ASSESSMENT OF THE USAGE MANAGEMENT ACCOUNTING PRACTICES IN MANAGERIAL DECISION MAKING ON MANUFACTURING COMPANIES IN ADDIS ABABA AKAKI KALITY SUB-CITY

Abstract

Management accounting offers a good best opportunity for firms to compete in the market in order to offer the best quality products and services at affordable prices to consumers. The general objective of this study was to assess the usage of management accounting practices in managerial decision making on manufacturing companies in Addis Ababa Akaki Kality sub-city. The target population for this study was the 229 manufacturing companies in Addis Ababa Akaki Kality sub-city. A stratified random sampling method was applied to come up with the sample size. The study, therefore, involved 29 manufacturing companies Akaki Kality sub-city. The study collected primary data from the respondents. The analysis was done using Excel, allowing the researcher to present the information in the form of tables and figures. The study concludes that budgeting practices are the most highly used management accounting practice amongst the manufacturing companies in Addis Ababa Akaki Kality sub-city followed by Costing practice but for the rest management accounting practices strategic analysis, information for decision making, and performance evaluation have been given less attention by respondent companies. The study suggests that respondent companies should evaluate performance using non-financial measures of performance evaluation such as Non-financial measure(s) related to customers, Non-financial measure(s) related to operation and innovation and Non- financial measure(s) related to employees in addition to their financial measure of performance, the researcher also recommends that various information for decision-making practice should be implemented and get serious attention. Strategic analysis management practice of respondent companies mainly focused on maximizing shareholder value & long-range forecasting, however other strategic analysis tools should get a room by respondent companies to better understand the dynamics of the market, maintain competitive advantage, and increase performance also recommends the finance department should exert much effort to provide managers with the information they need in time. Besides, accountants should also consider the accounting background of users because report complexity is one of the major bottlenecks for managers for not using management accounting information. After all, managers (other than the finance department) limited knowledge of accounting is one of the barriers to not using management accounting information. So that firms should design pieces of training on accounting to enlarge the manager’s knowledge of accounting. This training could be in house training.