Effect of Cost Management Strategies on the Profitability of Manufacturing Firms: A Case Study of Sulfo Rwanda Industries Ltd

Noella Mukamisha &Tarus Thomas
University of Kigali
Email: nmukamisha2@gmail.com

Abstract: This study examined the effect of cost management strategies on the profitability of manufacturing firms, focusing on Sulfo Rwanda Industries Ltd, Rwanda. Specifically, it assessed inventory cost management, labor cost management, and overhead cost management. The study was guided by Cost Theory, Resource-Based View (RBV) Theory, and Systems Theory and adopted a descriptive and correlational research design using a mixed-methods approach. The target population comprised 146 employees, with 138 receiving questionnaires and eight management staff participating in interviews. Of the questionnaires distributed, 125 were successfully returned, representing a 90.6% response rate, while all eight management staff participated in interviews. Data were collected through questionnaires, interviews, and documentary review. Quantitative data were analyzed using SPSS version 25 through descriptive statistics, Pearson correlation, and multiple regression, while qualitative data were analyzed thematically. Results showed significant positive correlations between profitability and inventory cost management (r = 0.630), labor cost management (r = 0.523), and overhead cost management (r = 0.493), all at p < 0.01. Regression results showed that inventory cost management (β = 0.489) and overhead cost management (β = 0.369) significantly improved profitability, while labor cost management (β = 0.104, p = 0.210) was insignificant. The model explained 54.5% of profitability variation. The study recommends strengthening inventory planning, monitoring, budgeting, overhead control, cost allocation, workforce planning, and employee training.