ACCOUNTING INFORMATION ON DECISION MAKING IN AN ORGANIZATION

ABSTRACT

Managers make decision in order to choose from alternative course of action at a dynamic rate. This is done in order to achieve the set objectives of the firms in which they manage. To make these decisions, accounting information are used as a necessary guide.

Manufacturing firms make use of accounting information which have been complied from source documents, records and statement in accordance with systems. These information gathered are used to make effective decisions which would achieve the objectives of profit maximization cost minimization, Production efficiency, proper resources allocation etc. This study is aimed at discovering the quantitative attributes to accounting information which makes it an effective tool in the production decision-making and if the information generated is utilized in effective manner. Although, it is evident that decisions made in manufacturing firms are determined by the accounting information to a varying extent. It is hoped that the recommendations will show the importance of accounting information and that managers who make decision will comprehend it as a vital necessity in decision – making.

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND TO THE STUDY

 Manufacturing firms in the present economy have to contend with a lot of economic variables which have been aimed at consolidating the gains of structure (adjustment programmes (S A P) since the first step introduced by SAP was self reliance, most manufacturing forms have had to consider the local sourcing of raw materials instead of the dependency on imported materials for their production processes. Other factors such as inflation, taxation, instability both economic and political, competition and market forces have caused a change in the out look of production.  In order to achieve their objectives the manufacturing firms have to make concise decision which would be relevant to the restricting of production processes and in profit maximization so as to survive in our ever- changing world of business.

Accounting information is often regarded as a means to an end, with the ending being the decision that is helped by the availability of accounting information as described by Arneld and Hope(1990). Accounting information helps managers understand their tasks more clearly and reduces uncertainty before making decisions.since profitability have long term effect on the business, it is therefore important to analyze accounting information before making profit decisions (Chong 1996). Similarly,accounting information is recognized as a learning machine that can help to evaluate how objectives might be  achieved by quantifying the financial impact of each alternative available to the decision.(Budugan and Georscu 2009).

Accounting information system is therefore imperative which is the efficient and effective collection and storage of data concerning an organisations financial activities, including getting the transaction data from source documents, recording the transaction in journals and posting data from journals to ledgers. It involve producing managerial reports and financial statements.

Production decision making process in the organization is effective with the availability of sufficient accounting information. Accounting information for profit planning usually covers three major elements such as cost information ,marketing and sales information(Admareli, 1991).

According to Norton (1997) costing contributes to an understanding of how profits and value are created and how efficiently and effectively operational processes transform input into output.It can be applied to resource, process, product/service, customer, and channel related information covering the organization and its value chain (Metcalfe,1998).Thus the production decision making process lies at the heart of accounting information

The research intend to investigate the use of accounting information for production decision making.

1.2 STATEMENT OF THE PROBLEM

The problem confronting the research is to investigate the use of accounting information for production decision making.The efficiency of planning and production decision making cannot be isolated from the availability and sufficiency of accounting information if the organization must survive, grow and operate maximally to make profit and attain its set objectives.

1.3 OBJECTIVE OF THE RESEARCH

1. 1       To determine the nature of accounting information
2. 2       To appraise the production decision making process of the organisation
3. 3       To determine the use and application of accounting information in production decision making

1.4 RESEARCH QUESTION

1. 1       What is the nature of accounting information
2. 2       What is the significance of accounting information in production decision making in the organization.
3. 3       What is the use and application of accounting information in production decision making?
   1. 1.5         SIGNIFICANCE OF THE STUDY

The study shall proffer an analysis of the application of accounting information in the production decision making process of an organization

It shall be a valuable source of information for managers, accountants etc.

1. 1.6         STATEMENT OF HYPOTHESIS

1. 1       Ho The quality of production decision making in the organization is low

Hi   The quality of production decision making in the organization is high

       2    Ho    The use of accounting information  is  low

          Hi    The use of accounting information is  high

       3 Ho  The effect of accounting information in production decision making is low

Hi    The effect of accounting information in production decision making is high

1. 1.7 SCOPE OF THE STUDY

The study focuses on the appraisal of the use of accounting information in production decision making.

1. 1.8 DEFINITION OF TERMS

ACCOUNTING INFORMATION SYSTEM DEFINED

Accounting information system is therefore imperative which is the efficient and effective collection and storage of data concerning an organisations financial activities, including getting the transaction data from source documents, recording the transaction in journals and posting data from journals to ledgers. It involve producing managerial reports and financial statements.

PRODUCTION DECISION MAKING DEFINED Production decision making involve choosing from among a given alternative the best possible option of a solution to a given problem confronting an organization at a given point in time.

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