University

November, 2020
 CHAPTER ONE
1.0 Introduction
This chapter presented the objectives of the study, research question and Research
hypothesis.

1.1 Objectives of the study

1.1.1 General Objectives

To investigate the impact of budgeting and budgetary control on the profitability of a

manufacturing company.

1.1.2 Specific objectives

1. To determine the relationship between budget sales and profitability.

2. To know whether there is a positive correlation between budgeted sales and total
cost.

3. To determine whether profitability is depends on the level of investment in productive

assets.

3. To establish the relationship between budgeted sales and total cost.

1.2 Research questions

The following research questions will be addressed with the view to achieving the
objectives of the study:

1. What is the relationship between budgeted sales and profitability

2. Is there a positive correlation between budget sales and total cost?
3. Does profitability depend on the level of investment in productive assets?
4. Is there any significant relationship between budgeted sales and total cost?
 1.3 Statement of hypothesis
According to Aigbokhaevbolo (2002:141), a hypothesis is a testable statement
regarding the relationship between two or more variables. Hypothesis is majorly of two
types; Null Hypothesis (Ho) and alternate hypothesis (H1).

Following hypotheses were therefore stated for the purpose of this study:

Hypothesis one:
Ho: There is no significant relationship between profitability and budgeted sales.

H1: There is significant relationship between profitability and budgeted sales.

Hypothesis two:
Ho: There is no a positive correlation between budgeted sales and total cost.

H1: There is a positive correlation between budgeted sales and total cost.

Hypothesis Three
Ho: profitability is not dependent on the level of investment in productive assets.

H1: profitability is dependent on the level of investment in productive assets.

Hypothesis Four
Ho: There is no relationship between budgeted sales and total cost.

H1: There is a relationship between budgeted sales and total cost.

For the first hypothesis, the dependent variable is profit while the independent variable
is budgeted sales.

The second hypothesis, budgeted sales is dependent variable while total cost is the
independent hypothesis.

The third hypothesis, the dependent variable is profit while total asset is independent
variable.

The Fourth hypothesis, budgeted sales is dependent variable while total cost is the
independent hypothesis.

Reference