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“Ovidius” University Annals, Economic Sciences Series
Volume XVIII, Issue 2 /2018
Influence of Managerial Accounting in the Decision Making Process
Țirău Adrian Ioan
Gînţa Anca Ioana
“1st December 1918” University of Alba Iulia
Marin Pantelescu Andreea
The Academy of Economic Studies of Bucharest
The article aims to put in center view the role of the managerial team in making management
decisions. Managerial accounting is of high importance due to the prized place accounted by
economic entities arising from the problems they have to face, that of developing and
substantiating the optimal decisions and of knowing how to take advantage of new opportunities to
promote their prosperity.
Key words: managerial accounting, management decisions, performance, decision
J.E.L. classification: M41, M48, H30, H87
1. Introduction
The managerial accounting favours the entrepeneur behaviour, helping the manager to respond
to two key questions which is the optimal method to realise the targeted objectives by using the
given resources, and also how those resources have been distributed.
Studying the costs offers the opportunity to find the means the accounting and calculation
operate with in order that the proposed system react in an optimal manner to the informational
necessary and thus supporting the decision making process.
It is the important role of the cost calculation and managerial accounting that represents the
objective of the study, this being attained by analyzing the theoretical aspects treated in the
scientific research, at a national and also international level, with the aim of organizing the cost
2. Theoretical background
The speciality literature gives us a lot of definitions that come to our aid to make us better
understand the decision term. We want to highlight the information given by the author Fătăcean
Gheorghe in his book, Managerial Accounting and Management Control, where we finde a
definition according to which “the decision is a dynamic, rational process in which, on the basis of
appropriate information, a line of action is chosen from a number of possibilities to influence the
activity of the performers and to obtain a certain result.”
Managerial accounting should be regarded as a stand-alone concept with an important
influence on strategic decisions that clearly highlight the sources of where managerial accounting
takes its information, and those designated to be held responsable should have a solid professional
training and knowledge in order to select the information needed, to prepare the briefs for the
managing team and be ready to test them before are made available for the entire entity.
“Ovidius” University Annals, Economic Sciences Series
Volume XVIII, Issue 2 /2018
Briciu Sorin (2010, p. 17) states that “However, we believe that a distinction should be made,
so managerial accounting must include both elements of general accounting, special accounting,
management accounting. A special place in managerial accounting has to be control management,
which is responsible for the proper functioning of the information system needed for decisionmaking in an entity. This should also include internal audit, which helps the entity to achieve its
objectives, performing systematic assessments and improving risk management, control and
management of processes. ”
3. Methodology
The researh is in a great measure qualitative, opinion-based. The methods used to compile this
research report are: observation and analysis.
This work falls within the scope of managerial accounting research to determine the entity’s
performance through pricing. The main objective of the research is to calculate the costs related to
the activity of the entity in order to provide a real and faithful image of the management team in
order to highlight the impact on the practices and the evolution directions.
4. Faithful frame – managerial accounting
Since an important part to an entity’s success is the strategic decision making process, different
levels should be taken into consideration, and the tracking and supervising of their implentation
plays also an important role. The account has, in this regard, of the strategic decision process, a key
role, because he helps the development of the strategies by providing the necessary resources for
the managers. This underlines the significance of the managerail accounting in the process of this
decision making.
The decision must be regarded as an essential feature of management being outlined as a
defining instrument of expression. It is this capacity to make decisions at the right moment and
also to implement them, that characterize a high level management team.
After a managerial decision is taken, it is transformed into a decisional act and the management
team formulates a solution to the problem in the shortest time possible, according to its own
capacity. Each decision type creates a different manner in whic the decision making process takes
The process of decision making is a separate mechanism that is integrated into a company, the
work being carried out with the help of specialists who have the knowledge to prepare, diseminate
and implement the control of a decision, the entire activity being carried out with easy to
understand instructions. This manner of acting reflects also the link between the decision and the
control of how it is implemented, the latter being the responsability of the managerial accounting.
Thus, the managerial accounting provides the management with only the primordial
information necessary to understand how te processes in the entity are being developed at a certain
period of time, and this piece of information helps to take the most suitable decision to improve the
activity and also to later verify the way it was implemented.
But in order to make the best result from the information received from the managerial
accounting, the management team needs to have the ability to interpret, analyze and issue a
decision based on the knowledge they have on filtering information and acting in a manner with
macroeconomic impact on the entity, even if the accountants have the responsability for the strictly
specific accountant information.
