EFFECT OF COST ACCOUNTING TO MANAGEMENT,

PLANNING AND DECISION MAKING (A CASE STUDY OF

NIGERIA BOTTLING COMPANY, IBADAN)
by

Matric No

A research project submitted to the department of ……….

Faculty of

National Open University

 CHAPTER ONE
INTRODUCTION
1.1 Background of the study

Cost accounting is a process of recording, classifying, analyzing, summarizing,

allocating, and evaluating various alternative courses of action for the control of costs. Its

goal is to advise the management on the most appropriate course of action based on the

cost efficiency and capability. Cost accounting provides the detailed cost information that

management needs to control current operations and plan for the future.

Cost accounting assists management by providing analysis of cost behavior, cost-

volume-profit relationships, operational and capital budgeting, standard costing, variance

analyses for costs and revenues, transfer pricing, activity-based costing, and more.(Lane

&Durden, 2013).

Cost accounting had its roots in manufacturing businesses, but today it extends to

service businesses. For example, a bank will use cost accounting to determine the cost of

processing a customer's check and/or a deposit. This in turn may provide management

with guidance in the pricing of these services. Decision making is part of everyone’s life

and all of us have to make decisions every moment. Right from choosing what to wear to

what to eat to where we live and work and extending to whom we marry, decisions are an

integral part of our lives.

According to Azad (2016) In an organizational context, it is worthwhile to note

that decision making needs the right kind of information, the complete information and

the ability to synthesize and make sense of the information. While the first two attributes
depend on external sources, the ability to make informed decisions is a personality trait.

Hence, successful Managers are those who can take into account the different viewpoints

and divergent perspectives and arrive at the right decision.

Today’s cost accountant must understand many functions of a business’s value

chain, from manufacturing to marketing to distribution and Decision Making of

organizations to customer service. This is particularly important when the company is

involved in both local and international trade (Ali, 2015). Accountants also have

recognized that information is a costly asset and have questioned the necessity of

acquiring additional information. FASB 33, requiring presenting the supplementary

information, an enterprise needs to measure the effects of changing prices on inventory,

property, plant, and equipment, cost of goods sold, and depreciation, depletion, and

amortization expense. No adjustments are required to other revenues, expenses, gains,

and losses.

According to Martin & Stevens (2011) Decision-making is an integral part of

modern management. Essentially, Rational or sound decision making is taken as primary

function of management. Every manager takes hundreds and hundreds of decisions

subconsciously or consciously making it as the key component in the role of a manager.

Decisions play important roles as they determine both organizational and managerial

activities. Decision making process is continuous and indispensable component of

managing any organization or business activities. Decisions are made to sustain the

activities of all business activities and organizational functioning.

 In essence, organization are established for a defined purpose which objective can

only be seen or shown to the world by the output (product) it produces. For there to be an

output the most necessary is the input. Inputs do not come for free; payments have to be

made on them. Taking the Nigerian Bottling Company (NBC) as a case study, it needs

inputs in the form of raw materials, labour etc. to produce goods (soft drink) and payment

must be made for these inputs, this boils down to cost.Since decision is a course of action

purposely chosen from a set of alternatives to achieve organizational or managerial

objectives or goalscost accounting must be investigated to determine if it has an effect on

management, planning and decision makingor not.

1.2 Statement of the Problem

In the past, many companies have witnessed considerable lapses and increasing

changes in management disciplines this has constitute a major problem in decision

making. Costing as an important element in the overall operation of an organization

through the provision of relevant information about cost is one of the problems

organizations are facing. Because there are no satisfactory requirements to maintain

detailed cost records, some organization keep only traditional financial accounts and

prepare cost information in an ad-hoc-fashion. There is a vast range of systems in

operation ranging from simple analysis to computer based accounting systems

incorporating standards, variance analysis and the automatic production of control and

operating statements. These different costing methods are meant to suit different

organization the adaptation of the wrong method, for a company will constitute a problem
instead of a solution. Also poor or inadequate knowledge of a particular method of

costing has constituted problems for many firms.

Most companies are still using the simple analysis system to set cost while some

companies do not even have a costing system. This no doubt has led to problem of poor

planning, control and decision making to this end, it became necessary to investigate

whether or not cost accounting have effect on management, planning and decision

making .

1.3 Objectives and Purpose of the Study

This research project is designed to provide a clear and concise understanding of

the importance of Cost Accounting to the manager in carrying out his/her responsibility

for planning controlling and making decision which will lead to achieving certain goals.

This research work will be aiming toinvestigating if:

i. Cost Accounting Indispensable in determining the cost per unit of a product.

ii. Cost Accounting is a factor in pricing decision, production planning and cost

control.

iii. Cost Accounting is an important tool in running a section, department or factory,

that is, organizational planning, decision on alternative methods, wages cost

control and material cost control.

iv. Cost Accounting is an importanttool in profit planning, making or buying decision

etc.
1.4 Research Question

The following research questions will be used to guide the research

i. How does cost accounting be indispensable in determining the cost per unit of a

product?

ii. How can cost accounting bea factor in pricing decision, production planning and

cost control?

iii. How does cost accounting bean important tool in running a section, department or

factory, that is, organizational planning, decision on alternative methods, wages

cost control and material cost control?

iv. How does cost accounting be an important tool in profit planning, making or

buying decision etc?

1.5 Research Hypothesis

H0:    Cost Accounting is not an indispensable tool in management planning, control and

decision making.

H1:    Cost Accounting is an indispensable table in management planning control and

decision making.

1.6 Significance of the Study

It is the desire of any management to maximize profit to boast of high profit all

expenses incurred must have to be deducted from turnover; whether profit will be low or

high largely depends on how much deductions (expenses) will be. Excessive cost reduces

turnover excessively this in turn reduces profit. This research project which is centered on

the importance of establishing adequate and proper cost for production will:
  Be of immense contribution towards helping managers to determine proper cost

for organizational operations

 Help managers and others in industry, commerce, local authorities and similar

organization to gain a working knowledge of the principles and processes of cost.

 Enable managers to analyse, select and implement the principle, techniques and

method that best suit their firm.

The research project will be of a great value to the researcher to understand the

importance of Cost Accounting to Management, Planning and Decision Making

The research could also be used by other researcher as reference for their research

conclusion.

1.7 Scope of the Study

This study covers a general review of the different methods and techniques of

costing and how cost accounting affects the planning, control and decision making

process of an organization using the Nigerian Bottling Company (NBC) as a case study.

1.8 Limited of the Study

Due to a lack of time for our research, we could not conduct this study as deep as we wanted and

so some questions that we had did not find any answer. The most of the information we got come

from interviews and questionnaires. During the interview we had sometimes the feeling that the

interviewees are used to employ other words and vocabulary than we do. We couldn't choose

other methods in addition as the research participants time was very limited. Indeed, such

methods required more time than just a few months. The managers did not have so much time to

allocate to our study. With more interviews we could have also a more clear answer to our
research question. As there is a huge amount of accounting tools available, only some of them

will be investigated. There are some tools that are said to allow for an examination of the

relationship between accounting information and decision-making, as will become apparent later

on. So the focus will be on these selected ones. We have to underline also that no one of us has

an experience before in conducting a study in this extent. For us it was hard to conduct this

bachelor thesis, especially the analysis was very difficult to do. Fortunately we got some help

and support. We hope that this work is pertinent.

1.9 Definition of Terms

Quantitative accenting approach: This is that approach to accreting which concerns itself with
only data that can be qualified in monetary terms.
2.                  Qualitative accounting approach: This unlike the number one above take cognizance of
data that matters but can not be qualified in monetary terms.
3.                  Limiting factor: This is that factor that can be a constraint to the expansion of
production. It is sometimes termed they factor.
4.                  Cost control: This as used in this study an operating function but not an accounting
function. It is the manipulation of cost through operating personnel precisely, it is the
employment of all the management devices in the performance of an important operation
so as to meet the already established objectives of quantity and quality with the lowest
possible outlay of input
5.                  Cost centre: This is a desirable are of activity within a business to which costs can be
attributed. In the content of manufacturing firm. It is those manufacturing units or
departments in respect of which cost can be ascertained and over which cost  can be
controlled.
6.                  Cost reduction: This is also an operating function this aim at the employment of the
management derives in the performance of some important operation so as to reduce cost
firm what it use to be. This can be achieved through a change in the system of production
labour intensive to capital intensive)
7.                  Performance: This is the act of measuring appraising and comparing the operational
results of different  profit centers of an organization.
8.                  Variance This is the difference between the actual performance and the expected
performance expressed by the standard costing. Simply put, it is a difference between
standard cost and actual cost.
9.                  Benchmark This is used in this study means the process of companism between what is
and what is supposed to be.

 
 CHAPTER TWO

REVIEW OF RELATED LITERATURES AND THEORETICAL FRAME WORK

2.1 Introduction

This chapter reviews related literatures and Theories the chapter will be sectionalized

under the following headings Conceptual Frame work, Empirical Frame work and

Theoretical frame work.

2.2 CONCEPTUAL FRAME WORK

Accounting is the language of business as it is the basic tool for recording, reporting and

evaluating economic events and transactions that affect business enterprises. It processes

all documents of a business financial performance from payroll, cost, capital expenditure

and other obligations to sale revenue and owners’ equity. It provides financial

information about one’s business to the internal and external users, such as managers,

investors and others. It is sometimes referred to as a means to an end, with the ending

being the decision that is helped by the availability of accounting information (Arneld

and Hope 1990). Management is the art of working particularly through people, for the

achievement of the broad goals of an organisation (Ejiofor 1987), in trying to achieve

these goals the manager has to map out strategies to find out the accounting information

suitable for the company. Management accounting uses both financial and non financial

information and is generally intended for the use of internal users who use the

information to make decisions that help achieve the goals and objectives of the

organisation. Financial information used by management accountants include sale

growth, profits, return on capital employed and market shares, non

financialinformationsinclude customer satisfaction level, production quality, performance

of competing products and customer loyalty. Management accountants use both financial

and nonfinancial information to aid business decision-making (Melissa Bushman 2007)

Decision making is the process of choosing alternative courses of action using cognitive

processes. Making decision is necessary when there is no one clear course of action to

follow. Accounting systems can aid our decision making by providing information

relevant to the decision and to the decision makiner.

