Relationship between Master Budget Preparation and Profit ability in Sugar Factories in Kenya, “A Case Study of Mumias Sugar Company Ltd”

Abstract

The study examined the relationship between budgeting and Profitability among Sugar Factories in Kenya, with particular focus on Mumias Sugar Company Limited (MSC LTD). The researcher chose MSC Ltd because it is the largest Sugar Factory in Kenya that produces 67% Kenya‘s locally consumed sugar. MSC Ltd has conducted retrenchments, pointing to poor profitability as a result of poor budgeting that precipitated an investigation on the ground. The independent variables of the study included Sales budget, Production budget, Costs of goods sold budget and Marketing and administrative budget in Mumias Sugar Company Ltd. The dependent variable was profitability. The research used a descriptive study design using stratified random sampling. Data was collected using Questionnaires whereas tables and graphs were used to analyze data. The findings are that participation of all stakeholders in budget planning was limited, limited time for budgeting was allotted, rates used were rather sub standard, standard costing was missing, a comparative study was required, dissemination of budget planning information was limited and budget education to its employees missed and employee retrenchment has adversely affected the profitability of the company. The conclusion of the study revealed that there is a positive relationship between budgeting and profitability.