THE ROLE OF MANAGEMENT ACCOUNTANT IN PROFIT MAXIMIZATION (A CASE STUDY OF NESTLE PLC)
The management accountant is identified as one of the key officers in the accounting department of any manufacturing company. He has the duty of providing the required professional information relate to achieving the organization goal. Some of his functions include planning and controlling activities formulation of strategy decision taking optimizing the use of resources etc. In his planning function he quantifies and interpreters, the effect of planned transaction and other economic event of the organization. The management accountant by virtue of his duties participants indirectly in the management process. This research work aims to bring to the knowledge of its user the role the management accountant plays in the achievement of the goal of every manufacturing outfit which is profit minimization. The work is organized in five chapters, chapter one is the introductory. Part which include the background of problems, significance, scope and limitation of the study. Chapter two is the literature review this is where the opinions of various author’s in related subjects are reviewed chapter three deals with the research design and methodology. This could be seems as a framework or a plan that is used in collecting analyzing the data for the study. It reveals the sources of the data the sample used and the method of investigation. In chapter four the data are being presented and analyzed the hypotheses stated were adequately tested and decision taken. Finally in the fifth chapter the finding of the research work is disclosed and recommendations and suggestions are give for the benefit of the user.
- Background of Study
Due to the complexities in the system of most organization the system of cost accounting is equally becoming complex and resultantly a body of professional with special expertise in this is created. This body of professional is called the management accountants and the area of study is know as management accounting.
Woody et al (1985) define management accounting as the process of identification measuring accumulating analyzing preparation in interpretation and communication of financial information used by management to plan events and control within an organization and to ensure proper use and accountability of its resources form the above definition it means that the management accountant has a range of function to carry out in organization.
According ICMA “management accounting is the presentation of accounting information is such a way as to assist management in the creation of policies and in the day-to-day operation of an undertaking”.
To achieve this aim he management accountant is interested in the past the present and the future. Useful information and be extracted form past result which together with report of current performance of point the way to immediate management action. In the same vein forecasting the future enable the management to evaluate current result more readily and may also reveal areas of business which requires corrective actions. David fanning (1983) defined management accounting as “the application of professional knowledge and skill in the preparation and presentation of accounting information in a way to assist the management in the formulation of polices and in the planning and control of operating of the undertaking it is designed to provide information for internal problem solving. The management accounting system of planning and control is designed to spur up and help chief executive search for and selecting shorting run and long run goals and implementing plans apprising performance and pinpointing deviations from plan.
To be able to do all these the management accountant must posses some knowledge of account. He must have a thorough understanding of the operation of the organization in which these system are implemented and the appropriate technology to apply in each case for the provision of management information. Information depends solely on the type of business. It is obvious that the management of a manufacturing company will need information that will enable them consider the factor affecting cost of production, cost of classification, cost reduction, product pricing market shares of the products choice of the product lines diversification and investment. However a trading company needs information that will concentrate decision on customers demands advertisement and product branding.
The management accountant uses data from the financial and cost accounting system to perform his ask he conducts special investigations and uses accounting and other appropriate techniques from statistic and operation research. He considers the human element in all activities so that at all times he will be provided with information which is relevant for carrying out his work effectively so as to maintain his value or even enhance it. In addition he interprets data and communicate same to the management.
The inability of the management accountant to perform his duties would result in shortage of in information for long and short run planning system thereby affecting the noble objective of any business organization which is profit making.
Woldi (1976) opines that profit maximization can only come about through an efficient and effective management process and Nigeria being a developing country it is clear that the cost of running a business is increasing at a very high rate. Many manufacturing companies in Nigeria has this as a problem them struggle to maintain reasonable amount of earning in a situation where costs are rising there by making profit margin more and more difficult to sustain mean while the Nigeria manufacturing companies as reported by he manufacturing association of Nigeria (MAN) in its 1997 economic review are faced with escalating costs of production arising from the adoption of macro-economic policies which are inflationary in nature. This trend reinforces the imperativeness of the application of sound management accounting technique in the manufacturing companies. Interestingly Adewumi (1989) posits that management practice is yet to have its rightful place in Nigerian manufacturing companies. The implication is that the principle of management is rarely applied in most manufacturing firms in Nigeria.
A careful study of Nigeria manufacturing companies shows as decrease in productivity this is as a result of gross incompetence and lack of motivation on the part of the top management and their subordinates consequently there has with the general planning and control of the firms resources thus profit maximization is firmly rooted in the effectiveness of the planning and control of the firms resources. generally speaking the role of a management accountant is based on his technical knowledge experience and judgement in contributing to the success of the manufacturing industry.