Accounting systems also provide check for the validity through the process of auditing

and accountability (Gray et. Al 1996). Effective and efficient accounting information

plays a central role in management decision making. Literature Review In managing an

organisation and implementing an internal control system the role of accounting

information is crucial. An important question in the field of accounting and management

decision making concerns the fit of accounting information with organisational

requirements for information communication and control (Nicolaou 2000). Accounting

information system is considered as a subsystem of Management Information System

(MIS). To regard accounting as an information system, perhaps, is the latest definition of

accounting, as can be deduced from the statement of American Institute of Certified

Public Accountants (1966). “Accounting actually is information system and to be more

precise, accounting is the practice of general theories of information in the field of

effective economic activities and consists of a major part of the information which is

presented in the quantitative form”. Boockhodt (1999), defines accounting information

systems as systems that operate functions of data gathering, processing, categorising and
reporting financial events with the aim of providing relevant information for the purpose

of score keeping, attention directing and decision making. Studies have shown that

successful implementation of accounting system requires a fit between three factors

(Markus 1983). Firstly, a fit must be achieved with dominant view in the organisation or

perception of the situation. Secondly, the accounting system must fit when problems are

normally solved, i.e. the technology of the organisation. Finally, the accounting system

must fit with the culture, i.e. the norms and value system that characterise the

organisation. Accounting system will be useful when information provided by them is

used effectively in decision making process by users (Christiansen 1994). Otley (1980)

argues that accounting information are important parts of the fabric of organisational life

and need to be evaluated in their wider managerial, organisational and environmental

information not only depends on the purposes of such systems but also depends on

contingency factors of each organisation. Accounting information are said to be effective

when the information provided by them serves widely the requirements of the system

users. Effective information should systematically provide information which has

potential effects on decision making process (Ives 1983). The effectiveness of accounting

information has long been a subject of many researches (Chenhall 1986, Chong 1996,

Kim 1988, Mia 1994). Accounting information is usually categorised under two groups:

information that influences decision making and mainly for the purpose of controlling the

organisation; information that facilitate decision making process and mostly used for

coordination within an organisation (Kren 1992). Hubber (1990), argues that integration

of accounting information leads to coordination in organisation, which in turn, increases

the quality of the decision. Some researchers in accounting shows that the effectiveness

of accounting information system depends upon the quality of the output of the

information system that can satisfy the users’ needs. Generally speaking, accounting

information provides financial reports on daily and weekly basis and also provides useful

information for monitoring decisionmaking process and performance of the organisation.

Simon (1987) in his study used the first part of the statement as measure of control for

management and the second part for evaluating the effectiveness of the accouunting

information via continous monitoring. Accessibility to information relating to the main

transaction of an organisation leads to a categorised detailed information which facilitates

decision making in any difficult situation (Mia 1994). Accounting information system is

a computer based system that (Nicolaau 2000) defines as a system that increases the

control and enhances the cooperation inside the organisation. Quality of information

generated from accounting information is very important for management (Essex 1998).

Kim (1989) argues that usage of accounting information depends on the perception of the

quality of information by the user. Quality of information depends on reliability form of

reporting, timeliness and relevance to the decision. Effectiveness of accounting

information system also depends on the perception of decision makers on the usefulness

of information generated by the system to satisfy informational needs for operation

processes, managerial reports, budgeting and control within organisation. Aggregation of

information is considered as means of collecting and summarising information within a

given time period (Choe 1998). Historically, accounting is as old as man, but the initial

formal literature originated from an Italian monk and mathematician Luca Pacioli (1494).
In his famous treatise “Summa De Arithematical Geometrical proportion et

proportimalitain” (1494) in Venice, Reverend father Pacioli described the double entry

system by giving insight into the reasoning behind accounting records. He postulated that

all entries must be double entry, i.e. when one is debited, the other must be credited, or

debit receiver and credit the giver. Even though during this period the records were

prepared to show statement for the business rather than the owner the yearly preparation

was lacking. Longe (1999). After Pacioli, a dutch man advocated the profit and loss

account at yearly interval. The level of civilisation and technological advancement helped

in the development of modern methods of accounting. During the industrial revolution

there was need for sophisticated accounting methods. Different bodies were formed eg

ACA (Scotland 1854); ACA (England and Wales 1880); AICPA (USA 1887). With the

development of new methods ownership was separated from management. Since the

discovery of the double entry principle, there has been tremendous development in

accounting theories and methods. The introduction of micro and mini computers have

brought enhanced performance but the fundamental principle remains unchanged.

Locally, in Nigeria, record keeping has antecedents in the ancient kingdoms and empire

and prominent then was the periodic contribution which were recorded on the wall, but

the granting of royal charter to Royal Nigeria Company was the turning point in record

keeping in Nigeria. The governing accounting principle in Nigeria was almost the same

as the ones in Britain, our colonial master. The Institute of Chartered Accountants of

Nigeria (ICAN) was established in 1965 and affliated with the professional institutes in
Britain and USA. The Corporate Report of 1975 formulated by the Sandiland Committee

in the United Kingdom recognized

Decisions Making Process

The complexity of economic life in conditions of competition imposed by the market

economy and globalization also increases the role of information in decision making. Its

quality affect both the quality of current decisions and the prospect of taking decisions

and hence the results of decision. The objective of each activity is to increase the

efficiency of the basic system, which is why managers need concrete and timely

information for decision-making within an entity. From here arises the need to improve

management accounting. Accounting information for users fall into one of the categories:

public information and / or confidential information. In countries with a developed

market economy the management system of an entity is composed of an information

system consisting of applications, concepts and techniques characteristic. In Anglo-Saxon

region, the field of management accounting includes all information "valued" that

managers need, and not only information on costs, recognizing that the general subject of

management accounting relating to economic resources mobilized not only in their

consumption (Briciu S., 2010).

Management accounting is defined in the literature as managerial accounting, analytical

accounting (comptabilitéanalytique) or internal accounting. Management accounting is

that accounting approach of an entity activity that allows separation and structure in

subdivisions of property and financial results. In this way you can know how to generate

profit or loss in the entity, and ways to influence its activity in order to increase
profitability (S. Briciu, 2010). But a distinction must therefore be made thereby

management accounting must include the specific elements of financial accounting

(general) and of the second side of accounting, management accounting. A special place

in the management accounting must be held by management control, which is responsible

for the smooth operation of the informational system necessary in a decision making

entity. Also must be included the internal audit, which helps the entity to achieve its

objectives, making systematic assessments and improving risk management, control and

management processes.

In France, management accounting is defined "as a technical analysis" of the entity's

activities and products manufactured by it having as an objective evaluation of products,

works and services and the control of internal conditions of production through costs.

Michel Capron, defines analytical accounting (management - Ed) "as a management tool

that is arming the management of an enterprise to meet their information needs and to

guide decisions." In the view of Henri Bouquin management accounting is "an

information system that intends to help managers and influence behavior by modeling the

relationship between resources consumed and aims pursued". Henri Bouquin (2004)

believes that "the major role of management accounting is to produce information to

enable modeling the relationship between resources deployed and the results obtained in

return." Another definition of management accounting we discover at the U.S. National

Association of Accountants (NAA) which defines management accounting as "the

identification, measurement, collection, analysis, preparation, interpretation and

transmission of financial information used by management of an enterprise for planning,

evaluation and control of appropriate and responsible use of its resources." Chartered

Institute of Management Accountants UK (CIMA) explain management accounting as

"Management accounting is an integral part of management dealing with the

identification, presentation and interpretation of information used for: the formulation of

strategies, planning and control of activities, decision-making; the use of resources,

information of members and other external information users, information of workers,

protection of assets. " Management process is based on a wealth of information taken

from the area of management accounting. As part of this information a very important

role in the management of economic entities is the concept of cost and presenting it in

different structures or different levels of responsibility. Planning the future activities of

an entity, decisions that managers take within the entities (purchasing decisions, pricing

decisions) are closely related to knowledge of costs. Cost accounting has a huge impact

on the quality of decisions made by managers. Ebbeken et al. define cost as "an expense

or an amount of expenditure associated with (and recognized) a resource consumption, a

place of business, a product produced or reporting period". Bernard Y, Colli J.C. (1994),

define cost as "amount expressed in general in currency, of the necessary expenditure for

the purchase or production of a good or service." According to specialists Glautier M. and

Underdown B. (2001) “cost is the monetary expression of the effort that an entity must do

to achieve its objectives.“ In the Anglo-Saxon literature there is consensus on the

definition of cost, the cost is defined as an indicator of monetary sacrifice made to obtain

and provide customer specific products or services, achieving a work or performance of

an activity. Cost information is valuable in decision-making process to ensure the

achievement of a production, an activity with a reasonable cost by eliminating waste and

production factors which translate into greater efficiency.

In this study, five strategic decision making areas such as basic, manufacturing, human

resource, marketing, long-term investment were selected. These strategic decisions

making somehow depend on accounting information. Without accounting information

manufacturing department can’t know what is going on with the production cost and

equipment cost. For hiring, training and promotions, human recourse manager somehow

depends on accounting information. For developing new product or determining the sales

commission, a sales manager needs proper accounting information. Accounting

information also helps to take long term investment decisions by giving the proper view

of present condition and would be condition of the organization. Though top management

needs accounting information in every step to take any sorts of strategic decisions but no

significant study were found to be conducted on the role of accounting information in

strategic decisions making in manufacturing industries

Accounting information

Accounting information is a part and parcel of today’s life which is necessary to

understand the accurate financial situation of the organization and used as the basis of

making any decisions. Since strategic decisions have long-term effect on the business and

therefore it is important to analyze accounting information for making strategic decisions.

Accounting information helps managers understanding their tasks more clearly and

reducing uncertainty before making their decisions (Chong, 1996). Accounting is

sometimes referred to as a means to an end, with the ending being the decision that is
helped by the availability of accounting information (Arneld and Hope,1990).

Accounting systems can aid in decision making providing information relevant to the

decision and to the decision maker (Gray, 1996). Effective and efficient accounting

information plays a central role in management decision making (TrimisiuTunji, 2012).

Accounting information is one type of information recognized as a ‘learning machine’

that can help to evaluate how objectives might be achieved by quantifying the financial

impact of each alternative available to the decision (Burchell et al., 1980).

Accounting and financial information are among the most important information widely

used in the managerial decisions (Royaee, Salehi, &Aseman, 2012). Within

contemporary economic conditions, a successful manager needs a lot of reliable

accounting information in order to be able to make quality business decisions (Miko,

1998). Economical information especially financial and accounting ones are the

information which always managers use in short term and strategic decisions and they

may have most application among different variables effective in decision-making and in

all types of decisions (Royaee, Salehi, &Aseman, 2012 and Hubber, 1990).

Strategic decisions, when the decision maker aims for long periods of time, allocates all

or part of the company's core assets to achieve that goal; such decisions are usually

adopted at top management (Eugenia1 and Tiberiu, 2013). Strategic decisions are among

the most distinctive decisions in an organization and these are used for determining the

goals and direction for long-term company development. Basically top management is

involved in these sorts of decisions.

They decide on company policy, long-term and annual business plans and the

organizational structure, i.e. anything that is linked to the future of the company. A wrong

strategic decision have far-reaching, negative effects on the company, which in turn

places a lot of responsibility on the shoulders of the strategic decision maker (Sikavica, et

al.1994).

