P3: Calculation of cost using an appropriate technique
Added on 2021-01-03
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ManagementAccounting
Table of ContentsINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1. Management accounting and its types of management accounting systems........................1P2. Management accounting reporting and its types..................................................................2M1: Evaluate the benefits of management accounting system and its applications...................4D1. Management accounting system and its reporting within organisation process..................4TASK 2............................................................................................................................................5P3: Calculation of cost using an appropriate technique..............................................................5M2: Various types of accounting techniques and financial reporting documents......................6TASK 3............................................................................................................................................7P4: Budgetary control and different types of planning tool and their advantages anddisadvantages used in budgetary control.....................................................................................7M3: Uses and applications of planning tools for preparing and forecasting budgets.................9TASK 4..........................................................................................................................................10P5: Responses of management accounting system to deal with financial problems................10M4: Management accounting can lead organisation to sustainable success in responding tofinancial problems.....................................................................................................................12D3: Planning tools respond appropriately to resolve financial problems.................................12CONCLUSION..............................................................................................................................12REFERENCES..............................................................................................................................13
INTRODUCTIONManagement accounting is a process of providing all the internal data to stakeholders ofthe company. It helps in preparing several managements reports which determine the amount ofcash, incomes, expenses, outstanding payments and accrued gains etc. of the company.Management accounting assist in evaluating accurate financial data to the management which isnecessary for company's operations. Agmet Ltd is a leading recycler and manufacturer which islocated in Reading, UK. It provides innovative and high quality chemicals products to customers.In this report, company follows essential management accounting systems and reportingmethods which helps in creating accurate reports. Company determine cost and net profit of itsproduct using appropriate techniques. Its also analysis various budgetary control planningtechniques and identify accounting systems to respond to financial problems. TASK 1P1. Management accounting and its types of management accounting systemsManagement accounting is an approach of identification, measurement, collection,interpretation and communication of financial data that is used by management in planning,controlling it's operations. The aim of management accounting is to aid company in makingeffective qualitative decisions. Management accounting system refer to internal system which acompany uses to measure and evaluate it's processes or activities. Agmet Ltd uses severalmanagement accounting system which help in determining it's accurate information to internaland external stakeholders. These systems assist in making plans and policies which increasecompany's performance and profitability. Cost accounting, price optimisation, inventorymanagement and job costing systems are the different types of management accounting thatAgmet Ltd follow (Agrawal and Cooper, 2017). These systems are described below: Cost Accounting System: This system refers to accumulated cost of raw material that amanufacturer use in its production activities. These material processed through severalproduction stages like raw material, work in progress, finished goods in a particular time period.So, this system is an essential for Agmet Ltd to evaluate accurate cost of its product that isimportant for efficient delivery to manufacturing plants. Company measures and details the costof product i.e. chemicals separately then compare actual outcomes with standard and inputresults with outputs. By this comparison managers of Agmet Ltd get actual data that helps in1
evaluating its cost accounting strategies. With the aid of this strategies manager track the insidecost of product for a particular project and record cost of each activities at all levels ofproduction.Price Optimisation System: This system helps in determining the proper price ofproduct or services. This system works as calculating the demand of product at different pricelevels. Price optimisation system help organisation in determining their initial pricing i.e. productsecure base for long run, promotional pricing like setting temporary prices of product to increaseits sales and discounting pricing such as selling product according to trends. Agmet Ltd uses thissystem as a pricing strategy for finding that optimum price of product which a customer iswilling to pay. The basis requirement of using this system to analyse the perception of customerregarding the product offer by the company.(Anderson and Dekker, 2014).Inventory Management System: This system used to track inflow and outflow ofinventory at different stages of production. It also helps in managing overall information ofinventory in process, warehouse or it market. FIFO, LIFO and weighted average are the methodsof inventory valuation. Agmet Ltd use inventory management system for monitoring,controlling, directing the flow of product in the operations. It also identify chemicals stock inprocess and its availability in the storage. This minimizes the risk of improper inventorymanagement in the company by controlling and managing the product demand in future. Job cost System: This system identify the manufacturing costs of product at various joblevels. In this system accountant can track each job by maintaining information which is oftenrelated to company's operations. This system is used in situation where every job is different andis performed according to the customer's specification. Agmet Ltd is dealing in manufacturingchemicals and supply it's products to clients. Therefore company deal in two different jobs andfollow process costing system to determine the costs and revenues of its product used in differentlevels of job. This system helps in evaluating its actual cost and performance involved in eachjobs i.e. manufacturing and distributing.P2. Management accounting reporting and its typesManagement accounting reporting is an important method of collecting informationthrough company's accounting records. This details helps in preparing effective managementaccounting reports. These reports display fair information that are useful for its managers andstakeholders. Reports are very clear and easy to understand for stakeholders such as customer2
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