Cost Accounting Practices and Profitability in Small-Scale Textile Firms in Kano State

This study investigates cost accounting practices and their effect on profitability among small-scale textile firms in Kano State, North West Nigeria. The textile industry in Kano has historically been one of the city's most important economic sectors, yet many small-scale operators face persistent profitability challenges linked to poor cost management. Despite the availability of relatively straightforward cost accounting tools, adoption among small firms remains low. This study uses a descriptive survey design and administers questionnaires to 96 owners and financial managers of registered textile firms in the Kano metropolitan area. Cost accounting practices examined include job costing, process costing, standard costing, and overhead allocation. Profitability is measured using gross profit margin and net profit ratios derived from financial records provided by respondents. Multiple regression analysis is applied to examine the relationships. Results indicate that the use of standard costing and accurate overhead allocation are significantly associated with higher profit margins. Firms that applied systematic cost control reported 23 percent higher average net margins than those relying on informal estimation methods. The study concludes that the adoption of formal cost accounting systems significantly improves profitability outcomes for small textile manufacturers. It recommends that the Kano State Ministry of Commerce, in partnership with professional accounting bodies, establish subsidized cost accounting training programs tailored to the operational realities of small-scale textile producers.

Keywords: cost accounting, textile firms, Kano State, profitability, small-scale manufacturing.