VARIANCE ANALYSIS AND FINANCIAL PERFORMANCE OF MANUFACTURING FIRMS IN NIGERIA

This study examined the effect of variance analysis on financial performance of manufacturing companies in Nigeria. It specifically examined the effect of overhead cost variance, labour cost as well as material cost variance on asset return of listed consumer goods firms in Nigeria. The study adopted an ex-post-facto research design and secondary data was gathered to analyze the relationship between the variables. The population of the study consisted on twenty-eight (28) consumer goods listed on the Nigeria Exchange Group, however, only five (5) samples were selected from the population. The data was collected from the annual financial reports of the five (5) consumer goods companies sampled for the investigation for the periods 2010-2020. The measures of variance analysis were proxied with overhead cost variance, labour cost variance and material cost variance. Panel data was used which consists of 100 observations analyzed using multiple regression model. Robust regression model was employed to test the effect of variance analysis. The findings of the result revealed that overhead cost variance has positive and significant effect on return on asset with a coefficient of 1.0016 which is significant at 5% (p=0.001). material cost variance has positive effect on return on asset with a coefficient of 0.0014 which is significance at 5% (p=0.025) while labour cost variance has negative effect on return on asset with a coefficient of -0.0051 which is significant at 5% (p=0.66) of listed consumer goods firms in Nigeria Exchange . The study concluded that variance analysis has a significant statistical link with the financial performance of listed consumer goods firms in Nigeria. Inference statistics were used to corroborate the presence of a significant impact at a p-value of less than 5%, lending credence to this position.