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  • Name: MANAGEMENT ACCOUNTING AND ITS APPLICATION TO MANAGEMENT, PLANNING, CONTROL AND DECISION-MAKING (A STUDY OF NIGERIA BREWERIES PLC)
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  • Length: [77] Pages

 

ABSTRACT

The study examined management accounting and its application to management, planning, control and decision-making. Descriptive survey design was adopted and simple random sampling technique was used in the selection of the sample size. 120 copies of questionnaires were administered to workers all management and staff of the Nigeria Breweries Plc, 100 questionnaires were retrieved and found usable for the study.

Data were analyzed by ordinary least square regression analysis method;

Findings indicate that management accounting information supports managerial decision-making, Furthermore, management accounting is an important part of the economic information system, with a key role in decision making, whether in a small and medium enterprises or large companies. However, management accounting is superficially treated in most economic entities; there are entities in which professional accountants consider management accounting as optional.

For these reasons regarding different managerial decision-making behavior and different requirements it is recommended that, management accountants need to employ appropriate accounting techniques, organizations should endeavor to set up units within the accounting department that should handle management accounting matters.

TABLE OF CONTENTS

Certification                                                                             i

Dedication                                                                               ii

Acknowledgement                                                                   iii

Abstract                                                                                   iv

Table of content                                                                       v-vi

 

CHAPTER ONE: Introduction

1.1     Background of  the study                                                1

1.2     Statement of the research problem                                            4

1.3     Research objectives                                                                  5

1.4     Research questions                                                                   6

1.5     Significance of the study                                                 6

1.6     Research hypothesis                                                                 6

1.7     Scope of the study                                                          7

1.8     Definition of terms                                                                   7

 

CHAPTER TWO: Literature review

2.1     Conceptual review of the study                                       9

2.2     Theoretical review of the study                                       28

2.3     Empirical review of the study                                                   34

 

CHAPTER THREE: Research methodology

3.1       Introduction                                                                            48

3.2     Research design                                                              48

3.3     Research population                                                                 48

3.4     Sampling techniques and sampling size                                     49

3.5     Method of data collection                                                         49

3.6     Method of data analysis                                                  50

3.7     Decision rule                                                                            51

3.8     Reliability of the research instrument                                        51

3.9     Validity of the research instrument                                           51

 

CHAPTER FOUR: Data Presentation, Analysis and Interpretation

4.1     Introduction                                                                             52

4.2     The distribution of questionnaire and analysis of questionnaire  52

4.3     Analysis of demographic data                                                   53

 

CHAPTER FIVE: Summary, Conclusion and Recommendation

5.1     Summary of research finding                                                    62

5.2     Conclusion                                                                     63

5.3     Recommendation                                                           63

 

BIBLIOGRAPHY                                                          66

APPENDIX                                                                   70-72

 

CHAPTER ONE

INTRODUCTION

  • BACKGROUND OF THE STUDY

Accounting helps the managers and business owners to take the right decision while providing necessary information about a company’s financial performance and position. Managerial or management accounting aims to provide financial information relating to cost of the goods and services, relations between sales volume and profit or some performance analysis. The distinguished aspect of managerial accounting is that, it provides information for internal decision-making. This is importance since the use of managerial accounting is not obligatory for the businesses.

Any organization  whether private or public has set objectives. Attainment of these objectives depends on how effectively the resources available to the organisation were deplored for the purpose for which they are meant to serve. In addition, deployment of these resources to appropriate area agreed in the organisation depends on the information availability to the management of the organisation. Management accounting provides valuable information concerning segments and the entire organisation. Aku (1999.221) provides a clear demarcation between accounting generally and management accounting in particular, that it provides management information for the good of enterprise while accounting generally is concerned with reporting the entity’s performance at regular periods. However, Magekun (2003.55) opined that the use of management accounting in the public sector is scarce due to unqualified nature of their accounting personnel. He is not alone in these regard, in a study carried out on management accounting and management strategic decisions in organisations, it was found that most public sector accountants are not qualified to hold the position of accounting (Achimugu, 2010). It was also noted in that study that management accounting are meant for strategic decisions in organisations. Most public sector organisations are resolved in taking strategic decision without prior analysis using the techniques in management accounting. For proficiency and productivity in any establishment, management accounting department is highly recommended to enable adequate administration and control of cost to take place.

To this extent it was observed by Achimugu (2010) that, care must however be taken, particularly in government establishments where at the detriment of the objectives of the establishments, more recognition is accorded to the audit department than cost account department. This largely is because they fail to understand and acknowledged the difference between the function of audit department and a well established cost account department. Auditors or audit accountants are trained for post cost review while cost accountants are trained for pre-cost review. We can understand that the two functions cannot be combined and performed by one department effectively. Therefore there is need for cost account department in any organisation. (Achimugu, 2010)

From the above perspective, the author is of the view that the existence of cost account department is necessary regardless of whether the entity is privately or publicity owned. A little effort will disclose that most public sector organisation has no established cost accounts department and hence management accounts functions are being neglected. We understand that most public sector organisations are meant for the welfare of the citizenry. To that extent they are expected to engage the use of management accounting techniques to maximise the welfare of the citizenry. Techniques such as “cost benefit analysis” and “performance budgeting” are most appropriate to public sector activities.