Being the decider Nothing is more difficult, and therefore more precious, than to be able

to decide according to Napoleon Bonaparte. (Larouse du XX- 1929).Sfez (1988)

proposes a classification of decision maker evolution in three stages: the certain man is an

actor of the classical organization making decisions in a rational manner, according to a

linear process in a certain universe; he can optimize all the factors and his individual

objectives converge with those of the entity; the probable man is an actor with limited

rationality seeking only a satisfactory solution in a more uncertain universe but

probabilistic; the random man is an actor in current businesses where imprecision,

uncertainty and complexity are very present; decisions involve compromises. Whatever

the status of decision maker, there are several theories seeking to explain the decision-

making process based on different aspects.

What theory to mobilise

A decision is a choice made at a time, in a given context, from more alternatives, to

stimulate actions of variable size and du survival and development, since it is prior to any

action. A decision may be regarded behavior that operates choices being partially

informed ( , 1979), a course of action consciously chosen from a number of possibilities,

in order to reduce a perceived dissatisfaction on a (Nizard, 1986) or a process that

consists in being permanently located in front of choices (Mintzberg, 1984a), but

whatever the definition considered, we identify three key aspects to characterize a

decision: the perception of a problem and the need to solve it; the usage of relevant

informations to better understand the problem, its dimensions and the possible

alternatives; the selection criteria used to make a certain election. Understanding patterns

of deciding and decision-makers behaviors come a long way. The various aspects of

decision-making process: rational and formalized dimension (Rapaport, 1967; Fericelli

1978) human and behavioral dimension (Simon, 1959; Barnard, 1950; Lindbom, 1959;

Argyris, 1973) political dimension (Crozier & Friedberg, 1977) organizational dimension

(March & Olsen, 1976) integrate and combine differently depending on decision makers

and context. 50 - -making processes remains labelled by the approach in terms of rational

optimization, after this period several researches try to integrate human dimensions, by

considering the intuition, unconscious and irrational. Thus, the decision-making process

is analyzed differently according to decision maker outlook. Behavioral and cognitive

theories present decision makers with cognitive processes and differentiated value

systems proving that decisions are influenced by immaterial and psychological factors.

The contemporary decision results from an interpretable and multirational procedure with

many concurrent ends.

The steps until the final choice

A decision is the result of a process and its steps are as important as the final choice.

Resuming the elements of decision theory, it is possible to highlight several decision

systems, according to the type and level of decision-making within an organization:

routine, scheduled, repetitive decisions are taken in accordance with classical reasoning

systems based on rationality and optimization; short-term, tactical decisions are based on

organizational foundations: the specific operating of the entity, habits and experiences

inducing private decision-making systems; strategic decisions from the highest level are

based on political foundations: power, pressure, negotiations of different groups of actors

influence decision-making systems.

There are many classical decompositions of decision-making, but all are limited in a

manner more or less detailed at the stages formalized by Simon (1960) and recognized by

the literature as a widely accepted model: Information: data gathering to identify decision

issue and set objectives; Projection: identifying action alternatives and evaluating their

consequences; Choice: selecting the alternative that will be designated in order to act;

Implementation and evaluation of decision. It is not mandatory to complete this decision-

making phases in a strictly sequential manner, as it is possible to return to the previous

stages if results are not conclusive. 3. Being the manager: between satisfaction and

optimization In market economy conditions, depends heavily on managers to understand

and apply principles, methods and modern management techniques. The quality of

management is vital for companies to gain competitive advantages and to resist in a

challenging environment. The previous statement is even more important in recent years,

when it was shown that the main factor of incompetence and errors due to mistakes in

decision-making. (Onofrei, 2007) Therefore, a more efficient management is required,

which means competence and rational decisions.

The manager as a key player in decision-making

Most decisions are unprogrammed and have at least some degree of uncertainty,

ambiguity and complexity. Complex decision situations require a combination of data,

experience and knowledge, and often must draw upon inputs from many personnel.

Hence we need to investigate the role of the manager in making decisions. The manager,

according to Anthony (1988), is results, generally expressed by quantitative and time

objectives, through . (Bouquin, 2004a) As an organizational actor, he is responsible for

decision-making at operational and strategic level, on how to use limited resources under

his control. He needs information to enable the output foresight of action alternatives.

Thus, the manager should monitor the results of decisions taken to extend matters that

have been successful or to adapt and change others. (Alexander &Nobes, 1994) Through

a study concerning the actual work performed by managers, the descriptive analysis of

Henry Mintzberg (1984b) calls into q s research and seeks to determine the exact nature

of the managerial function. Mintzberg observed in detail the activity of several managers

and found that the four main activities identified by Henri Fayol (planning, organizing,

coordinating and controlling) are only rarely performed in everyday work of these actors.

Managers spend their time juggling from one topic to another and overseeing various

projects. They respond to spontaneous requests and to a multitude of questions. A

manager has to take a decision before acting or before preparing a plan. Thus, decision-

making pervades all managerial levels. A manager is an individual responsible of an

organization or a set of entities. Any manager is invested with formal authority in

accordance with his assigned statute. According to Mintzberg, a manager practices three
major roles: contact, information and decision-making. The challenge is to play all these

roles at the same time and correctly in the context of a given situation. Managers

decisions include subjective and irrational elements. They are taken not only in

accordance with informations and reality, but also in terms of managers beliefs and

representations of their environment. Depending on s vision, strategic decisions change:

we can have the information and refuse to see it. For Richard CantillonEssaisur l (1720),

the competence of a manager refers to his ability of accepting uncertainty and not

informing or analyzing the reality. of possibilities, impossibilities and ambiguities on

economic, technological, social and political issues depending on his beliefs, fears and

values. Thus, when the manager is replaced, the strategy also changes. Reality is not only

an external constraint, but also a construction of the decision-maker. In a specific

situation, the manager reflects, examines and passes through the filter of his personal

possibilities, impossibilities and ambiguities, issues like: impossible to sell the company,

possible that the product would be successful in other countries or impossible to change

customers behavior ... Based on these prior convictions, preconceptions, the manager

perceives reality, consider feel , develops solutions and sees the future. Through personal

beliefs, fears and desires, the manager creates his personal vision of the world. The

manner in which managers frame a problem greatly influences the solution they will

ultimately choose. Frameworks that persons and entities use regularly for specific

problems will affect their reaction to any possible obstacle. Frameworks traps can make

even the most talented managers to commit capital errors. Companies have regular

annual losses because they limite to prior rational frameworks that are totally inadequate.
The best frameworks will reveal what is important at the expense of what is not. In this

context, we consider necessary to clarify what a decision framework means. Decision

frameworks are mental structures that we create to simplify and organize the world.

(Russo &Schoemaker, 1994) They limit the complexity of any decision so that our minds

can understand it. No one takes a rational decision without defining a specific framework.

On the other hand, any framework provides only a partial view of the problem. More than

that, the manner that people simplify things often makes them choose the wrong

alternative. Faced with a new situation, a successful manager will create a decision

framework specifically designed to meet these circumstances. The difficulty arises from

the fact that very few managers are fully aware of decision frameworks they adopt.

However, by reflecting on: the limits set for a problem, the reference points for defining

success and failure and the measuring instruments, it is possible for a manager to

understand his frameworks. The key for better decision-making is the understanding of

personal frameworks. (Russo &Schoemaker, 1994) For example, many managers have

learned how to better frame their competitors according to Michael Porter, expert in

strategy at Harvard Business School. Companies tended to against other organizations

offering similar products or services. Michael Porter mentioned that this framework often

lead companies to underestimate other competing pressures exerted on benefits, as their

suppliers that are perhaps too expensive, their customers that always want to pay less and

demand more and more, substitutes, potential competitors government, employees etc.

Michael Porter asked each entity to determine who are the real competitors. The oil

sector, for example, should consider government as a competitor, given that 80% of every
euro from sold oil rests with it as various taxes. By understanding how competition

frame, managers are able to make rational decisions and become prepared to change the

framework if necessary. In a complex and uncertain world, we can not expect that

managers will always choose the best alternative providing the most favorable results.

But, we can expect to what a successful manager would do, so that: the whole company

will frame situations after a long reflection; the organization dominant frameworks will

be adequate; complex decisions will be considered according to various alternative

frameworks. Several evidences have shown that people generally pay too much attention

to their personal opinions. In business environment, the excess of confidence often leads

to wrong decisions, reducing margins of profit, layoffs and bankruptcy. By his nature,

man suffers from a tendency to favor informations that come to support his convictions

and to exclude inconvenient facts. This can negatively affect organizations, especially if

we consider that an ambitious search can often reveal dozens of indications to confirm a

hypothesis, even if incorrect. A successul manager has to be realistic when making a

decision, but optimist when implementing it. Unfortunately, few know how to move from

realism to optimism at the right moment.

The role of financial accounting

Information Informations can reduce uncertainty and complexity of actions, facilitate

elections, highlighting the possibilities and limitations of alternative solutions. An

information system should help decision-making process before, by preparing the

decision, during, by simulating the decision options and after, by communicating the

decision taken to the performers, including control of its execution. The most effective
performance management system is one that is as close to real time as possible. (Beer,

1994) This resonates with the concepts of availability (Tversky and Kahneman, 1973)

and primacy (Asch, 1946), that events that are easily remembered or accessed are

perceived to have higher probabilities and consequently are of higher importance, and

that the sequence in which information is presented will affect how each piece of

information is used (Friedman, 2004). The use of real time data goes someway to

focusing managers on the most relevant information, as long as the context and history of

the data is also incorporated. Johnson, speaking over two hundred years ago, thought

hecou through counting (Boswell, 1980). Apart from monitoring, supervising and

overseeing, managers are closely involved in strategic decision making. Decisions must

be made about the future direction of a company, its capital investments and divestments,

lines of business, financial structure and investments in the activities of other entities.

Strategic decisions are taken as opportunities arise or circumstances unfold. In these

decisions, financial accounting has a necessary function. It can inform managers about

the financial position, the performance and changes that have taken place, of their

company.

In practice, much of the counting of interest to directors is undertaken in financial terms,

as financial figures often provide the only available formal plan and account of activities

undertaken. Knowing what happened in the past and which is the present position,

represents necessary background for any decision requiring deliberation (Wells, 1979)

and in accounting, making the past deterministic is the function of selected financial

numbers. Financial accounting informations are used to establish the financial position,
the changes in financial position, the performance and risks of a company. They facilitate

recording and evaluation which takes place in units of money. Various research studies

propose to explain organizational behaviors by subjective dimensions related to

managers, as their profiles. (Chapellier, 1999; Bourguignon, 1998; Dupuy, 1999;

Bescos& Mendoza, 1999; Oriot, 2004) Understanding and explaining the nature and

extent of use of accounting by the manager will benefit from a changing observation

angle of the researcher: in place of examining an accounting object and its context, it

would be more relevant and appropriate to observe an user and identify his perception

about this object and the context in which it operates. Accounting is, in fact, a tool

interpreted by actors with different representations and frameworks of reference.

