Management Accounting Practices: A Comparative Analysis of Manufacturing and Service Industries Farjana Yeshmin* Rehana Fowzia* Abstract
The study aims to examine the use of the management accounting techniques in manufacturing and service industries of Bangladesh for discharging managerial functions. To achieve this objective, 151 organizations from manufacturing and service industries have been surveyed with a structured questionnaire by using 5 point Likert scale. By identifying fourteen management accounting techniques, three factors have been identified to determine the variability’s of the usage level in managerial functions. The total variabilities in application of management accounting techniques in managerial functions of manufacturing and service industries, 73.343 % and 54.396% respectively. The findings reveal that management accounting techniques such as financial statement analysis, budgetary control, CVP analysis, variance analysis and fund flow analysis are common 14 both the industries and are used frequently in managerial functions.
Keywords: Management Accounting Techniques, Quantitative Techniques, Qualitative Techniques, Manufacturing Industry, Service Industry , Managerial Functions.
Management accounting is a technique of presenting accounting information to the various levels of management in order to enable it to perform its functions of planning, control and decisionmaking more efficiently. By conveying pertinent accounting data in time and at less cost, the management accounting system assists management in the formulation of policy, efficient execution of the same, control of performance and decision-making (Iyengar, 2000). Managerial accounting is relevant to many activities of managers. Managers develop strategies for achieving goals, evaluate the performance of workers and other managers and make decisions. Managers decide the prices to be charged for their products, whether to continue selling particular products and whether to build a new factory. Many activities performed by managers have to do with acquiring and using economic resources (money, people, machinery, buildings) and managers need information to make those decisions. Management accounting applies to businesses because it deals with economic information and businesses seek profits and other economic goals. Managerial accounting also applies to organizations that do not seek profitsgovernment units, universities, hospitals and churches – because those organizations, like businesses, use economic resources to achieve their objectives. Hence, an understanding of the concepts of managerial accounting is important to managers in any organization (Louderback and Holmen, 2003). *
Assistant Professeor, Discipline of Accounting, Dept. of Business Administration, Stamford University Bangladesh
ASA University Review, Vol. 4 No. 1, January–June, 2010
In the past, managerial accountants were primarily engaged in cost accounting- collecting and reporting costs to management. Recently that role has changed significantly. First, as the business environment has become more automated, methods to determine the amount and type of cost in a product have changed. Second, managerial accountants are now held responsible for strategic cost management, that is assisting in evaluating how well the company is employing its resources. As a result, managerial accountants now serve as team members alongside personnel from production, marketing and engineering when critical strategic decisions are being made (Weygandt et al, 2008). The last two decades have been a period of wrenching change for many businesses and their employees. Many managers have learned that cherished ways of doing business do not work anymore and that major changes must be made about how organizations are managed and how work gets done. These changes are so great that some observers view them...