Management process is a set of interdependent activities used by an organization to carry out their functions which include, planning, organizing, staffing, leading, and controlling. Brech (2010) recommends the following definition of management as the most appropriate for general usage: “A social process entailing responsibility for the effectiveness and economic planning and regulations of the operation of an enterprise in fulfillment of a given purpose of task.” Such responsibilities involve:

(i) Judgment and decision in determining plans and in using data to control performance and progress against plans;

(ii) The guidance, integration, motivation and supervising the personnel comprising the enterprise and carrying out its operations.

Management Accounting refers to that part of the management process which is focused on adding value to organizations by attaining the effective use of resources by people, in dynamic and competitive contexts. It is an integral part of the management process, distinctly adds value by continuously probing whether resources are used effectively by people and organizations – in creating value for customers, shareholders or other stakeholders. (Adelegan, 1998). In this regard, resources include not only financial ones, but also all other resources created and used by organizations as a result of financial expenditures.

Thus, information and knowledge, work processes and systems, trained personnel, innovative capacities, morale, flexible cultures, and even committed customers may be included as resources – along with special configurations of resources that may be identified as strategic capabilities, core competencies or intellectual capital. Management accounting tasks deals with collection and provision of information for managers to use in decision making. The purpose of the management accounting discipline is to aid management decision making.

  • STATEMENT OF PROBLEM

The Manufacturers Association of Nigeria (MAN) has been complaining of societal attitude toward locally manufactured goods, low patronage for locally made goods and preference for imported ones substantiate because competition has become stiff and fierce, the imperatives of globalization have all combined to force organization to seek better ways of optimizing the competitive advantage. Companies lacking appropriate management accounting skills may be unable to adjust to the pressure of this competition and may not succeed in the long run as it is very critical to survival of business.

Some manufacturing companies in Nigeria are not even aware of the importance of management accounting techniques which leads them to engage in activities which do not add value to their business and in which they do not have competitive ability thus leaving their core competent area to suffer and incur unnecessary costs. Moreover, it is observed that there has been tremendous work on topics related to this, but most of them used descriptive analysis and a few among them that attempted to use models limited themselves to general applicability without them given consideration to socio-economic parameter affecting selection of management accounting techniques as planning and control decision making tool and its impact in the effectiveness of those techniques. It is on view of this that the present study decided to examine management accounting and its application to management, planning, control and decision making.

  • OBJECTIVES OF THE STUDY

The general objective of the study is to evaluate management accounting and its application to management, planning, control and decision-making. The specific objectives of this research are to:

  1. To examine the effect of management accounting and its application on managerial process.
  2. Examine the impact of management accounting techniques adoption for planning and control decision-making on firm performance.
  • Examine the impact of management accounting techniques on corporate standardization and competitiveness.
    • RESEARCH QUESTIONS
  1. Does management accounting and its application have effect on managerial process?
  2. Does management accounting techniques adoption for planning and control decision-making have impact on firm performance?
  • Do management accounting techniques have impact on corporate standardization and competitiveness?
    • SIGNIFICANCE OF THE STUDY

Small business owners are faced with countless decisions every business day. Managerial accounting information provides data-driven input to these decisions, which can improve decision-making over the long term. Small business managers can leverage this powerful tool to help make their business more successful by understanding how management accounting benefits common business decision contexts. Also, the findings of this research would be important and useful to the managers and shareholders of companies to take efficient financing decision. Furthermore, this research will be useful for students who want to write on the effect of management accounting on business firm.

1.6     STATEMENTS OF HYPOTHESIS

Ho: Management accounting and its application have no effect on managerial process.

Hi: Management accounting and its application have effect on managerial process.

Ho: Management accounting techniques adoption for planning and control decision-making have no impact on firm performance.

Hi: Management accounting techniques adoption for planning and control decision-making have impact on firm performance.

Ho: Management accounting techniques have no impact on corporate standardization and competitiveness.

Hi: Management accounting techniques have impact on corporate standardization and competitiveness

1.7     SCOPE OF THE STUDY

The scope of the study is limited to the management and staff of Nigeria Breweries Plc

  •  DEFINITION OF TERMS

An accountant:  is a qualified person who is trained in bookkeeping and in preparation, auditing and analysis of accounts. Accountants prepare annual reports and financial statements for planning and decision making, and advise on tax laws and investment opportunities.

Control: Device or mechanism installed or instituted to guide or regulate the activities or operation of an apparatus, machine, person, or system.

Decision making: The thought process of selecting a logical choice from the available options.

Management: Management is the process of reaching organizational goals by working with and through people and other organizational resources.

Management accounting: The process of preparing management reports and accounts that provide accurate and timely financial and statistical information required by managers to make day-to-day and short-term decisions.

Manager: An individual who is in charge of a certain group of tasks, or a certain subset of a company. A manager often has a staff of people who report to him or her.

Organization: An organization that is established as a means for achieving defined objectives has been referred to as a formal organization. Its design specifies how goals are subdivided and reflected in subdivisions of the organization.

Planning: Planning is a management process, concerned with defining goals for company’s future direction and determining on the missions and resources to achieve those targets.

Shareholder: A shareholder is any person, company or other institution that owns at least one share of a company’s stock.

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