THE ROLE OF MANAGEMENT ACCOUNTANT TO COST CONTROL AND PROFITABILITY IN AN ORGANIZATION

THE ROLE OF MANAGEMENT ACCOUNTANT TO COST CONTROL AND PROFITABILITY IN AN ORGANIZATION

(A CASE STUDY OF NASCOS GROUP OF COMPANY JOS)

ABSTRACT

Accountant has been bestows with the role of providing information to the management regarding the affairs of the organization in particular and to the stakeholder in general. Internally in manufacturing organization management has always relied on the management accountant for cost evaluation and performance efficiencies of cost element. This role of management accountant to the management has been in dough because of increase in the cost element of goods manufacture in Nigeria which in cause has resulted in constant increase in the price of goods. The aim of this research study is to evaluate the role of management accountant to cost control and profit performance in an organization. A quasi-experimental research design was adopted for this research study and the sample size was selected using the Taro Yamane sampling technique. Primary and secondary sources of data were used in collecting information which was analyzed using simple percentages. The hypothesis was tested using chi-square statistical method at 0.005 level of significance for validity and decision making. The finding from the analysis of the research study depicts that organizational strategic managers should rely on management accountant information for decision making. Management of any manufacturing company cannot make profitable decision without quality information. The researcher can confidently conclude based on the findings that the availability of skilled knowledge and informative management accountant in an organization profit performance promotes productivity. Therefore, this research work recommends that management accountant should provide information on time so as to hasten up in making vital decision because undue delay on decision making will profit organization. Also, it recommends that adequate exposure should be given to management accountant through training programs, appraisal and evaluation of seminars in other to acquaint them with the new technology in vogue and keep with new knowledge.

CHAPTER ONE

INTRODUCTION

1. Background of the Study

Price of goods and services are gradually increasing day by day, due to the fact that the sole aim of a businessman, producers or manufacture is to make profit they end up making use of low quality material for production so as to reduces cost of production and maximize profit .moreover, with the increase of competitor around, most of the producer have thought it wise to manufacture or package a quality product and also enhance the profit level.

This elevated the interest of the researcher to bring to light of how this goal can be achieved through intensive study of the role of management accountants to cost control and profit performance in an organization. Apart from corporate scandals; there has been anosmatic pressure for better profit maximization as the business environment became more volatile, prices of product increasing at an alarming rate, and the production of low quality products.

In the past management accountant operation is strictly on workers capacity usually separated from the management for whom they provided report and information. Both in the present period, management accountant now serve as internal business consultants working together in cross functional teams with managers from all sector of the organization.

However, the management faces a broad array of decision including production, marketing, financial, and other relevant decisions.  Also having in mind that decision making is a fundamental part of management; the management accountant most be equipped with some knowledge of account and management .he most have an understanding and knowledge of the environment and the operations of the organization in which those system are implemented and appropriate technology to apply in each case for the provision of management information. it is obvious that the management of a manufacturing firm will need information that will enable them consider the factors affecting cost of production, cost reduction, product pricing and investment e.t.c.so as to choose the best alternative

1. Statement of the Problem

In recent years, the cost of product manufactured in Nigeria has been very expensive beyond the reach of common Nigerians. This cost challenges has made many products manufactured in the country un-patronize by the consumers, and as a result of that, most goods expires in the hands of the sellers. There is also problem of poor inventory management which leads to overstocking thereby tying down the company’s working capital. Another problem facing some or most of the manufacturing firm is the installation of improper plan to reduce cost of production so as to maximize profit, i.e. (making use of low quality raw material).

Management accountant are assigned with managing cost element of product among other responsibilities. He aligns cost with efficiency; provide required information for cost minimization so that profit could be maximized.

These assignment should reduce product pricing, but instead there have been a consistent product price racketing. These problems therefore brought the need for this research work which intends to find the reason for this persistent increase in product pricing where the services of management accountant were engaged and therefore putting up the following questions.

Do management accountant perform in their responsibility?

Is cost performance inefficiencies of management accountant include in the product pricing?

