Sindikat 6:

1. Billyandri Herfiantara (29121267)

2. Devi Natasha Polim (29121048)
3. Masegi Primartono (29121070)
4. Tigas Adrian W (29121173)
5. Yosantia Bella (29121085)

Effectiveness of Nigeria Policy on Substitution of Wheat for Cassava Flour in Bakery

Products: Empirical Evidence from Enugu State, Nigeria

1. Introduction
Due to the increasing wheat price and importation cost, Nigeria is looking for cheaper
alternatives to Wheat flour by using local raw materials. Research has shown that High-Quality
Cassava Flour (HQCF) can be a good substitute for wheat flour. However, Cassava flour
production has challenges, such as the manual process of production and the manual
availability of equipment. There are also several policies regarding the use of cassava flour for
bread making, but these policies have been continuously changed by governments for different
reasons, making them ineffective.
On the other side, Nigeria cannot afford to reduce wheat importation and import bread
improvers, because importation activity will affect the Nigerian currency exchange rate.
2. Analysis & Literature Review
A. Application of Managerial Accounting
➢ Managerial accounting has been applied due to Cassava Flour can reduce baking costs
(production costs) by about 48-50%, depending on the amount of wheat flour used.
Therefore, there is a significant increase in the use of Cassava flour by bakers,
depending on the bakery product.
➢ It is supported by data of percentage level of acceptability of Cassava flour Products
in 2017. It can be seen that there is an increase in consumer acceptance of cassava
flour, depending on the bakery product.
➢ On the other side, to produce High-Quality Cassava Flour has also been identified that
the cassava flour value chain is very weak and unreliable in Nigeria.
➢ Cassava flour is the main raw material for bread making, so direct materials which are
substituted could reduce the production cost.
B. Application Job Order Costing and Process Costing
Applying the process costing has been suitable in this case, which is proven by:
- Homogenous product, which is Cassava Flour.
- Producing continuously
- Producing in long-term
Challenge to faced:
➔ The Cassava Flour value chain is still weak in terms of:
 o Inadequate market information
o High Power cost
o Processing equipment
o Poor transportation
o Limited storage facilities
The Nigerian Cassava Production systems are inefficient based on global standards.
The majority of the cassava production systems are not oriented to the industrial market.
An estimated 30 million farmers are involved in the cultivation of cassava. Despite the
huge population of cassava farmers, Cassava yields are still suboptimal.
3. Solution/Recommendation
- According to data of proportion of bakers using cassava flour in 2017 (bakers side)
aligned to data percentage level of acceptability of cassava flour products in 2017
(consumer side), the substitution of wheat flour to cassava flour is recommended as
well as the COGS has a lower cost.
- Using Managerial Accounting so that companies can track production costs incurred
(starting from direct/indirect materials, direct/indirect labor, manufacturing overhead)
to determine HPP so that profits can be obtained from sales and minimize risk.
- Improvements in the value chain, such as increasing efficiency in labor by applying
technology to agriculture so that the results obtained can be more optimal.

4. Lesson Learned
Based on this case, it is very important to apply management accounting in determining
the cost of production because management accounting can provide the information
needed in the company and every event that occurs in the company can be accepted by
management so that it can assist in providing accountability for the company's finances.
In addition, the method of determining the cost of production depends on the nature of
product processing based on orders and processing which is mass production. With the
right calculation of the cost of production, the right selling price will be obtained, so that
the marketing will be smooth and finally the company can develop rapidly so that the
continuity of the company will be guaranteed.