METHODIST UNIVERSITY COLLEGE GHANA

THE RELEVANCE OF MANAGEMENT ACCOUNTING INFORMATION

IN THE MANUFACTURING INDUSTRY: A STUDY OF GIHOC
DISTILLERIES COMPANY LIMITED

BY
SARAH MICTHUAL

BBAA/WD/120518

MATILDA DA-CRUZ

BBAA/WD/119720

SELASSIE DOTSEY

BBAA/WD/120581

SILAS GYAMFI ASOMANING

BBAA/WD/118870

CHAPTER ONE
INTRODUCTION

1.1 Background of the Study

The business world has changed totally. As a result, the role of management
accountant is very different now than it was years ago. In the past, management
accountants operation is strictly staff capacity usually separated from the
managers for whom they provided reports and information.

This period, management accountants serve as internal business consultant.

Working together in cross functional teams with managers from all sectors of the
organization. The management faces a broad array of decisions, including
production, marketing, financial and other decisions. Having in mind that decision
making is a fundamental part of management such decisions about the acquisition
of equipment, mix of products, methods of production and pricing of products and
services confront managers in all types of organizations.

All managers and management teams need information pertinent to their

decisions. In support of the decision making process, management accountants
play a specific and vital role in providing relevant information. Thus, the
management accountant must have a good understanding of the decisions faced
by managers in the organization.

Management is expected to make rational decision that will be directed towards

the achievement of profitability and solvency of the organization which requires
availability of some vital information used in making decisions.

Decision making entails choosing among the available alternatives courses of

action. The manager will desire all the information which is relevant to the
decision and then have some criterion on the basis on which he can choose the
best alternative.

1.2 Statement of the Problem

Our economy is now characterized by organizations which are being controlled
and managed by managers. Managers of certain business organizations especially
small-scale businesses, manage their business resources intuitively without
making use of management accounting techniques to enable them to plan, control
expenses of cost, control business operations and make efficient decisions which
will enable the organization to move towards achieving their aim.

In any organization where there is an effective and adequate management

accounting technique, it provides vital information for internal reporting
managers use in decision-making and formulation of long term plan. The
inability of some organization to use management accounting techniques in their
decision-making has resulted to non-effective and efficient accomplishment of the
firms or organizational goal.

Therefore, the aim of this research work is to have a look at or show the
information, management can derive from management accounting techniques,
then usefulness or lack of it for decision making in business organization.

1.3 Objectives of the Study

The objectives of the study can be stated as follows:
1. To determine the type of management accounting information used in
decision making
2. To ascertain whether management accounting information are provided in
good time for decision making.
3. To determine whether management seek accounting information in every
decision making.
4. To determine how efficient the management accounting information system is
in the company.

1.4 Research Questions.

1. What type of management accounting information are used in decision
making?
2. Are management accounting information provided in good time for
management decision making?
3. Does management seek accounting information in every decision making?
4. How efficient is the management accounting information system in the
company?

1.5 Significance of the Study

Management accounting information in decision making process deals with the
provision and interpretation of information to management and other users of
financial statements for solving organizational problems, planning, control and
decision making.

On this note, this research work when completed will be very useful to the
followings:
a. Business/ Organisations: To this group, the research work will provide them
with the requisite knowledge of management accounting in making provision and
interpretation of information required by management at all levels for formulating
organizational policies, planning and good decision making.
b. Academia: This research work will assist them in formulating more theories
that will enhance the effectiveness of management accounting to organizations.
c. Researchers: the researchers will get more knowledge to present in time of
being consulted and also it is of immense importance to the researchers
(Academia) because it is in partial fulfillment of the requirement of the institution
for the award of B.B.A in accounting

1.6 Scope and Limitation of Study

This research work will be carried out through the comparative study of a
manufacturing industry known as GIHOC Distilleries Company Limited. It covers

the importance of management accounting information in manufacturing

industries.

A major limitation of this work is the uncooperative attitude of the staff in the
organisation. Another is the time and monetary constraints and the protocols of
getting the top management of the firm for more information.

1.7 Definition of Terms

Accountant: An accountant is any person who possesses a professional license
to practice accountancy from a recognized professional body and has legal
capacity and authority to carryout the duties of accountants in taxation and audit
practice.
Accounting: This is concerned with how to record, communicate and interpret
business financial transaction in a systematic manner so as to provide
management with sufficient data to make informed decisions.
Assets:

These are those resources of an organization controlled by the

organization as a result of past events and from which future economic benefits
are expected to flow to the enterprise.
Business:

These are economic activities which take place in an organization.

Company:

This refers to a legal entity that carryout business in its name.

