MANAGERIAL ACCOUNTING AS AN INSTRUMENTOF PLANNING AND CONTROL IN A MANUFACTURING COMPANY
(A CASE STUDY OF FARM ASSOCIATES NIG LTD)
ABSTRACT
This study was undertaken to investigate the application of managerial accounting as a tool for planning and control in business oriented enterprise, especially a manufacturing company.  The research focused on such accounting information available to the management of farm associates Nigeria Limited, Enugu for decision on production, purchasing, pricing and cost reduction.  Managerial accounting techniques employed were budgeting and budgetary control, standard costing and variance analysis direct c1osting, break even analysis and project cost analysis.Relevant information was gathered from the management of the company through questionnaire and oral interviews.  The data so collected were statistically analyzed. Results of the research revealed the following; managerial accounting helps management of manufacturing companies in planning and control; management accounting help to check wastage in manufacturing companies and thirdly, managerial accounting helps manufacturing companies make desired profit.It was recommended that business oriented enterprise, especially manufacturing firms should design, install and operate effective and efficient managerial accounting systems to help them realize their profit motives.  Managerial accounting is therefore considered an instrument for planning and control in any manufacturing company.
 TABLE OF CONTENTS
CHAPTER ONE                                          
INTRODUCTION                                
1.1  Background of Study           
1.2  Statement of the problem    
1.3  Objective  of study              
1.4  Research Questions                    
1.5  Research Hypothesis            
1.6  Scope and delimitation of Study
1.7  Significance of the study      
1.8  Historical Development of Farm Association
1.9  Definition of Terms              
Reference
CHAPTER TWO
LITERATURE REVIEW               
2.0  Introduction                       
2.2  Management Accounting             
2.3  Cost Analysis and cost Ascertainment
2.4  Direct Costing Analysis                
2.5  Cost Behaviour                          
2.6  Management Accounting Technique
2.7  Planning and Control as Vital Functions
2.8  Cost Systems                     
2.9  Manufacturing Accounting     
2.10 Pricing Policy                      
Reference
CHAPTER THREE
RESEARCH DESIGN AND METHODOLOGY
3.1  Research Design                               
3.2  Population of the Study and Sample Size     
3.3  Sources of Data Collection                  
3.4  Data Treatment Technique                  
Reference                                               
CHAPTER FOUR                                             
Discussion, recommendation and conclusion       
4.1  Presentation and Analysis of Data               
Reference                                                      
CHAPTER FIVE
Summary of Findings, Conclusion and Recommendations        
5.1  Summary of Major Findings  
5.2  Conclusion                         
5.3  Recommendation                 
5.4  Suggestion for Further Research
Bibliography                                     
Appendix                                                
Questionnaire
CHAPTER ONE
1.0  INTRODUCTION
1.1  BACKGROUND OF THE STUDY
Management Accounting is an integral part of management concerned with identifying, presenting and interpreting information used for: formulating strategy, planning and controlling activities, decision taking, optimizing the use of resources, disclosure to shareholders and others external to the entity, disclosure to employees and safeguarding assets. Management accounting therefore is primarily concerned with data gathering (from internal and external sources) analyzing, processing, interpreting and communicating the resulting information for use within the organization, so that management can more effectively plan, make decision and control operations.
       According to Koontze and O’ Donnel (1980), there is no more important area of human activity than managing; for it is the basic task of all managers at all levels and in all kind of enterprises, to design and maintain an environment in which individuals working together in groups can accomplish pre-selected missions and objectives. In other words, managers are charged with the responsible of taking actions that will make it possible for individuals to make their best contributions to group objectives.
       Although much emphasis is placed on managers in designing on internal environment for performance, it can never be overlooked that managers must have many interactions with the environment of both an enterprise and departments within it. As for interaction with the external environment, managers cannot perform their tasks well unless they have an understanding of an are responsive to the many elements of the economic, technological, social, political and ethnic environment that affect their areas of operation.
       Managing is essential in all enterprise while the term “management is generally taken to mean person of high level in the organization. All those responsible for the work of others at all level and in any type of enterprise regard themselves as managers.  The goal of all managers in manufacturing outfit that is business oriented is basically profit. Profit is a measure of surplus of business income over cost. Therefore, the task of managers is to establish the environment for group effort in such a way that individuals will contribute to group effort and objective with the least amount of such inputs as money time, effort, discomfort and materials.  Effective and efficient   management is often assessed in terms of ability to attain company goals with least cost.
       In understanding managerial task, planning control are the critical management functions which are considered essential to attain corporate objectives.  In designing an environment for the effective performance of individuals working together in groups, the most essential task in to see that purpose and objectives and method of attaining them are clearly understood. If group effort is to be effective, people must know what they are expected to accomplish.  This is the function of planning and it is the most basic of all the managerial functions. It involves selecting from among alternative future courses of action for the enterprise as a whole and for every department or section within it. It requires selecting goals and determining ways of achieving them.
       Eze (2001:42) noted that, the basic objective of planning is to provide guideline for decision making. Immediately a decision need has been identified, planning provides for a method of scanning decision alternative within the framework of the enterprise objectives and other constraints. Thus, planning provides a rational approach to pre-selected objective, it strongly implies managerial innovation. Since managerial operations organizing, staffing, directing, leading and controlling are designed to support the accomplishment of company objective, planning logically precedes the execution of all other managerial function.  Although all the managerial functions intermingles in practice as a system of action, planning  unique in that it establishes the objective necessary for all group efforts.
