Management Accounting and Organizational Profit Maximization in the Federal Inland Revenue Service

Abstract

This study investigates management accounting tools, specifically, Activity-Based Costing (ABC) and Break-Even Analysis, and profit maximization within the Federal Inland Revenue Service (FIRS), a key government agency in Nigeria. As public sector institutions face challenges in efficient cost management and resource allocation, the application of advanced management accounting techniques like ABC and Break-Even Analysis can provide valuable insights to optimize financial performance. The research employed a survey method to collect data from 62 FIRS staffs in Edo State, with responses analyzed using descriptive statistics and correlation analysis to assess the relationship between the application of these tools and profit maximization. The findings reveal that both ABC and Break-Even Analysis significantly contribute to improved decision-making, cost management, and profitability. Specifically, 75% of respondents agreed that ABC enhances cost management, while 75% also affirmed that Break-Even Analysis aids in better decision-making. Correlation analysis confirmed a significant positive relationship between both tools and profit maximization, with ABC showing a correlation coefficient of 0.62 and Break-Even Analysis at 0.58, indicating their effectiveness in driving financial performance. Based on these findings, the study recommends that the FIRS should invest in training its staff on management accounting techniques and integrate ABC and Break-Even Analysis into regular strategic decision-making processes.