The ongoing collaboration between management and managerial accounting with an entity is
supposed to achieve is to take suitable decisions and strategic concepts regarding competitive
The need for an entity to use and adopt a model for calculating and analyzing the costs of
products, works and services primordial in order to find the level of sales prices that are tailored to
market requirements and to achieve the projected targets. The entity’s cost fluctuation analysis is an
objective in itself, their organization being motivated by the more frequent influences of the
management of the entities, given the opening to the market economy, a phenomenon requiring the
“Ovidius” University Annals, Economic Sciences Series
Volume XVIII, Issue 2 /2018
cost accounting information to be as complete and relevant as possible, designed to be able to
intervene if prices are to be adjusted.
Along a series of factors, the premises offer the contribution to choosing how to manage
accounting and to achieve its aim. Several factors are considered to determine the managing
accounting and costing, among which: the entity’s size and type, its organizational structure, the
characteristics of the activities carried out and also the manner in which the entity is organized.
The results of a high performance decision making process is very much determined by the
manner in which the management team overviews the implementation of the decision . And in
order to ensure the best result of this activity, it is of primordial interes to frequently analyze and
control the way these measures taken with process managers are followed. And the main objective
of this check is to revise the results that have been obtained during the refference perios, to identify
the causes of an eventual hinder to the attainement of the aim and also means to prevent similar
hinderings form taking place. Thus, we make sure the systems and subsystems are adjusted,
through verifications performed at the right moment.
The aim of the managerial accounting is to present the operations of collectin and distributing
expenses, by their destination, separately on products, activities, works, orders, sections, phases,
and also the settlement of the output, but also the calculation of production costs for the products
manufacturated, the work executed and the costs for the services provided, that also include the
production in progress. This helps managerial accounting, but to prepare the information the
management team needs, it is also of high importance to use the pieces of information that the
financial accounting and management control department offer.
The evolution of costs is directly reflected in the performance of entities. Detailed cost control
of entities can lead to a cost-saving and maximize performance mechanism. Theoretically, the
process of calculating the costs involved is closely related to the nature of the decisions made by
the management.
When an analysis of how the managerial accounting fulfill its aims and support managerial
activity is to be carried out, it has to determine, on one hand,
The analysis of how managerial accounting fulfills its objectives and supports managerial
decision-making processes within the entities has as its objective to solve a worrying ituation: on
one hand, organizing the managerial accounting is not a well established process for most of the
entitites and also, using the analytical information regarding to resources, potential and the position
in comparison to similar entitites is made by old methods that are directed by the managers by their
own will. One of the commonly applied methods is the global method that is based on the
traditional idea of indirect spending analysis, adding to direct spending, without focusing on
careful analysis of calculation objects.
5. The importance of costs in achieving the managerial objective
The goal of managers should be to break down the cost of responsibility centers as accurately
as possible.
If errors are commited on this level, the managers will have a false image on the profitability of
some products and this will translate, at a macroeconomic level, into selling non profitable
products. If managers are to take decisions, this involves cost analysis the safety of fairness of
direct costs if this represents a higher level than indirect ones. Also, indirect costs represent a very
big problem because it is not possible to quantify the resources consumed on each ocst item, and
this regardless of the specific of the entity.
Managers might also have problems to separate direct and indirect costs, situation that could
appear because the importance of the cost for the entity, as long as costs that are more important
cannot be attributed to a responsability center. Another cause for the impediment to classify costs
is an outdated or inappropiate procedure of collecting information.
The efficiency of the costs implies the use of available resources with current production
conditions and also taking into consideration the conditions imposed by a crisis.
If, when taking a decision regarding the fixed costs, the managers might fail because the
unitary fixed cost can change, the management team must remain focused on the total costs and
consider their value rmains unchanged even if the production volume changes.
“Ovidius” University Annals, Economic Sciences Series
Volume XVIII, Issue 2 /2018
The managers must pay attention to cost developments that can be closely observed through
cost functions, where cost functions is a mathematical expression of cost changes.
In nowadays economic conditions, the way to improve the efficiency is to use spending
budgets, and entities should find different ways to reduce costs and maximize on their resource
consumption in order to resist competition.
A quality indicator of the cost of production is the cost of production, which occupies an
essential position among the indicators that characterize the activity of anentity and which have a
crucial role for the decision making process of the managers.
The first step in cost accounting is analyzing the past service cost and information, because an
essential thing is to have the best perception of costs possible. The team of managers should be
always informed about the cost expected to occur in the future, this value reprsenting the
fundament of the decision process for smooth future work. Also, a good forecast of costs enusres
an adequate level of prices and the supply needs.
The cost control system and the managerail accounting are designed to provide pices of
information that supply the decision making process regarding planning, offering great details
often, and thus underlining the importance of costs of activites or products.