Explaining managers behavior related to accounting, necessarily involves the description

and understanding of their practice. Furthermore, accounting can not be dissociated from

the representations of different involved parties. Hopwood (1983) argues that a

framework of analysis that constitutes a common references and representations system.

So, what is accounted shows the vision and the sense that members of the company have

about organizational reality. (Burchell et. al., 1980; Cooper et. al., 1981; Boland, 1993)

The manner in which managers use accounting information is questionable, because there

are a few studies about the information they actually use compared with those they might

exploit. Hall developed a survey based on three ideas about the reason of using

accounting informations at managerial level. (Hall, 2010) First, they are for the decision

maker a good way to develop knowledge of the work environment rather than a specific

input in decision-making scenarios. (March, 1986; Preston, 1986) From this perspective,
we consider that accounting informations help managers prepare for future activities and

decisions. Second, given that they represent only a fragment of a whole (McKinnon

&Bruns, 1992), it is essential that their strengths and weaknesses to be considered in

relation to other sources of information, and not in isolation. Third, managers interact

primarily based on verbal forms of communication, which determines the involvement of

accounting information in the same way. (Ahrens, 1997; Jonsson, 1998) On the other

hand, the results of a study conducted by Anderson prove that economic analysis of

financial accounting informations is an indispensable tool to support decisions.

(Anderson, 2008) Regardless of the level at which it occurs, economic decision-making

process requires a thorough analysis of production process inputs, to estimate the

necessary from each assortment separately, to be conversant with the whole market

conjuncture, to schedule tasks in conjunction with the resources and requirements, a

prospective thinking about the company in general. Accounting, a key source s financial

position and performance, can help managers to develop knowledge about the

organization in several ways. (Hall, 2010) It makes visible those events that are not

perceptible by daily activities of a leader and provides a quantitative overview of his

work. Accounting informations can reveal issues that are overlooked during normal

activities and can provide an independent control over operations to help managers being

aware. Thus, we consider that through accounting information are made available

important aspects about the company, which allows the manager to determine the

meaning and significance of all the operations. An indisputable advantage of accounting

is its ability to provide an overview which, according to Meyer, it is always preferable to

a multitude of particular views. (Meyer, 1962; T Accounting has a well defined see only

through accounting informations and these are more numerous as the entity is bigger.

Fleishman and Tyson (1998) identified managerial decision-making and control, as the

most important uses of accounting information during the industrial revolution in United

States and Great Britain. (Akintoye, 2008) Thus, accounting is concerned with the

provision of relevant financial informations to make informed decisions on allocation and

management of resources and performances. In Buchaltung und bilantz , highlights the

importance of accounting informations for decision making: bring light, order and control

to th . ( It is obvious that every manager wants to have knowledge that would reduce

uncertainty and give him the opportunity to make the best decisions. In fact, these

requirements denote the need for accounting to produce quality informations. According

to Financial Accounting Standards Board (FASB), to be useful to its users, to have a

decision utility, financial accounting information must be intangible and possess two

main qualities: relevance and reliability. Between them is interposed the comparability, a

quality considered secondary. There is however a general restriction: the costs of

fulfilling these qualities should not be larger than the expected advantages.

The synthesis and accounting reporting documents represent the basic form of publishing

accounting informations, providing data needed to determine the conditions under which

a company operates and evolves over time. The Framework for the Preparation and

Presentation of Financial Statements states that the usefulness of informations provided

by annual accounts is determined by four qualitative characteristics: (IFRS, 2010)

Intelligibility - the informations contained in the synthesis documents must be easily

understood by users who have a reasonable knowledge of business and accounting

concepts; Relevance reffers to the capacity of informations to essentially influence

decision-making process. Relevant informations are those that help users evaluate past,

present or future events, to confirm or correct their future assessments. Reliability

informations must not contain significant errors or be biased, providing sufficient

certainty for users in decision-making process. Comparability - refers to the capability of

information to be compared over time or in space and relative to other benchmarks.

Qualitative characteristics are attributes that determine the usefulness of accounting

information. Accounting information may not meet the highest rates of features but to be

useful in decision-making, it must possess, at least partially, each of the qualities that

define it. (F Like other resources, information can have immediate strategic utility or may

be a fundamental responsibility to expand the field of business opportunities. (Bouquin,

2004b)

2.3 EMPIRICAL FRAME WORK

Management accounting empirical research has grown in the modern decade, in

this manner, Shields (2003) continued to improve and expand the coverage of gathering

and analyzing management accounting research topics from 152 to 275 published articles

from 1972 to 2002 and came up with the renowned studies identified as the Mapping

management accounting: graphics and guidelines for theory-consistent research with the

help of Joan Luft (2003) as presented in Table 4. They provide a graphic representation

of the theory-consistent empirical management accounting research as exemplified by

articles published in the same six leading journals (Accounting, Organizations and

Society; The Accounting Review; Contemporary Accounting Research; Journal of

Accounting and Economics; Journal of Accounting Research; and Journal of

Management Accounting Research). To summarize the theoryconsistent empirical

evidence, Luft and Shields (2003) used the nine graphic maps (A-I) to provide a compact

visual overview of the various research streams of management accounting. In

constructing the individual studies they used three questions: (1) What set of variables

did the study include? (2) What is the causal model? and (3) What is the level of analysis

(Individual, Subunit, Organization and Beyond organization). The examination of the

maps offers a rapid tracing of what topic has been researched through the use of the

causal link which is identified by a number that references the studies collected from

numerous academic researchers. Firstly, Map A deal with the individual budget work

based on 42 links. The research is all about the following topics: Attitude that budget is

useful; Attitude toward organization and job; Budget-based compensation and difficulty

fairness; Budget emphasis by a superior in evaluating a subordinate; Controllability of

budget variances used for determining rewards; Expectation that budget will be achieved;

Frequency of budget feedback; Participative budgeting; Use of participative budgeting to

coordinate task interdependence; Explanation given for why participation did not lead to

budget subordinate proposed; Use of participative budgeting to increase subordinates’

motivation, for planning and goal setting; Subordinate involvement during budgeting

(Luft and Shields, 2003, p.209). Secondly, Map B stress out the causes and effect of

budgeting at the organizational and subunit level based on 27 links and consists of the
following studies: Budget-based planning and cost control; Budget importance; Change

in competitive strategy; Control system complexities and tightness; Decentralization;

Differentiation strategy; Importance of expenditure budget for management control;

Flexible budget; Interactive use of budgets; Importance of dealing with budget overruns;

Knowledge of task transformation process; Long-term incentive use; Manipulate

performance measure; Number of potential causes of budget variances recorded in the

accounting system; Use of operating budgets for management control; Product

standardization; Planning vs. control decision; Short-term managerial orientation;

Technology automation (Luft and Shields, 2003, pp. 212-213). Thirdly, Map C

concentrates on the usefulness of budgeting system for planning and control based on 33

links such as: Activity-based accounting and management; Advanced manufacturing

practices and technologies; Availability of nonfinancial information to workers;

Achievement of sales or profit target, controlling for the level of sales or profit; Balanced

scorecard; Capital budgeting monitoring system; Customer-focused strategy; Cost-based

transfer pricing; Effectiveness of discounted cash flow model for capital budgeting

decisions; Type of decision is more strategic and less operational; Usefulness of external,

historical information; Use of flexible-budget information; Importance of financial

information for decision making; Increased importance of management accounting

practices; Improved matching of management accounting with contextual variables;

Increased reliance on management accounting system; Just in time; Low-cost/price

strategy; Usefulness of nonfinancial relative to financial information; New product

development performance; Use of standard cost information; Usefulness of timely

information; Total quality management (Luft and Shields, 2003, pp. 215-218). Fourthly,

Map D creates 14 links and focus on the use of specific type of information rather than

overall use of the budgeting system to implement changes namely: Compatibility with

existing cost system; Number of changes in management accounting systems; Number of

management accounting systems Organizational implementation/adoption or

success/satisfaction with ABC and/or activity-based management; Product diversity;

Linkage to performance evaluation and compensation; Quality strategy; Training in

ABC; Top management support; Use of the control system for continuous improvement

(Luft and Shields, 2003, pp. 219-220). Fifthly, performance measures and incentives for

Map E associated more on nonfinancial in relation to financial strategy based on 30 links

such as: Asset turnover; Residual income; Relative ROA performance compared to

industry; Change in revenue/assets; Shifting of reported costs to products with more

costsensitive revenues; Variable cost ratio relative to allowable ratio (Luft and Shields,

2003, pp. 221-223). Sixthly, Map F stands for micro process that includes negotiated or

centralized transfer prices, product costing method and incentive systems based on 33

links for example: ABC (vs. volume-based allocation) cost information; Budgetary

constraints on investment proposals; Bargaining costs of accounting-based contracts

(Luft and Shields, 2003, pp. 224-225). Seventhly, Map G relates to individual judgement

and decision making for both planning and control based on 48 links such as: Activity-

based cost knowledge content; Activity knowledge structure; Accurate product costs;

Budget forecast and variance are required, in addition to a production decision;

Decisionmaker ignores irrelevant reported cost allocations; Information about relevance

of cost data; Information about production processes; Judged likelihood of cause of

variance; Management accounting experience; Magnitude of variance required to trigger

an investigation; Number of business units evaluated; Negative feedback about the

usefulness of cost system; Optimizing choice of expenditure; Opportunity costs are used

in making a decision; Specific experience in which different costs were relevant than in

the present task; Volume-based cost knowledge content; Variance in transfer price

predictions; Willingness to change cost system (Luft and Shields, 2003, pp. 227-230).

Eighthly, Map H addresses management in its historical and social context that focused

on the calculation-based control through financial standards based on 13 links, for

instance: Key individuals’ actions supporting management accounting; Local

circumstances affecting resistance to management accounting; Limitations of non-

accounting information; Management accounting and control system development and

use; Resistance to management accounting control systems and their effects; Resource

pressure and resource allocation problems (Luft and Shields, 2003, p. 232). Lastly, Map I

describes organizational change process in a financial and operational setting based on 18

links, such as: Accounting through which environmental change is analyzed; Accounting

change (e.g. costing systems); Availability and quality of accounting information;

Acquisition strategy based on financial performance; Environmental change; Information

technology change (Luft and Shields, 2003, pp. 233-234). Through the extensive studies

made by Luft and Shield (2003) it is evident at this time that there are numerous topics

already made about customer satisfaction, quality, growth and profitability as to what

Foster and Young (1997) comment on Shields (1997) previous reports, together with the
research on the aspect of long-term planning such as capital budgeting and decision

making. Moreover, their studies include valuable representation about the causes and

effects of management accounting that clearly shows the connection and disconnections

in the diverse streams of management accounting literature.

