The role of management accountant to cost control and profit performance in an organization

Project Abstract

<p> Accountants have been bestowed with the role of providing information to<br>the management regarding the affairs of the organization in particular<br>and to the stakeholders in general. Internally, in manufacturing<br>organization, management has always relied on the management accountant<br>for cost evaluation and performance efficiencies of cost element. This<br>role of management accountant to the management has been in doubt<br>because of incessant increase in the cost elements of goods manufactured<br>in Nigeria which in cause has resulted in constant increase in the<br>price of goods. The aim of this research study is to evaluate the role<br>of management accountant to cost control and profit performance in an<br>organization. a quasi-experimental research design was adopted for this<br>research study and the sample size was selected using the Taro Yamane<br>sampling technique. Primary and secondary sources of data were used in<br>collecting information which was analyzed using simple percentages. The<br>hypothesis was tested using chi- square statistical method at 0.05 level<br>of significance for validity and decision making. The findings from the<br>analysis of the research study depicts that organizational strategic<br>managers should rely on management accountant information for decision<br>making. Management of any manufacturing company cannot make profitable<br>decision without quality information. The researcher can confidently<br>conclude based on the findings that the availability of skilled,<br>knowledgeable and informative management accountant in an organizational<br>profit performance promotes productivity. Therefore, this research work<br>recommends that management accountants should provide information on<br>time so as to hasten up in making vital decision because undue delay in<br>decision making will definitely undermine the firms‟ goal of profit<br>maximization. Also, it recommends that adequate exposure should be given<br>to management accountants through training programmes, appraisal and<br>evaluation of seminars in order to acquaint them with the new<br>technologies in vogue and keep pace with new knowledge. <br></p>

