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Management Accounting of Agmet

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Added on  2020-07-23

Management Accounting of Agmet

   Added on 2020-07-23

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UNIT 5 MAN ACC
Management Accounting of Agmet_1
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1TASK 1............................................................................................................................................1P1 Management accounting and essential types of management accounting........................1P2 Methods for management accounting reporting................................................................3TASK 2............................................................................................................................................6P3 Marginal and absorption costing and enumerating differences........................................6TASK 3............................................................................................................................................8P4 Kinds of planning tools.....................................................................................................8P5 How management accounting system help to respond to financial problems................11CONCLUSION..............................................................................................................................13REFERENCES..............................................................................................................................14
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INTRODUCTIONManagement accounting has much importance for management of the company so thataccurate decisions are taken with much ease. The present report deals with Agmet companywhich is a chemical manufacturing firm. Management accounting information is required byfirm to strengthen organisation internally. Types of management accounting is discussed in thereport. Moreover, various methods of managerial accounting reports are also discussed in thereport. Planning tools are explained which are helpful in taking viable decisions. Budgeting andplanning are also accomplished with the help of management accounting information. This helpmanagement of company to take better decisions. Moreover, marginal and absorption costing arediscussed. Furthermore, management accounting systems are also discussed so that financialproblems may be resolved quite effectively. Benefits of management accounting is alsodiscussed and it can be said that management accounting has great role in making enhanceddecisions. TASK 1P1 Management accounting and essential types of management accountingManagement accounting help to forecast business trends and as such, management isbenefited by given information for the betterment of the company. Agmet Company also usesmanagement accounting information so that it may be able to forecast trends in effective wayand take viable decisions. This accounting information is used by management of AgmetOrganisation to enhance internal strength so that operational tasks may be effectively managedand customers' may be satisfied in the best possible way. Short-term and long-term policies aretaken quite easily with the help of management accounting information. Various sources whichare used in production process such as labour, materials and overheads as well as otherequipment which are required so that business may be successful in the market by satisfyingcustomer's demand (Otley, 2016). Stakeholders such as creditors and investors also benefited as firm becomes strongenough and go ahead of competitors. Various managerial reports are provided to management sothat it may analyse the same to reduce costs in effective way. This is important as businessshould concentrate on expenditures so that it may not exceed revenue in any case. Thus,expenses are reduced and revenue is maximised up to high extent which ultimately led to1
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achievement of goals and objectives in effectual way. Moreover, it helps to control company'soperations in that way so that it may earn desired profits quite easily. In relation to this, types ofmanagement accounting are as follows-1. Cost accounting:Cost accounting is quite helpful as it helps to control costs in effective way so thatrevenue may be earned by company in the best possible manner (Renz and Herman, 2016). Thisis useful branch of management accounting as it helps to assess costs of various elements in theproduction process and as such, take effective measures to reduce expenditures so that adequaterevenue may be earned with much ease. There are expenses which are required to be incurred sothat production may be accomplished in effectual way. As such, various expenditures are direct,indirect, variable, semi-variable and fixed costs in the production process. Thus, various costs areascertained in that way so that steps can be taken by the management to minimise expendituresin effectual way in order to earn desired revenue.2. Price optimisation:Price optimisation is useful technique of management accounting and is essentiallyrequired in Agmet company as well. It is termed as a mathematical analysis which is carried outto assess how price of a particular product affects customer's behaviour. In simple words, thistechnique help management to determine price level of products in that way so customers maybe attracted to buy it. Thus, it is meaningful technique for management to quote price of goods inthe easiest way. Agmet Company also uses price optimisation method so that it may set price ofproducts by analysing consumer's behaviour. This help to achieve desired profits in accordancewith satisfaction of customers as well. Thus, it is good technique to quote price of commoditiesby the organisation (Chenhall and Moers, 2015).3. Job costing:The method of job costing is quite useful in the manufacturing sector. In relation to this,Agmet Company also takes into account job costing as it is engaged in manufacturing ofchemical products. Job costing is recording expenditures incurred on various jobs so thatmanagement may keep track on each of the jobs so that expenses may be reduced so that moreproduction may be successfully accomplished in the best possible way. Manufacturing sector2
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