Origin of Cost accounting

All types of businesses, whether service, manufacturing or trading, require cost

accounting to track their activities. Cost accounting has long been used to help managers

understand the cost of running a business. Modern cost accounting originated during the

industrial revolution, when the complexities of running a large scale business led to the

development of systems for recording and tracking costs to help business owners and

managers make decisions.

In the early industrial age, most of the costs incurred by a business were what modern

accountants call "Variable cost" because they varied directly with the amount of

production. Money was spent on labor, raw materials, power to run a factory, etc. in

direct proportion to production. Managers could simply total the variable costs for a

product and use this as a rough guide for decision-making processes.

Some costs tend to remain the same even during busy periods, unlike variable costs,

which rise and fall with volume of work. Over time, these "Fixed cost" have become

more important to managers. Examples of fixed costs include the depreciation of plant

and equipment, and the cost of departments such as maintenance, tooling, production

control, purchasing, quality control, storage and handling, plant supervision and

engineering. In the early nineteenth century, these costs were of little importance to most
businesses. However, with the growth of railroads, steel and large scale manufacturing,

by the late nineteenth century these costs were often more important than the variable

cost of a product, and allocating them to a broad range of products led to bad decision

making. Managers must understand fixed costs in order to make decisions about products

and pricing.

Definition of Management Accounting Horngren et al. (2013) explained that

management accounting helps managers to measure, analyze and report financial and

nonfinancial information in making decisions to fulfill the goals of an organization,

which is similarly defined by Atkinson et al. (2012) that management accounting is also

the process of supplying the managers and employees in an organization with relevant

information, both financial (cost of producing a product, the cost of delivering a service

and the cost of performing an activity or business process) and nonfinancial (measures

related to customer satisfaction and loyalty, process quality and timeliness, innovation

and employee motivation) for making decision, allocating resources, and monitoring,

evaluating and rewarding performance. 2.3 Importance of Management Accounting

Information to business Garrison et al. (2011) placed an emphasis as to what extent the

management accounting information can help managers to perform their functions.

Garrison et al. (2011) discussed that managers use management accounting information

to develop, communicate, and implement strategy. They also use management accounting

information to coordinate product design, production and marketing decisions and to

evaluate the overall company’s operating performance including their employees, which

is agreed and matched to Carter’s (2007) perspectives, that management accounting

information and other reports do not have to follow set of principles or rules required by

different government agencies. The key questions are always (1) how will this

information help managers do their jobs better? and (2) do the benefits of producing this

information exceed the costs? Through these, managers can successfully run their

businesses.

Customer Satisfaction

Foster and Young (1997) find out that managers identified customer satisfaction as the

most important, followed by cost control and product quality for the managers

responding out of the given important management areas through the one-page

questionnaire handed out during their conferences and seminars. In contrast with the

work of Shields (1997), Foster and Young (1997) mentioned that customer satisfaction,

quality, growth and profitability were never reflected on the compilation studies made by

Shields (1997) but instead, cost management, cost control and cost accounting topics are

the areas of the business that were given an extensive coverage in the listed articles.

Foster and Young (1997) were not really convince of the studies and comment on the

slight coverage of the topics such as: target costing, kaizen costing or capacity cost

planning in the articles listed by Shields (1997) since, there were a major shift in

management literature over the last five year periods. In comparison with the work of

both the literature researchers, Shields (1997) will never meet the expectations of Foster

and Young (1997) as to the completeness of the listed articles given that, the scope of the

studies were based mainly on the 152 North Americans published articles and it was

constructed simply on the six leading journals, while Foster and Young (1997)
experiment were gathered from a combined total of 300 respondents which are not even

allocated proportionately between American and Australian managers as the sample size

of their studies. It is difficult to put together the applicability and consistency of their

ideas as a result of cultural differences (Hofstede, 1997) between the respondents

therefore, that could affect the effectiveness of the result. On the other side, both Shields

(1997) Foster and Young (1997) would like to inform the numerous interested

researchers of finding new and relatively unexplored areas that could offer a promising

further substantive contribution to knowledge.

Map Category Links C Information for planning and control 33 D Implementing

management accounting change 16 E Performance measures and incentives 30 F

Contracting and control: micro processes 33 G Individual judgements and decisions 48 H

Management accounting in its historical and social context 13 I Organizational change

processes and the relation of financial and operational realities 18 Source: Luft and

Shields (2003). Mapping management accounting, pp.177-181

2.4 THEORETICAL FRAME WORK

Towards a Theory of Management Accounting This section outlines the theoretical

framework for management accounting on the basis of the theoretical review and the

empirical investigation. The main aspects that are carried forward from the literature are

natural environment, social environment, ethics, power, and the three main functions of

management accounting: decision-making, planning and control. The empirical

investigation has illustrated that the main features are budgeting, performance
measurement, power, strategy, culture, education and technology. Below figure illustrates

how they connect on the basis of the coding analysis:

The theoretical framework depicts the most important elements that transpired both from

the literature review and from the empirical investigation. While figures usually are a

technique of positivist researchers, they help illustrate and allow for the reader to

visualise the relationships between different concepts. Akin to Bourdieu (1977)

management accounting takes place in the field within which actors move and interact.

Management accounting is illustrated in three stages: decision-making, planning and

control. The underlying concepts are power and culture, which form the backdrop to

management accounting activities. Power features strongly for instance when setting the

budget for an organisation, as more powerful agents/participants will seek to take

advantage of their privileged position. Power is important when wanting to pursue a

particular point of view, as the more powerful can achieve more, especially in reference
to change. Culture is also part of the backdrop of the organisation and society because it

strongly influences actors' perceptions of budgeting and performance, but also

environmental, social and ethical issues. Culture and its implied beliefs can be a

hindrance to and a perpetuator of any developments, adoptions and changes in the

system. Input in the actual management accounting system can take place in two stages:

firstly at the decision-making stage actors and participants decide on their strategic aims

and objectives, which will then in turn be considered when setting up the budget for the

respective organisation. Also at this stage actors should consider whether they want to

include an element of risk management in their budget and how they want to address any

uncertainty, and finally, newer technologies may help in budget setting and may provide

more accurate information. These inputs take place at the decision-making level but are

then carried forward to the planning and control stages. It is also suggested to broaden

management accounting's reach to include societal, environmental and ethical elements

alongside the conventional financial aims and objectives. At all three stages organisations

should adhere to ethical standards and factor in environmental and social aspects in order

to extend the management accounting function, so for instance when discussing buying

cheaper materials or acquiring lower cost labourorganisations should ensure that such

materials are not harmful to the environment and that labourers are treated in accordance

with human right acts. Importantly, this framework is not guided by any specific meta-

theory (Llewelyn, 2003) but instead is designed www.ccsenet.org/ijbm International

Journal of Business and Management Vol. 8, No. 18; 2013 21 to be applicable to several

possible research approaches. Based on the review of prior management accounting

studies, this framework was developed devoid of any particular theoretical guidance, akin

to Actor-Network-Theory only focussed on how particular aspects of the management

accounting discipline relate to each other. In that sense, the framework is skeletal in

nature only highlighting the main features that researchers and practitioners should

consider in their approach to management accounting. This does not mean that no

theoretical assumptions should be made but it allows the researcher to adopt the

theoretical point of view they would like pursue. Relationships between factors can be

explored depending on the various possible research approaches –contingency theorists

will seek to identify contingent factors and determine a cause-effect relationship between

the factors and management accounting. Actor-network theorists will seek to explain the

strongest network relationships but not on the basis of cause-effect relationships.

Bourdieu's followers will seek to explore the field further and then determine habitus of

management accounting (decision-making/planning/control) on the basis of forms of

capital. And critical theorists can address the elements of power, for instance with regard

to the societal elements: environment, social and ethical.

Management Accounting and Its Various Theories

Theoretical Approaches Research in management accounting

Theoretical Approaches Research in management accounting has a long tradition with a

variety of theories being utilised and applied in the process (Scapens& Bromwich, 2010).

Some of the main theories, grand or meta-theories or more accounting or organisation-

specific theories (Llewelyn, 2003), are outlined in this section as part of building on the

existing accounting-relevant theories (Becker in Ahrens et al., 2008). Scapens (2006)

provides a personal account and outlines his own experience with some of the research

approaches that were popular throughout the years. The very first studies assumed a

quantitative mathematical approach to management accounting with little belief that

anything important could be found, as everything had been done already (Scapens, 2006).

Some of the earliest studies have adopted a contingency theory approach (Chapman,

1997; Chenhall, 2003; Scapens, 2006) which is derived from organisational studies and

says that the successful implementation and use of management accounting practices

depends upon particular factors, so-called contingencies. These typically include the

environment, technology, size and structure of an organisation, but recently strategy and

national culture have been added (Chenhall, 2003). Contingency theory is typically used

in positivistic studies (Malmi&Granlund, 2009), where pre-determined hypotheses are

delineated and then tested in the empirical part of the investigation, although this does not

have to be the case (Chapman, 1997). Uncertainty will drive, however, the adoption of

information processing requirements (Chapman, 1997). Contingency theory is still one of

the most popular research approaches in management accounting (Chenhall, 2006).

Moving along from the economics-based domain to focus on organisational and social

theories, institutional theory has now an established tradition in management accounting

research investigating change in management accounting practices, with the earlier

studies adopting New Institutional Economics (NIE), Old Institutional Economics (OIE)

and New Institutional Sociology (NIS) (Burns and Scapens, 2000; Scapens, 2006) and

recent studies having developed the concept further to institutional logics

(Rautiainen&Jarvenpaa, 2012; terBogt&Scapens, 2009). Meyer and Rowan (1977) found

that OIE and NIS support the idea of homogeneity, that is everyone signs up to the same

belief system within the organisation, for instance budgeting takes place because external

forces, be they coercive, mimetic or normative, force the organisation to do so in order to

gain legitimacy (Ma and Tayles, 2009; Moll and Hoque, 2011). In general, NIE focusses

on the structures that govern economic transactions, OIE is concerned with institutions

that impact upon thought structures of individual human agents, and NIS deals with the

institutions that shape organisational structures in the organisational environment

(Scapens, 2006). Institutional logics is a recent development of institutional theory, which

reflects the idea of heterogeneity. Heterogeneity occurs because individuals act on the

basis of their habitus (Bourdieu, 1977; terBogt&Scapens, 2009) but also on the basis of

detailed deliberation. Contrary to prior forms of institutional theory, institutional logics

suggest that an individual can make their own choices, although their internalised habits

and routines will guide such choices (terBogt&Scapens, 2009). A further interpretive

theory adopted in management accounting is Giddens' structuration theory (Coad &

Herbert, 2009; Scapens, 2006; Tillmann& Goddard, 2008), which combines structure, the

rules and resources of a society, and the agents, in whose memories these rules and

resources are embedded (Coad & Herbert, 2009). This is referred to as duality of

structure (Tillmann& Goddard, 2008). In order to manage within the structure, agents call

upon their memories in order to perform three possible outcomes on the basis of their

knowledgeability: have power, assign meaning and act according to norms (Coad and

Herbert, 2009). Power is created through access to resources, acting according to norms

is based on the structure's rules (Giddens, 1979). A similar approach that has been applied
in interpretive management accounting research is Bourdieu's theory of practice

(Bourdieu, 1977). Bourdieu refers to the field (i.e. structure) and the habitus (the agents'

knowledgeability), which interact and impact upon each other. An individual is part of

the field and adopts the rules and norms of the field into their habitus, for example

through education and experience (Bourdieu, 1977). Their habitus, in turn, can adjust

rules and norms if needed, and can change the field, depending upon the sources of

capital the individual possesses (Bourdieu, 1986). The sources of capital determine the

level of power an individual has, which include economic capital, i.e. the amount of

resources someone has available, social capital, i.e. the level of influence and connections

an individual possesses, cultural capital, i.e. the level of education someone has

completed and the level of knowledge someone possesses, and symbolic capital, i.e. the

prestige and honour an individual enjoys in their field (Bourdieu, 1986). The more capital

an individual has access to, the more powerful they are (Bourdieu, 1986). Interventionist

research suggests that researchers actively instigate change in the field, examples being

innovative action research (Malmi&Granlund, 2009; Joensson&Lukka, 2006).

