Management Accounting in Agmet

Management Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
A. Management accounting and its different types.....................................................................1
B. Different management accounting report use by Agmet and its importance to Management
.....................................................................................................................................................2
C. evaluation of benefits of management accounting system and its application in Agmet.......3
D. Evaluation of integration of management accounting system and management accounting
reporting......................................................................................................................................5
TASK 2............................................................................................................................................5
A. Marginal costing and absorption costing methods and preparation of income statements on
basis of both methods..................................................................................................................5
B. Calculations based on break even formula.............................................................................7
C. Financial reporting documents...............................................................................................8
D. Interpretation of the data by financial reports .......................................................................8
TASK 3 ...........................................................................................................................................9
A. Advantages and disadvantages of different planning tools for budgetary control ................9
B. Application of planning tools for preparing, forecasting and analysing budgets.................11
C. Adaption of management accounting system to respond to financial problems..................11
D. Management accounting techniques to respond to financial problems and lead to
sustainable success....................................................................................................................12
E. Use of planning tools to solve financial problems and lead to sustainable success.............13
CONCLUSION .............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Management accounting is an area related with activities of decision-making, devising
planning, performance management system, providing financial reporting expertise and planning
formulation implementation of organisational strategy and its controlling. It is a planning and
decision support system of an organisation. Management accounting system takes all financial
and operational information and present reports which assists in decision-making process.
The present report is about business Agmet, which is a chemical product-manufacturing
unit. The report presents Agmet with different management accounting systems and report and
states all their benefits. An Application of various planning tools their advantages and
disadvantages to the firm. Are also explained.
TASK 1
A. Management accounting and its different types
Management Accounting
Management Accounting is a combination of financial and statistical information and
preparation of management reports on the basis of available information. These reports guide
management of a business in decision-making process (Maas, Schaltegger and Crutzen, 2016.
Management accounting takes into consideration the entire activities of an organisation, which
are accounting, financial, operational and statistical activities take data and relevant information
from these activities and make day-to-day business decisions.
The reports that are presented under management accounting system provides details and
information related to cash and cash equivalents available with the firm, revenues generated from
sales, status of accounts payables and receivables, raw material, inventories and debtors and
creditors of the firm.
Different types of management accounting systems are:
Cost Accounting System: this system of management accounting deals with
determination of cost related to production of units of goods in a firm. The cost and sales
revenue are evaluated to determine profits. This system classifies information in manner required
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by management of the firm. Being a small manufacturer, Agmet have to consider all cost
relevant information to maximize its profits and lower operational and production cost.
Job costing system: this is a system where records related to cost of each job performed
in a firm that are determined separately. This helps management in determination of cost and
expense incurred on each particular job and quotes the selling price in accordingly. The
information can be used to assign inventory cost to manufacturing cost. This system assists
mangers of Agmet to clearly identify cost related to each job and take decision accordingly.
Inventory management system: this is a system of monitoring and maintaining stock of
goods produced in a firm. This system maintains a record of units produced, from the stage of its
manufacturing up to stage of selling. A proper channel of line is followed to keep proper
records of stock. Agmet is a small manufacturing business and it shall keep a close eye on stock
of chemical produced.
Price optimization system: this system is concerned with adoption of the best price for
product produced in the firm. Price optimization means the reaction consumers will give on price
quoted by firm. Agmet takes into consideration all expenses, cost of product and sets selling
price of product, and try to keep it minimal.
B. Different management accounting report use by Agmet and its importance to Management
Management accounting reports are prepared for planning of business operation and to
assist management in decision-making. This report is prepared by taking internal data
information by managers, which are:
Budgets: for making a report on different operations of the firm the managers uses the
techniques of budget preparation (Taleb, Gibson and Hovey, 2015). The budgets are prepared for
various activities such as sales, production, manufacturing, selling and distribution and
administrative expenses. The budgets are prepared in comprehensive manner, which assists
managers in formulation of plans and polices to be applied in the firm. The budgets give a
performance evaluation of the activity in relation to which it was prepared.
Performance report: for a firm, the employees are an integral and important part of the
business. To evaluate their performance and presenting a report on it has a vital role for the
operations of a firm. These report is necessary to prepare to know the quality of performance of
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