Project Overview

<p> </p><p>INTRODUCTION</p><p>1.1 BACKGROUND OF THE STUDY<br>Prices of goods and services are gradually increasing day by day, and<br>due to the fact that the sole aim of a businessman, producer or<br>manufacturer is to make profit they end up making use of low quality<br>materials for production so as to reduce cost of production and maximize<br>profit. Moreover, with the increase of competitors around, most of the<br>producers have thought it wise to manufacture or package a quality<br>product and also enhance their profit level. This elevated the interest<br>of the researcher to bring to light of how this goal can be achieved<br>through intensive study of the role of management accountants to cost<br>control and profit performance in an organization. Apart from cooperate<br>scandals; there has been anosmatic pressure for better profit<br>maximization as the business environment became more volatile, prices of<br>products increasing at an alarming rate, and the production of low<br>quality products.<br>In the past management accountants operation is strictly on workers<br>capacity usually separated from the managers for whom they provided<br>reports and information. But in this present period, management<br>accountant now serve as internal business consultants. Working together<br>in cross functional teams with managers from all sectors of the<br>organization.<br>However, the management face a broad array of decisions including<br>production, marketing, financial and other relevant decisions. Also<br>having in mind that decision making is a fundamental part of management;<br>the management accountant must be equipped with some knowledge of<br>accounts and management. He must have an understanding and knowledge of<br>the environment and the operations of the organization in which those<br>systems are implemented and appropriate technology to apply in each case<br>for the provision of management information. It is obvious that the<br>management of a manufacturing firm will need information that will<br>enable them consider the factors affecting cost of production, cost<br>reduction, product pricing and investment etc, so as to choose the best<br>alternative.<br>1.2 STATEMENT OF THE PROBLEM<br>In recent years, the cost of products manufactured in Nigeria has been<br>very expensive beyond the reach of common Nigerians. This cost<br>challenges has made many products manufactured in the country<br>unpatronized by the consumers, and as a result of that expires in the<br>hands of the sellers. There is also a problem of poor inventory<br>management which leads to overstocking thereby tying down the company‟s<br>working capital. Another problem facing some or most of the<br>manufacturing firm is the installation of improper plan to reduce cost<br>of production so as to maximize profit, i.e. ( making use of low quality<br>raw material).<br>Management accountants are assigned with managing cost elements of<br>products among other responsibilities. He aligns cost with efficiency;<br>provide required information for cost minimization so that profit could<br>be maximized. These assignments should reduce product pricing, but<br>instead there have been a consistent product price racketing. These<br>problems therefore brought the need for this research work which intends<br>to find the reason for this persistent increase in product pricing<br>where the services of management accountants were engaged and therefore<br>putting up the following questions:<br>Do management accountants perform in their responsibility?<br>Is cost performance inefficiencies of management accountants included in the product pricing?<br>Is the recent in price caused by other factors rather than elements of cost of production managed by management accountants?<br>How would the role of management accountant in an organization improve profit performance?<br>1.3 OBJECTIVES OF THE STUDY<br>1 To determine the relevance of management accountant in an organizational internal cost performance efficiency.<br>2 to ascertain whether the resent increase in cost of products<br>manufactured in Nigeria is caused by other factors rather than<br>management inefficiency.<br>3 To ascertain if organizational strategic managers should rely on management accountant information for decision making.<br>4 To make recommendations based on the findings.<br>1.4 RESEARCH QUESTIONS<br>To what extent is management accountant still relevant in organizational internal cost performance efficiency?<br>Does the resent increase in cost of products manufactured in Nigeria<br>caused by other factors rather than management accountant inefficiency?<br>To what extent should strategic managers rely on management accountant information for decision making?<br>1.5 FORMULATION OF HYPOTHESIS<br>The following hypothesis was formulated for this research work.<br>Hypothesis 1<br>H0: management accountant is not relevant in organizational internal cost performance efficiency<br>H1: management accountant is relevant in organizational internal cost performance efficiency.<br>Hypothesis 2<br>H0: resent increase in cost of products manufactured in Nigeria is not<br>caused by other factors rather than management accountant inefficiency.<br>H1: resent increase in cost of products manufactured in Nigeria is<br>caused by other factor rather than management accountant inefficiency.<br>Hypothesis 3<br>H0: organizational strategic managers should not rely on management accountant information for decision making.<br>H1: organizational strategic managers should rely on management accountant information for decision making.<br>1.6 SIGNIFICANCE OF THE STUDY.<br>The management accountant makes the necessary information available to<br>the management by the application of his skill and knowledge. The<br>significance of this study is to bring to the notice of the management<br>the exemplary role of the management accountant and the technique he<br>uses to provide information and also how these would affect the<br>operations and the attainment of the organizational goal if these<br>information provided are not recommended for use by the management. And<br>with such knowledge and information put to use, management would be able<br>to plan and control the organization such that the cost of operating<br>the business will be at a minimum while profit will be maximized.<br>And if the profit objective is achieved, the customer will benefit from<br>better and cheaper product while the investors will benefit from the<br>profit as well.<br>1.7 SCOPE OF THE STUDY<br>The study is limited as it looks at the role of management accountants<br>to cost control and profit performance in an organization. A case study<br>of INNOSON Company Nigeria limited Emene, Enugu. This research work<br>intends to cover:<br>1. How managerial accountants should be able to adapt their generalized<br>knowledge of accounting to develop customized data and report that are<br>logical and support sound management process.<br>2. The reporting structure is well defined and standardized.<br>3. The methods of preparation of information and the report presented are governed by rules.<br>1.8 LIMITATIONS OF THE STUDY<br>In the process of carrying out this research work, the most nagging<br>problem facing the study is how to obtain reference materials. The time<br>to carry out the research is short and insufficient, since it is done<br>alongside with some other courses to contend with so as to present a<br>good result. There are also difficulties associated with personnel‟s<br>accepting to give vital information which will be of help to the<br>researcher.</p><p>1.9 DEFINITION OF TERMS<br>Accountant: An accountant is a practitioner of accountancy or accounting<br>( referred as an accounting in the united states), which is the<br>measurement, disclosure or provision of assurance about financial<br>information that helps managers, investors, tax authorities and others<br>make decisions about allocating resources.<br>Management Accountant: are those key officers that provide business data<br>and analysis to managers within organizations to assist in decision<br>making and control.<br>Profit maximization: A process that companies undergo to determine the<br>best output and price levels in order to maximize its return. The<br>company will usually adjust influential factors such as production<br>costs, price of goods and output level as a way of reaching its profit<br>goal.<br>Performance; General accomplishment of a given task measured against<br>present standards of accuracy, completeness, cost and speed.<br>Management;: this is defined as the process of dealing with or<br>controlling things or people. It is the responsibility for control of a<br>company or similar organization.<br>Company: this refers to a legal entity that carries out business in its name.<br>Information: this means data that is accurate and timely, specific and<br>organized for a purpose, presented within a context that gives it<br>meaning and relevance,<br>and can lead to an increase in understanding and decrease in<br>uncertainty. Information is valuable because it can affect a decision or<br>an outcome. For e.g., if a manager is told, his company‟s net profit<br>decreased in the past month, he may use this information as a reason to<br>cut financial spending for the next month.<br>Decision making: the thought process of selecting a logical choice from<br>the available option. It is done to achieve a specific objective or<br>solve a specific problem</p> <br><p></p>