Importantly, the study should be academically sound, and should have an impact on the

practice of accounting where the study takes place. The researcher switches between the

insider (emic) and outsider (etic) perspective, and ultimately intrudes on the

organisational practices to institgate change (Joensson&Lukka, 2006). Importantly, the

study has to be anchored in academic theory and follow academic research principles to

not fall into the realm of consultancy (Joensson&Lukka, 2006; Malmi&Granlund, 2009)
but at the same time has to instigate change to not just be another theory-informed case

study (Burns in Ahrens et al., 2008).

Actor-Network Theory

Actor-Network Theory originates from the sciences, and takes a new approach to

investigating relationships between actants, thus it is not really a theory but rather an

ontological approach that has been applied in accounting extensively

(Justesen&Mouritsen, 2011). It does not engage in how and why questions but rather

seeks to analyse the ties within a network, where a network can be comprised of humans

and non-humans (Ahrens & Chapman, 2006; Justesen&Mouritsen, 2011; Whittle &

Mueller, 2010). The network with the strongest ties will be the most successful, thus

deserves attention (Whittle & Mueller, 2010). Scientific truth arises out of the robust

network around a scientific theory, by investigating the actors and researching the ways

they relate to each other. With regard to critical research, several scholars' and

philosophers' works have been applied in recent years and have been used to guide

analysis. Most notably, Habermas, Foucault, and Derrida have featured in accounting

studies. Habermas is responsible for such theories as Legitimation Crisis (Habermas,

1976) and The Theory of Communicative Action (Habermas, 1984, 1987), where the

former argues that within a societal structure there are four potential possibilities for

crisis: economic, rationality, legitimacy and motivation (Dillard &Yuthas 2006). Dillard

&Yuthas (2006) adopt this theoretical approach to the increasing popularity and

implementation of Electronic Resource Planning (ERP) systems within both

organisations in general as well as to a specific organisation, and argue that the increased
adoption of ERP systems has led to a crisis in the market managers have to deal with. The

Theory of Communicative Action is considered to be Habermas' most influential work

and has received the most application within accounting. Broadbent, Laughlin and Read

(1991) is an important example because it made a number of refinements to Habermas

(1984, 1987) in order to make the theory applicable to specific organisations rather than

society as a whole. Foucault's writings on disciplinary power and governmentality have

been utilised in several accounting studies (Armstrong, 1994) with the writings on power

in the modern world being one of Foucault's main theories being applied. As part of the

interpretive and critical research bodies, researchers have sought to address and include

the 'outlier' and the non-elite interest groups and topics of interest, such as feminism and

gender concerns (Gallhofer, 1998; Haynes, 2008; Hopwood, 1987), ethical concerns

(Gray et al., 1994; McPhail, 2001), environmental and social elements of accounting

(Gray &Bebbington, 2001; Gray & Laughlin, 1991; Masanet-Lodra, 2006; Mathews,

1997 and 2004; McPhail, 2001; Owen, 2008; Parker, 2005 and 2011), and politics and

power (Carter et al., 2010; Whittle and Mueller, 2010). McPhail (2001) has raised

concerns regarding the contribution of accounting education to raising responsible and

ethical accounting graduates. In particular in light of the recent financial crisis (Van der

Stede, 2009), this is an issue worth re-examining as we have to deal with our contribution

to the failure of our economic systems. Gray &Bebbington (2001) address accounting in

relation to the environment, and as the environment's condition continues to deteriorate

and as natural disasters, such as Fukushima (Note 3) or Hurricane Sandy, cannot be

conquered and can cause considerable and long-lasting damage, we must continue to
fight for nature's rights and consider its needs as part of our business practices (Gray,

2000). Burritt et al. (2002) and Schaltegger et al. (2010) have focussed on environmental

management accounting, and provide a very detailed analysis on how to undertake

environmental management accounting. Schaltegger et al. (2010) suggest that two

different accounting systems would be needed, one for conventional accounting, and one

for environmental accounting. While this may allow for more detail, it may also be why

accountants in practice and managers might not adopt such practices. In this study, we

seek to amalgamate managerial elitist interest, maximising wealth (Malmi&Granlund,

2009), with more diverse needs, such as the redistribution of power, prioritising the

environmental and social agenda, and enhancing academic education, in a proposed

theoretical framework. Power is an important element, and Whittle and Mueller (2010)

demonstrate that business strategy is ultimately determined by the most powerful, not

necessarily in a rational planning-manner. Power is also associated when it comes to the

distribution of financial funds, and the ability to invest in particular parts of an

organisation (Hutaibat et al., 2011).

Management Accounting-Definition and Practices The subject matter of the current study

is management accounting but as Quattrone (2009) rightly asks what management

accounting entails. In line with the theory – practice divide, management accounting has

a theoretical scientific character, i.e. a scientific character, and a practical character,

which reflects what happens management-accounting related in practice and how

practitioner apply and utilise management accounting information. Quattrone (2000)

illustrates this two-fold nature of (management) accounting being conceived through

knowledge of theory, how and why such theories are being produced, and knowledge of

practice, how and why do practitioners use accounting. Can we just take any definition

for granted, as it has been output by professional accounting bodies or fellow academic

scholars? In 1954, the Institute of Chartered Accountants England and Wales (ICAEW)

suggested that management accounting be any form of accounting that enables a business

to be more efficient (in Boyns& Edwards, 1997). Drury (2007) explains that management

accounting entails three main purposes: decision-making, planning and control. Malmi

and Granlund (2009) assume CIMA's definition (1996 in Malmi&Granlund, 2009) that

management accounting is 'the process of identification, measurement, accumulation,

analysis, preparation, interpretation and communication of information used by

management to plan, evaluate and control within an entity and to assure appropriate use

of and accountability for its resources’. For the current study, Quattrone's (2000) two-fold

approach of theory and practice knowledge of accounting, and Baldvinsdottir et al.,

(2010) focus on social and technical matters of accounting are being taken into

consideration. With regard to the definition of management accounting, providing

supportive information to those in control, to those that have to manage an organisation is

assumed, and the three basic functions: planning, decision-making and control, are used

to represent management accounting in the theoretical model. Over the years, a great deal

of practices have been developed and researched (Scapens& Bromwich, 2010), and for

theory development, one must ask now whether we should consider these practices to be

incorporated in the actual theory, like Granlund (2008) and Malmi&Granlund (2009)

suggest, for example theory of cost accounting or theory of management control systems,
or whether we should focus on a theory that is abstract enough to be applied in a variety

of accounting and non-accounting settings. Several of the polyphones argue against

adding yet another theoretical approach that ultimately only offers a variation of what

already exists, and instead suggest enhancing existing theoretical structures to

accommodate management accounting developments (Ahrens et al., 2008). Quattrone

(2008, 2009), however, believes that we should challenge the common assumptions we

make and beliefs we adopt, in particular in light of the recent disappointments with

transparency, stability etc. during the 2008 financial crisis. Baldvinsdottir et al. (2010)

state that we should turn our focus back to the technical core of the management

accounting discipline as the management accounting research of recent years has

focussed too much on the social aspects of accounting, and has veered too far away from

technical issues. Arguably, it is these technical aspects of our discipline that distinguish

us from economic and social science researchers (Baldvinsdottir et al., 2010). Scapens

and Bromwich (2010) provide us with an overview of what type of studies have been

published in Management Accounting Research in the last 20 years, subsumed under

relevant headings. These include, amongst others, activity-based costing, capital

budgeting, budgeting and standard costing, cost accounting systems, management control

systems, management accounting practices and management accounting change,

performance measurement, strategic management and risk management (Scapens&

Bromwich, 2010). Some are more prominent research areas, e.g., management

accounting change, performance measurement and management and organisational

control, than others, e.g. budgeting, activity-based costing and strategic management.
This illustrates the vast variety of studies that have been undertaken in the area of

management accounting, and discussing each of these is beyond the scope of this article.

Instead attention should be paid to which aspects have been researched in the various

studies. Almost all studies address the objectives of the managerial elite and as such, they

cannot be eliminated from any theoretical construct that addresses management

accounting. However, there are various developments that extend beyond the original

managerial interests, such as environmental management accounting (Burritt et al., 2002),

power in strategic decision-making (Whittle & Mueller, 2010), ethical concerns in

accounting in general (McPhail, 2001), and factoring in an element of risk management

(Van der Stede, 2009). Hansen et al. (2004) attribute four distinctive functions to the

budget – planning, performance measurement, goal communication and strategy

formation. Malmi and Granlund (2009) state that planning and control, i.e. performance,

need to be linked in a research study for the findings to be complete. Thus, the main

practical functions of management accounting, decision-making (strategy formation),

planning (budgeting), and control (performance management) will be at the heart of the

theoretical framework.

Topor et al (2011) have understood how information derived from management

accounting has an impact on development and foundation of new decisions and therefore

to better understand the relationship between management accounting and information

and showed the efficiency of information provided by management accounting in

decision making and the operational control of the production process. Martin & Stevens

(2011) have analysed cost accounting system from a cost – benefit perspective and find
that in some circumstances traditional methods with their aggregated level of detail are

economically optimal. They have proposed an effective approach to integrate both ABC

and ECA systems. A case study analysing process is used to compare the traditional

accounting system and the ABC system for allocating environmental costs. The results

enable managers not only to understand financial information regarding the activities for

environmental protection and the percentage of environmental costs in the overall

product costs but also to make more objective and accurate decisions.

