Accounting Project Topics

The Impact of Management Accounting Techniques on Organizational Decision Making

The Impact of Management Accounting Techniques on Organizational Decision Making

The Impact of Management Accounting Techniques on Organizational Decision Making

Chapter One


The main objective of the study is to examine the use of management accounting techniques as veritable tools for organization decision.

The specific objectives are:

  1. Determine the extent to which management accounting techniques are employed by management.
  2. Explain the differences between management Accounting and other fields of Accounting.
  3. Identify the factors influencing the choice of management accounting techniques by management.
  4. Ascertain level of effectiveness of management accounting techniques for decision making.
  5. Contrast and scrutinize the traditional management accounting approach and modern management accounting techniques.
  6. Eliminate the constraints affecting the application of management accounting techniques by management.




Daley et al., (1985) did a multinational research on the use of managerial accounting techniques by the 500 large companies in USA and Japan. They conducted a survey to find out attitudes of managers and controllers towards budgeting and control systems. Their study presents that, Japanese controllers and managers 1) prefer less participation, 2) have a more long-term planning horizon, 3) view budgets as more of a communication device, and 4) prefer more budget slack than their American counterparts. Coenenberg and Schoenfeld (1990) studied on the development of managerial accounting in Germany. Germany, as an important continental European country has influences in the development of managerial accounting in Albania. Authors analyzed the development of managerial accounting in Germany in several time periods such as: (1) the time before 1900, (2) the period of early academic efforts until mid- 1930s, (3) the period of government standardization and control until 1945, (4) the period after WWII leading up to today’s decision-oriented management accounting. In these different time periods, they found a paradigm change from production-function based cost theory, to cost volume relationship and depth cost behavior analysis. As a result of literature review on the use of managerial techniques in Albania, only one study has been found. In early research done by Naco, Cela and Dollani (2010), they used a sample of 150 people (Members of Certified Accountants on Albania CAA). The focus of their study was the practices related with traditional systems of cost accounting and new approaches used in cost accounting, mainly those focused on the decision making function. They investigated the recognition use and assessment of activity based costing (ABC). Also, target costing and the “costing of quality” were introduced as tools for confronting increased competition. To find out about the extent to which practitioners applied their costing system to provide more accurate cost information for decision making purposes, respondents were asked to indicate how often and how important are for them seven techniques related to costing systems. The results of the sample investigated shows lower levels of importance and usage of ABC and other full costing techniques. Budgeting for planning and control is either “important” or “moderately important” for more than 83% of companies. It was interesting that a high proportion does not flex or amend their budgets for changes in volumes or other factors, but work only with fixed budgets. “What if” analyses were fairly frequently applied. Activity based budgeting and activity based costing have higher ratings of importance than actual usage. We can get an impression here that it is more talked than done. Accountants find the techniques useful and beneficial for the organization, but they are not used by the managers.


Several researchers have described SMA in different ways but the ultimate key words attributable to all definition are: effective decision, process and competition (Tillmann & Goddard, 2008; Al-Maryani & Sadik, 2012; Cadez & Guilding, 2012; Holloway, 2006; Abdel-Kader & Luther, 2008). One of these researches Guilding et al. (2000) identified twelve (12) SMA tools available to business but they concluded that most firms adopted competitor accounting and strategic pricing due to their viability in making decision. SMA tools perform functions like gathering competitor information, gathering information from the accounting service in strategic decisions, and reducing costs based on strategic decisions (Shah, Malik &Shah, 2011) The difference between SMA and Management Accounting(MA) is that the former is designed to serve a group of users within and outside the organization and provide them with data and information necessary for them to take decisions related to these organizations , and the latter is the sub-accounting system, which serves the internal management of the organization and assist in performing the functions of planning, control, decision-making and performance evaluation in its operational activities(Ojra,2014; Aziz,2012; AlMaryani and Sadik,2012; Cadez & Guilding,2012; Holloway,2006; Abdel-Kader & Luther, 2008). Therefore, a need to look for methods and techniques which can lead to better relationship between strategy and operational effectiveness, externally focused on the market and pricing models. SMA combines elements from MA, strategic management and marketing within a single framework (Ojra, 2014). Decision making is a fundamental part of management and the most critical function amongst others. It is the process of identifying and choosing/selecting alternative courses of action in a manner appropriate to a given situation (Kidana, 2012).Right decisions give direction for a right course of action. SMA deals with those decisions that require quantitative data within and outside the firm, and the application of qualitative skills to make strategic decisions which have long term effect (Cadez & Guilding,2012;Kidana,2012).The inherent function of SMA in decision-making process is to provide data relevant to the decision, through quantitative analysis with qualitative factors considered in making the final decision by management which is supposed to be strategic after considering several alternatives (Cadez and Guilding,2012). Holloway (2006) in his assessment of relevant SMA literatures on budgeting, corporate governance and decision making asserted that effectiveness not efficiency should be the aim of well-constructed decision outcomes among firms using SMAT irrespective of their sizes and other characteristics. A general review of scholars’ work and on the real job evidence found that SMA or SMA techniques have not been adopted or accepted widely and the term is misunderstood by business managers and even accountants (Mbawuni & Anertey, 2014; Paggios & Pavlatos, 2009; Langfield-Smith, 2008; Nixon & Burns, 2013; Guilding et al., 2000). The low rate of adoption negates the widely held views and inconsistent with the model that business environment requires more information for decision making process (Fowzia, 2011). In climes where the adoption rate is fairly high, further review shows that SMA tools relevance determines its acceptability from one country/firm to the other. The outcome of any decision is performance, if it is favourable, management will be commended by stakeholders. Chenhall and Langfield-Smith (1998) in their Australian study discovered strong relationship between SMA tools and business performances.Al-Mawali (2015) studied SMA usage by firms within environmental uncertainty and business performance, posited that the level of SMA usage positively affect business performance but environmental uncertainty moderate the relationship hence reducing the supposed benefits. Cadez and Guilding (2008) returned a weak relationship between the usage of SMA tools and 7-dimensional performance indictors including the perceived performance of the top 500 Slovenian firms. Rababa’h (2014) also returned a weak relationship among Jordanian firms reviewed on the use of SMA tools and espoused organizational strategy indicating decision making is not effective. A midpoint relationship was observed in the Turkish firms’ research conducted by Şener and Dirlik (2012) between the adoption of SMAT and the performance of the top one thousand firms. Ramljak and Rogosic(2012) in their review of SMA in Croatia asserts that SMA tools are complementary and their combined effect is very useful for cost control after considering the activities of large firms using Activity Based Costing. Cinquini and Tenucci (2006) pointed out that the SMA techniques usage in Italy appears to be greater than what might have been presumed. In the view of Ahmad and Leftesi (2014) using Libyan manufacturing firms as a yardstick of investigative analysis discovered that virtually all the firms still rely largely on traditional management accounting techniques, while the adoption rates of advanced tools were rather low, slow and similar than those presented in other developing countries revealing that Libyan firms were still between stage one and two in IFACbased model.





