Cost Control Mechanisms and Financial Performance of Smes in Awka Metropolis

The main objective of this study is to determine the effect of cost control mechanisms on financial performance of SMEs in Awka metropolis. The specific objective was to examine the influence of cost monitoring, budgetary control and cost variance analysis on sales of SMEs in Awka metropolis. Survey research design was employed in the study. The population of 100 staff members from various SMEs in the area was narrowed down to 80 participants using Taro Yamane's formula for sample size determination. Primary data were collected through structured questionnaires, designed with a 5-point Likert scale to capture responses on various cost control practices. Validity and reliability of the instrument were ensured through expert feedback and pilot testing, with a Cronbach's alpha value of 0.927 indicating high internal consistency. Descriptive statistics, including mean and percentages, were utilized for data analysis, alongside the Spearman Ranked Order Correlation Coefficient to test the study's hypotheses, adhering to a 5% significance level for decision-making. The findings are as follows: cost monitoring has a positive and significant effect on the sales of SMEs in Awka metropolis (r = 0.249, p = 0.027); budgetary control has a positive and significant effect on the sales of SMEs in Awka metropolis (r = 0.275, p = 0.014); cost variance analysis has a positive and significant effect on the sales of SMEs in Awka metropolis (r = 0.282, p = 0.012). In conclusion, SMEs that actively monitor their costs, adhere to budgets, and analyze cost variances are better positioned to achieve higher sales and maintain a competitive edge in the market. The study recommends that SME owners and managers in Awka metropolis should implement comprehensive and consistent cost monitoring systems to regularly track expenses, identify inefficiencies, and ensure resources are directed toward enhancing sales and overall business performance.