6. The process of making decisions and how it influences the management of the entity
This chapters aims to analyze the various cost categories used in the process of decision
making and which are addressed and described in terms of the criteria of the national and
international literature, with a particular relevance in synthesizing and identifying those optimal
costs that can be properly managed internally. Cost information that management requires in
exercising the functions it possesses often requires predictions of its future behaviors, which
involves the use of mathematical models such as cost utility. It has been necessary to create a cost
function because of the need for information to make decisions about the quantity of products to be
manufactured, the establishment of production costs or the determination of performance
parameter. What defines the decision-making process is the transition process from thought to
Through this act it aims to find the most rational levers for actions that will lead to maximum
results with minimal effort for the management team.
The key to the management decision is the fact that these decisions are the expression of
rational acts, briefly formulated in order to find a direction meant to lead the management team to
achieve the defined objectives.
The decision is regarded as an essential feature of management regarded as a defining tool of
expression. The qualitative level of management of an entity is evidenced by the decisions taken by
them and their implementation.
The decision-making process is defined in the legal dictionary as a logical thinking activity,
carried out in a certain organizational and legal framework and carried out in time by the governing
bodies, with cooptation of some departments and specialists, in connection with the preparation,
elaboration, realization and control a decision.
Since the managerial accounting provide the management team with the pieces of information
needed to reveal the general idea of what goes on in the entity, the managers, using this
information, can make permanent decision and anticipate their effects, also having a control on the
This view helps claryifing the areas in which managerial accounting offers support for the
managers in order to make the most efficient decision.
For instance, the control tools provided by the managerial accounting are later found in the
reports used by the management in order to take strategic decisions.
And also the reports used by the management, resulting from regular reviews, provide them
with a degree of certainity and also the information is as accurate as possible. We consider there
have to be enstated procedures for all the large prcoesses of the entity in order to reduce errors and
to simplify the work, with the need to update them whenever changes in the strategy or in the
processes happen. And also, internal instructions should be provided to each memeber of the
departments detailing the steps people should follow to comply with internal procedures. The
“Ovidius” University Annals, Economic Sciences Series
Volume XVIII, Issue 2 /2018
management control must optimize the process, aiming to control the entitity , taking needed
actions in order to ensure beneficial results in the future.
As long as the management team knows if and how the decisions are implemented and
complied with, the internal audit verifies peridocally the procedures, the way they were
implemented, if the internal instructions have been followed and if the results of the processes are
correct. Starting from the results of this control, improvement measures are taken.
Many factors and functions sould be considered in order to ensure a good organization of
managerial accounting, and these factors influence greatly the manner in which the enitity is
organized. Managerial accounting in an entity is described by the author Seal W Herbert I. (2001,
p. 3-21), which realizes a parallel between the traditional versus the modern methods’ functions.
7. Conclusions
Managerial accounting puts its mark on the information it transmits, influencing strategic
decisions, even affecting the entity’s structre and the performance appraisal system
The defining element of decision-making is the process of transition from thinking to action.
Through this act, it is desirable to find the most relevant levers for actions that will lead to
maximum results with minimal effort for the management team.
The key to the management decision is the fact that these decisions represent the expression of
rational, briefly formulated acts in order to find a direction meant to lead the management team to
achieve clearly defined objectives.
8. References
• Briciu S., 2006. Contabilitatea managerială, Bucharest: Economica Publishing House.
• Briciu S., 2010. Contabilitatea şi controlul de gestiune. Instrumente pentru evaluarea performanţei
entităţii, Alba Iulia: Aeternitas Publishing House.
• Fătăcean Gh., 2006. Contabilitatea managerială şi controlul de gestiune, Cluj-Napoca: Alma Mater
Publishing House.
• Khan M., Jain P.K., 2007. Management accounting:text, problems and causes, 4th edition, New
Delhi: Tata McGraw-Hill.
• Kober R., Paul B.J., 2007. The interrelationship between management control mechanism and
strategy, Management Accounting Research, 18(4), p.425-452.
• Krell E., 2012. Forecasting the future role of the management accountant, CMA Canada, p. 102-109.
• Kuegen P., Krahn A.J.W., 1999. Building a Process Performance Measurement Systems: Some Early
Experience, Journal of Scientific and Industrial Research, p.152-181.
• Laitinen E.K., 2006. Explaining management accounting change: Evidence from Finland,
International Journal Accounting, Auditing and Performance Evaluation, 3(2), p.252-281.
• Otley D., 2002. Measuring Performance: the accounting perspective, in Business Performance
Measurement: Theory and Practice, Cambridge: Cambridge University Press, p. 3-21.
• Shah, K., 2017. Historical Evolution of Management Accounting, University of Dhaka, [online]
at:, [Accessed 12.01.2019].
• Seal W., Herbert I., 2001. Organizational Change and the Transformation of the Management
Accounting Function, Review of Management Accounting Research, Palgrave Macmillian, p. 3-21.
Copyright of Ovidius University Annals, Series Economic Sciences is the property of Ovidius
University of Constantza, Faculty of Economic Sciences and its content may not be copied or
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