Is the recent in price caused by other factors than element of cost of production management accountant?

How would the role of management accountant in an organization improve profit performance?

1. Objective of the Study
2. To determine the relevance of management accountant in an organizational internal cost performance
3.  efficiency
4. To ascertain whether the recent increase in cost of product manufactured in Nigeria is caused by other factors rather than management inefficiency.
5. To ascertain if organizational strategic managers should rely on management accountant information for decision making.
6. It has to install and maintained an accounting system to monitor the performance of his business.
7.  To identify the potential problem of the business environment employee customer government.
8. To generate information to meet with following requirement.
9. To allocate cost between cost of goods sold and inventory for internal and external profit reporting.
10. To help managers make better decisions.
11. For planning control and performance measurement.

1. Research Questions
2. To what extend is management accountant still relevant in organizational internal cost performance efficiency?
3. Does the resent increase in cost of products manufactured in Nigeria caused by other factors rather than management accountant inefficiency?
4. To what extend should strategic managers rely on management accountant information for decision making?
   1. Formulation of Hypothesis

The following hypothesis was formulated for this research work.

Hypothesis 1

HO: Management accountant is not relevant in organizational internal cost performance efficiency.

H1: Management accountant is relevant in organizational internal cost performance efficiency.

Hypothesis 2

HO: Resent increase in cost of product manufacture in Nigeria is not caused by other factors than management accountant inefficiency.

H1:     Resent increase in cost of products manufactured in Nigeria is caused by other factor rather than management account inefficiency.

Hypothesis 3

HO: Organizationstrategic managers should not rely on management accountant information for decision making.

H1: Organization strategic management should rely on management accountant information for decision making.

1.   Significance of the Study

The management accountant makes the necessary information available to the management by the application of his skill and knowledge. the significance of the notice of the management the exemplary role of the management accountant and the technique he use to provide information and also how these would affect the operations and the attainment of the organizational goal if these information provided are not Recommended for use, management would be able to plan and control the organization such that the cost of operating the business will be at a minimum while profit will be maximized.

1. SCOPE OF THE STUDY

The study is limited as it looks at the role of management accountant to cost control and profit performance in an organization. A case study of NASCO GROUP OF COMPANY. This research work intends to cover;

1. How managerial accountants should be able to adapt their generalized knowledge of accounting to develop customized data and report that are logical and support sound management process.
2. The reporting structure is well defined and standardized.
3. The method of preparation of information and the report presented are governed by rules.
   1.  Limitations of the Study

In the process of carrying out this research work, the most nagging problem facing the study is how to obtain reference materials. The time to carry out the research is short and insufficient, since it is done alongside with some other course to contend with so as to present a good result. There are also difficulties associated with personnel’ accepting to give vital information which will be of help to the researcher.

1. DEFINITION OF TERMS

Accountant: an accountant is a practitioner of accountancy or  accounting (referred as an accounting in the united state),which is the measurement, disclosure, or provision of assurance about financial information that helps manager, investor, tax authorities and others make decisions about allocating resources.

Management accountant: are those key officers that provide business data and analysis to managers within organization to assist to assist in decision making and control.

Profit maximization: a process that companies undergo to determine the best output and levels in order to maximize its return. The company will usually adjust influential factors such as production costs, price of goods and output level as a way of reaching its profit goal.

Performance: general accomplishment of a given task measured against present standards of accuracy, completeness, cost and speed.

Management: this is defined as the process of dealing with or controlling things or people. It is the responsibility for control of a company or similar organization.

Company: this refers to legal entity that carries out business I n its name.

Information: this means data that is accurate and timely, specific and organized for a purpose, presented within a context that gives it meaning and relevance, and can lead to an increase in understanding and decrease in uncertainty.

Information is valuable because it can affect a decision or an outcome. For e.g. if a manager is told, his company’s net profit decease in the past month, he may use this information as a reason to cut spending for the next month.

Decision making: process of selecting a logical choice from the available option. It is done to achieve a specific objective or solve a specific problem.

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