Controlling: This is a process of ensuring that organisation operates in the

intended manners and achieves its goal.

Communication: This is an act or activity or process of expressing/ conveying

information, fact and ideas which is relevant to management to enable them make
informed decisions.
Decision Making: This simply means choosing between the numerous available
alternative courses of action choice between future, uncertain alternatives.
Information: This refers to details about somebody or something.
Management Accounting: This is the process of identifying measuring,
analyzing, interpreting and communicating information in pursuit of an
organizational goal.
Management: This is the process by which business systems are administered. It
is also a process of planning, controlling and decision-making in an organization.
Organisation: This refers to a recognized business entity of enterprise that
carryout business activity.
Organisational Objectives: These are the aims and aspiration of a business
enterprise which they intend to actualize.

1.8 Organisation of the Study

This study will be structured to provide a critical review of relevant information
regarding the relevance of management accounting information in the
manufacturing industry. The study will comprise of five chapters and it will be
presented as follows:
Chapter One: Deals with the introduction, giving the background to the study
along with the statement of the problem. The chapter also outlined the research

objectives together with the research questions, research scope, limitations and
significance of the study, and organisation of the study.
Chapter Two: Reviews related literature regarding the relevance of
management accounting information in the manufacturing industry.
Chapter Three: Presents the research methodology and focused on research
design and methods as well as the justification of choices and uses. In addition,
the study population and area, sampling and sample size determination, data
collection activities and data analysis methods.
Chapter Four: Presents the data, which will subsequently be interpreted and
analysed in relation to the research objectives and questions, and discussion of
findings of the study;
Chapter Five: Provides a summary to the entire study, draw conclusions and
also recommendations made.

REFERENCES
Abdel-Kader, M and Luther, R. (2004). An Empirical Investigation of the
Evolution of Management Accounting Practices . Working paper No.04/06.
pp.1-25.
Baldvinsdottir, Gudrun, et.al. (2009). The Management Accountants Role.
Financial Management. July/August 2009. ABI/INFORM. pp.34.
Blocher, Edward J et al. (2005). Cost Management: A Sstrategic Emphasis. 3rd
edition. Mc.Graw Hill, USA.
Cooper, Robin. (1998). The Changing Practice of Management Accounting.
Management Accounting. March 1998:74,3. pp. 28
dan Yohanes Sondang Kunto, (2008). Aplication of

Devie, Josua Tarigan

Accounting Concepts in The Workplace: A Research of Management

Accountant in Surabaya, Indonesia. Journal of International Business
Research, vol.7 Iss: 3, pp 89 -104.
Hassan Yazdifar and Mathew Tsamenyi. (2005). Management Accounting
Change and The Changing Roles of management Accountants: A
Comparative

Analysis between

Dependent

and

Independent

oragnizations. Journal of Accounting

&Organizational Change. Vol. 1. Iss:2. Pp. 180 198.
Hilton, Ronald, W. And Platt E. David (2011). Managerial Accounting: creating
value in Global

business

Environment.

9th

edition.

Global

Edition. McGraw Hill International Edition.

Kaplan and Atkinson (1998). Advanced Management Accounting. 3rd edition.
Prentice Hall, Inc.
Lambert, Caroline and Sponen, Samuel. (2009). Roles, Authority and
involement of management accounting Function: a Multiple case Sudy
perspective.
Mahfar, Rosmawati and Omar, Normah, (2004). The Current State of
Management Accounting Practices in Selected Malaysian Companies:
An Empirical Evidence. Universiti Tenaga Nasional International
8

Business Management Conference.

Malmi, T., Seppl, T. & Rantanen, M (2001). The practice of management
accounting in Finland - A change?,. Finnish Journal of Business
Economics, Vol. 50, No 4.p 480-501.
Mishra, Sisira Kanti, Management Accountant: Role & Future Challenges
(March

16, 2011).

Available

http://ssrn.com/abstract=1788032
Odysseas Pavlatos and

at

SSRN:

or http://dx.doi.org/10.2139/ssrn.1788032

Ioannis Paggios, (2009) "Management Accounting

Practices in the Greek Hospitality Industry", Managerial Auditing Journal,

Vol. 24 Iss: 1, pp.81 98.
Sekaran, Uma, (2003). Research Methods for Business: A Skill Building
Approach. Fourth Edition, John Willey & Sons, New York, USA.
Weweru, N., Hoque, Z., & Uliana, E. (2005). A Survey of Management
Accounting practices in South Africa: Case Study on Retail Services.
Journal of Accounting, Auditing and Performance Evaluation, 2 (3):2229.