Lucas (2003) has also evaluated the research supporting the accountants‟ and

economists‟ respective positions and argues that neither is strongly supported by the

conflicting empirical evidence. It then identifies the issues that need to be resolved by

future research intended to assess whether empirical evidence supports neoclassical price

theory or (full) cost plus pricing. However, Hoque (2000) further observed that cost

information was important to management. It was important in pricing decisions, but the

research did not subsequently consider its importance in other types of product-related

decisions. Al-Basteki& Ramadan (1998) identified the applications cost accounting

systems in industrial companies of Bahrain , the study was conducted on a sample of 43

industrial companies and the study found that the data cost accounting system used in

cost control in 56 % of the companies , and in the pricing decision making , 58% , and in

the inventories 11.6 % of the companies; It also indicated that the results of the study to

determine the unit cost of the product are useful in cost control, product pricing decisions

and the preparation of budgets.

 Green &Amenkhienan (1992) found the following to be the major problems

associated with the introduction of ABC system:

i. the increased amount of detailed information needed by the new system,

ii. increased paperwork,

iii. difficulty in cost driver identification, and

iv. insufficient support by top management.

Then, (Emore& Ness, 1991) found that cost information had a critical role in

pricing, make-or-buy, cost control and product/market strategy decisions. Cooper &

Kaplan (1987) also found that product costs were important in decisions relating to the

pricing, introduction, discontinuation and the amount of effort given to selling products.
 CHAPTER THREE

RESEARCH METHODOLOGY

Introduction

This chapter focuses on the design and methodology administered for the research.

The chapter describes the research design, population, sample size determination, sources

of data, questionnaire design, distribution and interview structure and analytical

techniques used.

3.1 RESEARCH DESIGN

The study employed descriptive research design of the ex-post facto type. The method

was chosen because it helped to describe record, analyse and interpret the condition,

prevailing practices, belief, attitudes and ongoing process that exists in the survey (Ndagi,

1984).

3.2 POPULATION, SAMPLE AND SAMPLING TECHNIQUE

The population comprised all workers of Nigeria Bottling Company. From the

population, a sample of 50 workers (50 Females and 70 Males) was obtained through the

simple random selection techniqu

The population, sample and sampling the population of the research will be

accounting costs, accountants, auditors and managers of financial departments in

industrial companies in Nigerian Bottling Company (NBC) where 120 of them will be

selected through sampling formula. For sampling after estimate the sample size the

simple random sampling will be used The instrument proposed to be used in this study is

a standard questionnaire based on Likert of 5 scale (from very high to very low) will be
designed. The Study will implement two major aspects. The first part, Personal

Information which is about (age _ Qualification _ scientific specialization _ years of

experience occupation) the second part is about the dimensions of the study and the

questionnaire consists of 24 items distributed on three axes: - The first axis the quality of

information provided by the cost accounting system, consists of 8 variables. - The second

axis: the impact of information in making pricing decisions, and consists of seven

variables. - The third axis the adoption areas of pricing decisions on cost information, and

consists 9 variables.

3.3 RESEARCH INSTRUMENT

The instrument used to gather information in this study is a self-designed questionnaire.

The questionnaire consists of two sections. Section A elicits demographic information

like gender, working experience, while Section B contained structured items relating to

the research questions that necessitated this research.

Questionnaires will be distributed to all components of the study population, In

order to collect information and data required to test the hypotheses, five-item Likert-type

questionnaire will be used.

3.4 VALIDITY AND RELIABILITY OF THE INSTRUMENT

To ensure the validity of this research, the instrument was subjected to criticism by

specialist in the areas of educational management aside from peer reviewconducted by

the researcher. The reliability of the instrument was obtained through a test-retest

techniques to analyse the data collected.

 The Analysis of Data to be is used will be Descriptive statistics and Data analysis

through the Statistical Package for Social Sciences (SPSS).

3.5 METHOD OF DATA PRESENTATION AND ANALYSIS

The variables for this study were analyzed using contingency table, and sample

percentage.

The sample percentage is expressed mathematically as

Response in each option x 100

Total option

Hypothesis 1 and 2 was tested with T-Test for independent measures while hypothesis 3

was analysed with multiple regression analysis to validate statistical hypothesis at 5%

level of significance.
 CHAPTER FOUR

PRESENTATION AND ANALYSIS OF DATA

4.1 Introduction

This chapter focuses on the presentation and analysis of data as provided by the questionnaires

distributed and collected from respondents. Also hypothesis was formulated and their validity

test against the information gathered from the respondents using z-test and percentage.

The researcher distributed eighty-five (85) questionnaires to the respondents . The formulated

hypothesis will also be tested with the aid of necessary tables and statistical figures. In the course

of this study, 85 questionnaires was distributed to Administrative management and internal

auditing in Nigeria Bottling Company, in the proportion of 55 questionnaires to Administrative

management, which represents 55 percent of the population size and . 35 questionnaires to

internal auditing which also represents 35 percent of the population size .

For the analysis of this research work, a fourteen (14) point questionnaires statement were raised,

distributed and responded to by the respondents. The responses from respondents to the

questionnaire were represented in figures and percentages respectively as thus stated in the table

below:

TABLE 4.1: The Responses and Percentages of Responses from Respondents to Questionaire
QUESTIONAIRE 1.

Accountability and transparency has put to check the circumventing of due process in financial

and non-financial activities of Nigeria Bottling Company in Nigeria.

TABLE 4.2: The Responses and Percentages of Responses from Respondents to

Questionnaires

QUESTIONAIRE 2:

The inhabitants of Nigeria Bottling Company has benefited from the proceed of accountability

and transparency in improvement of Planning and decision making..

TABLE 4.4: The Responses and Percentages of Responses from Respondents to Questionnaire.

QUESTIONAIRE 4.

Accountability and Transparency in Financial management has improved the desired

performance of staff in Nigeria Bottling Company.

TABLE 4.5 : The Responses and Percentages of Responses from Respondents to Questionnaire.

QUESTIONAIRE 5.

The Nigeria Bottling Company adhere strictly to accountability and transparency principles in

Planning and Decision Making

TABLE 4.6: The Responses and Percentages of Responses from Respondents to Questionnaire.

QUESTIONAIRE 6.

Proper accountability and transparency in financial management is not necessary in Planning and
Decision Making in Nigeria Bottling Company
.

TABLE 4.7: The Responses and Percentages of Responses from Respondents to Questionnaire.

QUESTIONAIRE 7.

The assets and revenue are properly accounted for by the officials of the council.
TABLE 4.8: The Responses and Percentages of Responses from Respondents to Questionnaire.

QUESTIONAIRE 8.

It is necessary to improve the existing internal control system in your council.

TABLE 4.9: The Responses and Percentages of Responses from Respondents to Questionnaire.

QUESTIONAIRE 9.

The Performance of management in Planning and Decision Making has been effective.

TABLE 4.10: The Responses and Percentages of Responses from Respondents to Questionnaire.

QUESTIONAIRE 10.

The internal control system accomplished its practical valuable and importance to the entire

management and staff of Nigeria Bottling Company.

TABLE 4.11: The Responses and Percentages of Responses from Respondents to Questionnaire.

QUESTIONAIRE 11.

There have been frauds of serious nature in this council.

TABLE 4.12: The Responses and Percentages of Responses from Respondents to Questionnaire.

QUESTIONAIRE 12.

Accountability and transparency in financial management , Planning and Decision Making are in

existence in the administration of Nigeria Bottling Company.

TABLE 4.13: The Responses and Percentages of Responses from Respondents to Questionnaire.

QUESTIONAIRE 13

Contractors in the council complies with the due process principles in sourcing and execution of

contracts

TABLE 4.14: The Responses and Percentages of Responses from Respondents to Questionnaire.
QUESTIONAIRE 14

External auditor often visit Nigeria Bottling Company for audit activities

4.2: TESTING OF HYPOTHESIS

The hypothesis were tested using data collected from questionnaires distributed to population

sample.

H0: The staff of Nigeria Bottling Company Management council has not benefited from the
proceed of accountability and transparency in improvement of Planning and decision
making.
H1: The Staff of Nigeria Bottling Company Management council has benefited from the proceed
of accountability and transparency in improvement of Planning and decision making.
H0: The process of Planning And Decision Making In Nigeria Bottling Company has not affected
the official and non-official financial behavioral attitudes of council.
H2: The process of Planning And Decision Making In Nigeria Bottling Company has affected the
official and non-official financial behavioral attitudes of council.
H0: Cost Accounting does not have a direct significant to management, Planning and Decision
Making in Nigeria Bottling Company
H3: Cost Accounting have a direct significant to management, Planning and Decision Making in
Nigeria Bottling Company

HYPOTHESIS ONE

H0: The staff of Nigeria Bottling Company Management council has not benefited from the
proceed of accountability and transparency in improvement of Planning and decision
making.
H1: The Staff of Nigeria Bottling Company Management council has benefited from the proceed
of accountability and transparency in improvement of Planning and decision making.

HYPOTHESIS ONE

TABLE 4.15: Mean computation of Administrative management Responses o test the hypothesis

MEAN X =
X=

X = 3.18

TABLE 4.16. Computation of standard derivation of Administrative management

Responses to test the hypothesis.

Variance S2=

S12=

S12=

S1= 1.14
TABLE 4.17: Mean Computation of Internal Auditing

TABLE 4.18: Computation of standard derivation of internal auditing Responses

to test the hypothesis.
DECISION: Since the Z-calculated value 3.89 is greater than Z-critical table value

2.00 at an infinite degree of freedom and 0.05 percent level of significance,

therefore we reject the Null hypothesis <H0> and uphold Alternative hypothesis

<H1>which state that The staff of Nigeria Bottling Company Management council has not

benefited from the proceed of accountability and transparency in improvement of Planning and

decision making.
HYPOTHESIS TWO

H0: The process of Planning And Decision Making In Nigeria Bottling Company has not affected
the official and non-official financial behavioral attitudes of council.
H2: The process of Planning And Decision Making In Nigeria Bottling Company has affected the
official and non-official financial behavioral attitudes of council.

TABLE 4.19 : Mean computation of Administrative management Responses to test

the Hypothesis

TABLE 4.20: Computation of standard derivation of Administrative management

Responses to test the Hypothesis.

TABLE: 4.21: Mean computation of internal Auditing Responses to test the
hypothesis.

35

30

25

20
X
FX
15
F
10

0
Strongly Agree Agree Disagree Strongly Agree No Opinion
Mean computation of internal Auditing Responses to test the hypothesis.
TABLE 4.22: Computation of standard derivation of internal auditing Responses to
test the hypothesis
DECISION:

Since the Z-calculated value 2.93 is greater than Z-critical table value 2.00 at an

infinite degree of freedom and 0.05 percentage level of significance, therefore we

reject the Null hypothesis <H0> and uphold Alternative hypothesis <H1> which
states that the process of Planning And Decision Making In Nigeria Bottling Company has not

affected the official and non-official financial behavioral attitudes of council..