This chapter deals with the method used in collecting data required in carrying out this research work it explains the procedures that were followed and the instrument used in collecting data.

Sources of data collection

Data were collected from two main sources namely:

(i)Primary source and

(ii)Secondary source

Primary source:

These are materials of statistical investigation which were collected by the research for a particular purpose. They can be obtained through a survey, observation questionnaire or as experiment, the researcher has adopted the questionnaire method for this study.

Secondary source:

These are data from textbook Journal handset etc. they arise as byproducts of the same other purposes. Example administration, various other unpublished works and write ups were also used.

Population of the study

Population of a study is a group of persons or aggregate items, things the researcher is interested in getting information from for the study The impact of Management Accounting Techniques on Organizational Decision making. 200 staff of Tower Aluminum Plc, Abuja were selected randomly by the researcher as the population of the study.




Efforts will be made at this stage to present, analyze and interpret the data collected during the field survey.  This presentation will be based on the responses from the completed questionnaires. The result of this exercise will be summarized in tabular forms for easy references and analysis. It will also show answers to questions relating to the research questions for this research study. The researcher employed simple percentage in the analysis.




It is important to ascertain that the objective of this study was to ascertain the impact of Management Accounting Techniques on Organizational Decision making. In the preceding chapter, the relevant data collected for this study were presented, critically analyzed and appropriate interpretation given. In this chapter, certain recommendations made which in the opinion of the researcher will be of benefits in addressing the challenges of Management Accounting Techniques on Organizational Decision making


This study was on the impact of Management Accounting Techniques on Organizational Decision making. Six objectives were raised which included: Determine the extent to which management accounting techniques are employed by management, explain the differences between management Accounting and other fields of Accounting, identify the factors influencing the choice of management accounting techniques by management, ascertain level of effectiveness of management accounting techniques for decision making, contrast and scrutinize the traditional management accounting approach and modern management accounting techniques, eliminate the constraints affecting the application of management accounting techniques by management . In line with these objectives, two research hypotheses were formulated and two null hypotheses were posited. The total population for the study is 200 staff of tower aluminum plc, Abuja. The researcher used questionnaires as the instrument for the data collection. Descriptive Survey research design was adopted for this study. A total of 133 respondents made production managers, administrative staff, marketers and junior staff were used for the study. The data collected were presented in tables and analyzed using simple percentages and frequencies


Living in a globalized world, the business competition has become very harsh. In order to survive and achieve the goals, businesses should manage the cost in the best way possible. To take a better decision, management accounting techniques are designed to provide useful information. The important thing is to understand the techniques, adopt them and apply them in the right time and the right place. Nigerian companies seem to be far behind the expected situation due to the lack of information of using the managerial accounting techniques in order to benefit from these techniques in the decision making. Managers should be aware of these techniques as soon as they can in order to be competitive. Training should be organized by the organization in order to have specialized staff. Qualified staff is very important for the organizations. Managers should also have more freedom in terms of the decision making process. They should be free to take the decision of course based on the reports given to them. In order to increase the use of managerial accounting in the businesses, the qualified managers must be more participative in the decision making process


Work to increase the awareness of officials in the Nigeria industrial companies of the importance of the role played by management accounting in the provision of appropriate information that helps managers to carry out their functions such as planning, monitoring and evaluation of performance and decision-making methods. emphasis on the Nigerian industrial companies to accept and embrace the Balanced Scorecard technique to be applied properly, with the need to rely on the workers possess aware and sensitive enough for the application of this technique in order to enable the company to evaluate its performance in line with the surrounding environment.


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  •  Coenenberg, A., & Schoenfeld, H. (1990). The Development of Managerial Accounting in Germany: A Historical Analysis. The Accounting Historians Journal, 17 (2), 95-112.
  • Daley, L., Jiambalvo, J., Sundem, G., & Kondo, Y. (1985). Attitudes Toward Financial Control Systems in the Unites States and Japan. Journal of International Business Studies, 16 (3), 91-110.
  •  Davidson, S. , Maher, W. M., Stickney, P. C., Weil, L. R., (1985). Managerial Accounting An Introduction to Concepts, Methods, and Uses (Second Ed.) . USA, The Dryden Press.
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