Cost-Volume-Profit Analysis and Pricing Decisions in Small-Scale Manufacturing Enterprises in Anambra State

The inability of many small-scale manufacturing enterprises in Nigeria to apply systematic financial analysis tools to pricing decisions has been linked to persistent losses, underpricing, and business failure, particularly in the highly competitive post-pandemic economic environment. This study examined the application of cost-volume-profit (CVP) analysis to pricing decisions in small-scale manufacturing enterprises in Anambra State. The study was anchored on the marginal costing theory, which distinguishes between variable and fixed costs to determine product contribution and break-even thresholds. A descriptive survey design was employed, with a population of 340 owner-managers and accountants of registered small-scale manufacturing enterprises in Awka, Onitsha, and Nnewi. A sample of 183 respondents was drawn using systematic random sampling. A structured questionnaire validated by academic experts was administered, and data were analyzed using descriptive statistics and chi-square analysis. Findings revealed that a majority of enterprises did not formally apply CVP analysis to their pricing processes, and those that did reported more consistent profitability and fewer pricing errors. The study concluded that ignorance of CVP principles significantly impairs pricing accuracy and profitability in the sector. It was recommended that Anambra State Small Business Agency should integrate CVP training into its enterprise development programs and partner with the Institute of Chartered Accountants of Nigeria to deliver targeted workshops for small business owners.

Keywords: Cost-volume-profit analysis, pricing decisions, small-scale manufacturing, marginal costing, break-even analysis