HYPOTHESIS THREE:

H0: Cost Accounting does not have a direct significant to management, Planning and Decision
Making in Nigeria Bottling Company
H3: Cost Accounting have a direct significant to management, Planning and Decision Making in
Nigeria Bottling Company

TABLE 4.23: Mean computation of internal Auditing Responses to test the

hypothesis.
TABLE 4.24: Computation of standard derivation of Administrative management

Responses to test the hypothesis.

TABLE 4.26: Mean computation of standard derivation of internal Auditing

Responses to test the hypotheses

DECISION: Since the Z-calculated value 3.57 is greater than Z- critical table value 2.00 at an

infinite degree of freedom and 0.05 percent level of significance, therefore we reject

the Null hypothesis <H0> and uphold Alternative hypothesis <H1> which states that

Cost Accounting have a direct significant to management, Planning and Decision

Making in Nigeria Bottling Company

4.3 TABULATION OF RESULT

HYPOTHESIS ONE
 CHAPTER FIVE

SUMMARY OF FINDINGS, CONCLUSION AND RECOMMENDATIONS

5.1 SUMMARY OF FINDINGS

The following findings were made from the hypotheses tested.

The Staff of Nigeria Bottling Company Management council has benefited from the proceed of
accountability and transparency in improvement of Planning and decision making.
The process of Planning And Decision Making In Nigeria Bottling Company has affected the
official and non-official financial behavioral attitudes of council.
Cost Accounting have a direct significant to management, Planning and Decision Making in
Nigeria Bottling Company
5.2 COUNCLUSION

Moreover, companies are required by law to keep certain financial information, however, it is

often found that in meeting the business legal obligations the small business owner is found

wanting. It may be too convenient to ensure the bank balance is always positive and then wait

until the end of the accounting year before knowing the financial results of the business. This

approach may not be consistent with meeting the legal requirements but today much help is

available to overcome some areas of weakness in controls within a business. However,

Management Accounting is an internal business function responsible for reporting financial

information to business owners. Companies often use management accounting as a support tool

for business management. Management Accounting task requires that accountant make

judgments in collecting and providing information to use in decision making.

 Training and re-training programmes and seminars should be organized periodically for the

members and staff of the council to increase their moral and ensure efficiency and effectiveness

in doing their work.

 The research work was painstakingly conducted to educate people in the importance of proper

accountability and transparency is all about. There is need for proper supervision of the council

staff and officials to ensure that, they are efficiently and effectively monitored and managed in

line with the constitution adopted for the local government council in the country.

However, Planning can be thought of as a thorough formalized process encompassing great

effort at all levels of an organization to come up with essential short and long term decisions and

policies and recommended actions that will help direct a business or organization towards a

stated vision, goal, and objective which may include shareholder appreciation, stakeholder and

employee satisfaction, while encompassing financial objectives, moral, and ethical

considerations in the decision making process

 This research has gone further to discourage any council that have a weak internal control

system rather the councils should employ more dedicated and capable hands to argument the

existing ones.

Most of the manufacturing companies are not using management accounting techniques

frequently. It is worth mentioning that most of the manufacturing organizations are not well

informed about all these management accounting techniques. Among 12 management accounting

techniques in consideration, most influential techniques are: Cash flow return on investment,

Return on Investment, Long range forecasting respectively. From this research, it can be

concluded that though Researchers and Academicians are trying to pay attention on the

manufacturing business, firm’s concerned personnel attitude towards the use of management

accounting techniques in decision making, still manufacturing organizations of the study area use

various management accounting techniques in narrow scale. It is necessary to apply MATs to

make effective management decision by the manufacturing organizations operating in the study

area. The modern management accounting techniques enable the organization to improve the

innovative capacity of the organization and flexibility so that it can continually change and

improve performance. Moreover, to enhance the management accounting techniques and to gain

competitiveness of manufacturing companies the study recommends’ that manufacturing

companies should be synthesized and advised on the usefulness of MATs and moreover all socio

economic parameters needed for adoption of these techniques should be put in place in order for

manufacturing companies realize is impact in their business and to continue to survive in this

strict and ever dynamic competitive environment.

5.3 RECOMMENDATIONS

After more careful evaluation of transparency in financial management and accountability in

Nigeria Bottling Company and having seen the adverse effect of improper accountability in the

government system, to remain silent over these will endanger the rapid development of property

in the local government council in the country.

In the light of this, the following recommendations were made based on my finding during this

research work.

1) First and foremost, the recommendation is to advice readers to conduct further research on this

topic because the findings so far are based on the data collected and analyzed. Therefore, this

research should not be regarded as sacred.

2) The accounting working system of the council should be computerized, since most of the

systems are done manually.

3) There should be adequate sensitization through workshops, seminars and lectures on the need

for transparency and accountability in the government system.

4) The researcher equally recommends that the staff employed to man sensitive position like the

cashier, accountant, secretary to mention but a few, should be qualified with no qualification less

than B.SC or HND in the relevant professions.

5) The government should build an in-house ICPC, EFCC and due process office in all the local

government councils. This will go a long way to deter any fraudulent practices which can lead to

improper accountability and transparency in the system.

6) The state government in conjunction with the federal government should make sure that the

accounts of the local government are audited periodically and monitored by them.

This will go a long way in reducing corruption in the society.

Finally, the salaries and other fringe benefits of the staff of the council should be paid as and

when due in order to reduce any fraudulent act practices and bridge the gap for an effective and

efficiency transparency and accountability in the government system.

7) The conclusion drawn from this study should not be considered to be final. There is need for

further research, other local government council;

Nigeria in this field investigates more on proper accountability and transparency in the

government system.

5.4 CONTRIBUTION TO KNOWLEDGE

The study revealed that socio-economic parameters have significant impact in the adoption of

Management Accounting Techniques as tool for planning and control decision making in the

study area. Most of the previous studies in developing countries are descriptive, reporting the

adoption of MATs without any further analysis to find out the factors that influence its adoption.
This study therefore revealed the impact of socio economic parameters on adoption of MAT

using descriptive analysis as well as other analytical techniques

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APPENDIX I

Open University ,

Faculty of management

And social sciences,

Department of Accountancy.

Sir/ madam,

REQUEST FOR COMPLETION OF A RESEARCH STUDY

I am a final year student of the above mentioned institution and department am currently
conducting a research on the topic “effect of cost accounting to management, planning and
decision making (a case study of nigeria bottling company, ibadan)”.
I hereby for solicit your permission and assistance to carry out this research study together with

your opinion towards the questions asked below in fulfillment to be award Bachelor of Science

(BSC) degree in Accounting. Please, be assured that all the information supplied with respect to

this research work will be treated confidentiality and use for the purpose of this research work

only.

Thanks for your understanding.

Yours faithfully,

APPENDIX II

QUESTIONNAIRE

INSTRUCTION:

Please tick [ ] on the blank space provided for the appropriate response to the questions.

SECTION A

INDIVIDUAL PROFILE.

1. SEX: MALE [ ], FEMALE [ ].

2. AGE: 20-30 [ ], 31-40 [ ], 40 – above [ ].

3. MARITAL STATUS: MARRIED [ ], SINGLE [ ].

4. QUALIFICATION : WAEC/GCE [ ], HND/BSC [ ], MSC /PHD [ ].

5. POSITION : MANAGER [ ], ACCOUNTANT [ ], AUDITOR [ ],

CASHIER [ ], OTHERS [ ].

SECTION B.

6. Accountability and Transparency has put to check the circumenvention of due process in

financial and non-financial activities of local government councils in Nigeria.

a. Strongly Agreed [ ]

b. Agreed [ ]

c. Disagreed [ ]

d. Strongly disagreed [ ]

e. No option. [ ]

115

7. The inhabitants of local government council has benefited from the proceed of accountability

and transparency in improvement of social amenities.

a. Strongly agreed [ ]

b. Agreed [ ]

c. Disagreed [ ]

d. Strongly disagreed [ ]

e. No option. [ ]

8. The process of accountability and transparency has affected the official and non- official

financial behavioral attitudes of council staff in Nigeria.

a. Strongly agreed [ ]

b. Agreed [ ]

c. Disagreed [ ]

d. Strongly disagreed [ ]

e. No option [ ]

9. Accountability and transparency in financial management and have the desired performance in

Bende local government.

a. Srondly agreed [ ]

b. Agreed [ ]

c. Disagreed [ ]

d. Strongly disagreed [ ]

e. No option [ ]

10. The local government adhere to its yearly budget.

a. Strongly agreed [ ]

b. Agreed [ ]

c. Disagreed [ ]

d. Strongly disagreed [ ]

e. No option. [ ]

116

11. Proper accountability and transparency in financial management not necessary/ prevalent for

good local government management in Nigeria.

a. Strongly agreed [ ]

b. Agreed [ ]
c. Disagreed [ ]

d. Strongly disagreed [ ]

e. No option [ ]

12. The assets and revenue are properly accounted for by the officials of the council.

a. Strongly agreed [ ]

b. Agreed [ ]

c. Disagreed [ ]

d. Strongly disagreed [ ]

e. No option [ ]

13. In your own opinion is it necessary to improve the existing internal control system in your

council.

a. Strongly agreed [ ]

b. Agreed [ ]

c. Disagreed [ ]

d. Strongly disagreed [ ]

e. No option [ ]

14. The performance in the local government has been effective.

a. Strongly agreed [ ]

b. Agreed [ ]

c. Disagreed [ ]

d. Srongly disagreed [ ]

e. No option [ ]
15. Has the internal control system accomplished its practical valuable and importance to the

entire management and staff of the local government council

a. Strongly agreed [ ]

b. Agreed [ ]

c. Disagreed [ ]

d. Strongly disagreed [ ]

e. No option [ ]

16. There have been frauds of serious nature in this council.

a. Strongly agreed [ ]

b. Agreed. [ ]

c. Disagreed [ ]

d. Strongly disagreed. [ ]

e. No option. [ ]

17. Accountability and transparency in financial management are in existence in the

administration of Bende local government.

a. Strongly agreed. [ ]

b. Agreed. [ ]

c. Disagreed. [ ]

d. Strongly disagreed. [ ]

e. No option. [ ]

18. Contractors complain of irregular payment of their contract bills.

a. Strongly agreed. [ ]

b. Agreed. [ ]
c. Disagreed. [ ]

d. Strongly disagreed. [ ]

e. No option. [ ]

19. External auditor often visit your local government council for audit activities.

a. Strongly agreed. [ ]

b. Agreed. [ ]

c .Disagreed . [ ]

d. Strongly disagreed. [ ]

e. No option. [ ]