       The managerial function of controlling is the measurement and correction of the performance of activities of sub-ordinates in order to make sure that company objective and plans devised to attain them are being accomplished.  In an undertaking control consist in verifying whether everything occurs in conformity with plan, adopted the instruction issues and principles established.  The object of control is to point out weakness and errors in order to rectify them and prevent reoccurrence.  Control techniques and system are essentially the same for cash, office procedures, morale, product quality or anything else.  The basic control process wherever it is found and whatever it controls involves there steps namely; establishing standard, measuring performance against these standards and correcting deviations from standard and plans.
       Managerial accounting is concerned with the application of accounting and statistical techniques to be specified purpose of providing and interpreting information designed to assist management in its function of promoting maximum efficiency (Osisoma 1990:185) it focuses on the internal business environment and provides information for such decision of the company as manufacturing or buying, replacement pricing and cost reduction decisions.  The techniques applied for the analysis are both statistical and accounting in nature, budgeting and budgetary control, standard costing, and variance analysis direct costing and break even analysis and project costing analysis.
       From the fore-going one can consider managerial accounting as a tool for planning and control in profit oriented enterprise, especially a manufacturing firm.
 1.2     STATEMENT OF PROBLEMS
The objectives of managerial performance in a business enterprise are profit.  Profit is a measure of surplus of business income over costs.  A major managerial task is to achieve minimized cost in terms of such inputs as money, time, effort, discomfort (job stress and occupation hazard) and materials.  Many enterprises especially manufacturing companies often fail to attain this goals because of non-recognition.
       Therefore, the researcher tries to bring out the two vital management function planning and controlling which when utilized will go a long way in achieving company objectives with least cost.
 1.3  OBJECTIVE OF THE STUDY
This research work was carried out to achieve the following objectives:
1.          To determine the impact of managerial accounting on a manufacturing organization.
2.          To determine the impact of managerial accounting on a manufacturing company operational control system, production, sales and marketing.
3.          To determine the role of managerial accounting on costing and pricing polices of manufacturing company.
4.          To determine the importance of managerial accounting in decision making and performance appraisal.
1.4  RESEARCH QUESTIONS
The under listed questions will be necessary to make this study a success:-
1.          Does your company operate a effective and efficient managerial accounting system?
2.          Is your company’s managerial accounting system of assistance to your company in budgeting?
3.          Do you use data or figures from managerial accounting in costing and pricing decisions?
4.          Do you use information sourced from managerial accounting in production controls?
5.          Do you use information sourced from managerial accounting when fixing price for products?
 1.5  RESEARCH HYPOTHESIS
From the research questions seen above, some hypothesis were formulated and they possess the following”
1.    H0: There is no relationship between accounting instrument and control in manufacturing company.
       H1: There is a positive relationship between accountinginstrument and control in a manufacturing company.
2.    H0: There is no relationship between effectiv eaccounting plan and control in a manufacturing company.
H0: There is a relationship between effective accounting plan and control in a manufacturing company.
1.6  SIGNIFICANCE OF THE STUDY
Many manufacturing companies (especially the many scale industries) do operate managerial accounting system, perhaps as a matter of routine. However, these companies do not utilize financial information generated by the accounting system in their production, planning and control, costing and pricing policies as well as in managerial decision making and performance appraisal.
       The study has therefore become necessary as its findings will go a long way to sensitize the manufacturing companies on the need to employ managerial accounting system in their operational planning and control.
 1.7     HISTORICAL DEVELOPMENT OF FARM ASSOCIATED NIGERIA LIMITED ENUGU
Farm Associates Nigeria Limited, Enugu is an association of farmers which was established immediately after the civil war (1967-1970).  It later became a limited liability company following its incorporation in the year 1982.
       The engage in the sell of veterinary drugs and in the production of live stock feeds which include poultry feeds, pig feed and fish feed.  The raw material used for the production of these feeds are maize, wheat, soya beans, salt, groundnut cake, palm kernel cake and additives.
       Recently, the association is trying to establish another branch for the processing of maize.
1.9  DEFINITION OF TERMS   
Some key concepts have to be defined because they will be used throughout the study and therefore ought to be understood.
Balance Sheet: According to Iloh (2004), it is a financial
statement that lists a firm’s assets and claims (liabilities and owners equity) at a particular time.
Controlling: These are those activities of management
which ensure that the actions of the organization confirm with set plan (Okechukwu, 2005).
 Finished Goods: As noted by okechukwu (2005), they are
the stock under the custody of the sales/marketing department.  They are the raw materials that have passed through all the stages of production and have passed the final stage and are ready for resale.
Fund:     According to Adams R.A. (2006:62), fund is a
separated fiscal and accounting entity in which resources are held, governed by special regulation, separated from other funds and established for specific purpose.
Labour:  As notd by Okechukwu(2005), they are the worker / personal employed in a company.  These workers are paid wages and salaries.
Production:   As noted by Brigham (1979), it is all the activities associated wit the provision of goods and services.
Raw Materials: According to Okechukwu (2005),they are those stock items procured and worked upon to convert same into finished goods.
Stock:    According to Okafor(2000), it means goods purchase for resale / raw  material and components purchase for production of products and services in intermediate stages of completion normally referred to as work in progress or finished goods.
Variable: Orjih (2009:29) noted that it is anything that differs in attribut. It may be viewed as any characteristics of an object or concept which is capable of taking different values or taking more than one distinct category.
W.I.P:    As noted by Okechukwu (2005), they are stock items which have left the raw materials stage but have not reached the final goods stage in order to become finished goods.