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 CONTENT
Title page
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 whileproviding necessary information about a company’s financial performance and position.Managerial or management accounting aims to provide financial information relating tocost of the goods and services, relations between sales volume and profit or someperformance analysis. The distinguished aspect of managerial accounting is that, itprovides information for internal decision-making. This is importance since the use ofmanagerial accounting is not obligatory for the businesses.
Any organization whether private or public has set objectives.Attainment of these objectivesdepends on how effectively the resources available to the organisation were deplored for thepurpose for which they are meant to serve. In addition, deployment of these resources to appropriatearea agreed in the organisation depends on the information availability to the management ofthe organisation. Management accounting provides valuable information concerning segmentsand the entire organisation. Aku (1999.221) provides a clear demarcation between accountinggenerally and management accounting in particular, that it provides management informationfor the good of enterprise while accounting generally is concerned with reporting the entity’sperformance at regular periods. However, Magekun (2003.55) opined that the use ofmanagement accounting in the public sector is scarce due to unqualified nature of theiraccounting personnel. He is not alone in these regard, in a study carried out on managementaccounting and management strategic decisions in organisations, it was found that mostpublic 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 strategicdecisions in organisations. Most public sector organisations are resolved in taking strategicdecision without prior analysis using the techniques in management accounting. Forproficiency and productivity in any establishment, management accounting department ishighly recommended to enable adequate administration and control of cost to take place.
Tothis extent it was observed by Achimugu (2010) that,care must however be taken, particularly in governmentestablishments where at the detriment of the objectivesof the establishments, more recognition is accorded tothe audit department than cost account department. Thislargely is because they fail to understand andacknowledged the difference between the function ofaudit department and a well established cost accountdepartment. Auditors or audit accountants are trained forpost cost review while cost accountants are trained forpre-cost review. We can understand that the twofunctions cannot be combined and performed by onedepartment effectively. Therefore there is need for costaccount department in any organisation. (Achimugu,2010)
From the above perspective, the author is of the view that the existence of costaccount department is necessary regardless of whether the entity is privately or publicityowned. A little effort will disclose that most public sector organisation has no established costaccounts department and hence management accounts functions are being neglected.We understand that most public sector organisations are meant for the welfare of thecitizenry. To that extent they are expected to engage the use of management accountingtechniques to maximise the welfare of the citizenry. Techniques such as “cost benefitanalysis” and “performance budgeting” are most appropriate to public sector activities.
Management process is a set of interdependentactivities used by an organization to carry out theirfunctions which include, planning, organizing,staffing, leading, and controlling. Brech (2010)recommends the following definition of managementas the most appropriate for general usage: “A socialprocess entailing responsibility for the effectivenessand economic planning and regulations of theoperation of an enterprise in fulfillment of a givenpurpose of task.” Such responsibilities involve:
(i) Judgment and decision in determining plansand in using data to control performance and progress against plans;
(ii) The guidance, integration, motivation andsupervising the personnel comprising theenterprise and carrying out its operations.
Management Accounting refers to that part of themanagement process which is focused on addingvalue to organizations by attaining the effective useof resources by people, in dynamic and competitivecontexts.It is an integral part of the management process,distinctly adds value by continuously probingwhether resources are used effectively by people andorganizations – in creating value for customers,shareholders or other stakeholders. (Adelegan, 1998).In this regard, resourcesinclude not only financialones, but also all other resources created and used byorganizations as a result of financial expenditures.
Thus, information and knowledge, work processesand systems, trained personnel, innovative capacities,morale, flexible cultures, and even committed customers may be included as resources- along withspecial configurations of resources that may beidentified as strategic capabilities, core competenciesor intellectual capital. Management accounting tasksdeals with collection and provision of information formanagers to use in decision making. The purpose ofthe management accounting discipline is to aidmanagement decision making.
- STATEMENT OF PROBLEM
The Manufacturers Association of Nigeria (MAN)has been complaining of societal attitude towardlocally manufactured goods, low patronage forlocally made goods and preference for imported onessubstantiate because competition hasbecome stiff and fierce, the imperatives ofglobalization have all combined to force organizationto seek better ways of optimizing the competitiveadvantage. Companies lacking appropriatemanagement accounting skills may be unable toadjust to the pressure of this competition and may notsucceed in the long run as it is very critical tosurvival of business.
Some manufacturing companies in Nigeria are noteven aware of the importance of managementaccounting techniques which leads them to engagein activities which do not add value to their businessand in which they do not have competitive abilitythus leaving their core competent area to suffer andincur unnecessary costs. Moreover, it is observed thatthere has been tremendous work on topics related tothis, but most of them used descriptive analysis and afew among them that attempted to use models limitedthemselves to general applicability without themgiven consideration to socio-economic parameteraffecting selection of management accountingtechniques as planning and control decision makingtool and its impact in the effectiveness of thosetechniques. It is on view of this that the present studydecided 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 evaluatemanagement accounting and its application to management, planning, control and decision-making. The specificobjectives of this research are to:
- To examine the effect of management accounting and its application on managerial process.
- 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
- Does management accounting and its application have effect on managerial process?
- 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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