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Management Accounting Assignment | Management Accounting Systems

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Added on  2020-06-06

Management Accounting Assignment | Management Accounting Systems

   Added on 2020-06-06

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Management accountingsystems and its applications1
Management Accounting Assignment | Management Accounting Systems_1
Table of ContentsINTRODUCTION...........................................................................................................................3SECTION 1.....................................................................................................................................3(P1) Discuss management accounting and enumerate various types of it...................................3(P2) Types of management accounting reports...........................................................................5(P3) Calculate marginal and absorption costing for the firm......................................................7SECTION 2.....................................................................................................................................8(P4) Advantages and disadvantages of planning tools................................................................8P5) How management accounting system help to respond to financial problems......................9CONCLUSION..............................................................................................................................11REFERENCES..............................................................................................................................122
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INTRODUCTIONManagement accounting is useful tool for managers to take effective decisions in the bestpossible manner. The present report deals with Agmet Company engaged in manufacturingchemical products and selling goods to customers for maximising their level of satisfaction quiteeffectively. The report discusses about importance of management accounting information andcompany should implement this accounting so that it can achieve desired objectives andmaximise productivity in the best possible way. Moreover, various management accountingtechniques are discussed and managerial reports are explained which assists manager in takingeffective decisions quite easily. Various planning tools such as NPV, IRR and other tools arediscussed which assist management whether to invest in the project or not. Marginal andabsorption costing are explained and various accounting systems are discussed which help torespond to financial problems quite effectively. SECTION 1(P1) Discuss management accounting and enumerate various types of itManagement accounting is helpful for organisation so that it may take internal decisionswith much ease. Top management is benefited by such information to take better and effectivedecisions in the best possible way. This information is not provided to external users, as it ispurely available to management only (Nitzl, 2018). Financial accounting provide financial data,which are then provided to management for taking decisions for the betterment of the company.Management accounting is concerned with reducing costs in effective way so that managementmay be able to take better decisions for the betterment of the company. Agmet Company is alsoutilises management accounting as it provides them with useful insight to take into accountinternal strength of the company whether internal operations are up to the mark or not. If thereare any weaknesses then, corrective actions are taken quite easily. On the other hand, management accounting not only provides useful information to themanagers but also investors and creditors be benefited by it (Pratheepkanth, 2018). However, thisinformation is not available for other stakeholders but management takes effective decisionwhich eventually help investors and creditors to take decision whether to invest funds in thecompany or not. Thus, it has several features and beneficial to company in all aspects to achievedesired goals. In addressing this, various types of management accounting are listed below- The different types of management accounting are as follows-3
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1. Cost accounting-This branch of accounting deals with controlling various costs and expenses which areincurred in the production process or any other purpose. The recording and summarizing of costsis carried out so that overall performance of company can be enhanced by reducing costs ineffectual way. The various types of costs, which are incurred in the production process, aredirect, indirect, fixed and variable costs which are allocated in that way so that these do notexceed profit. Thus, management is benefited by such information and as such, it can take betterdecisions so that costs can be controlled in a better manner. Cost efficiency is achieved bymanagement with the help of such much needed information. Thus, company becomes effectiveand efficient to yield better results (Englund and Gerdin, 2018).2. Inventory management system-Inventory is important part of firm, as without it production process cannot beaccomplished by department. Stock requires to be maintain in appropriate quantity so that it mayfulfil requirement of production department in effective way. Overstocking may led to wastageof scarce resources and management does not want to reduce profits by spoiling inventory. Inregards to this, inventory management system is established by organisation so that inventory isnot wasted and at the same time, need of production department is fulfilled eventually. Firmplaces new orders on daily basis and as such, it is required that inventory may be managed in thebest possible way and customer demand may be fulfil.3. Price optimisation-Price optimisation is quite helpful for the company to take effective way. AgmetCompany also uses this technique to implement price in the best possible way. Price optimisationis a mathematical analysis technique which help firm to set price in quite effective manner byassessing consumer behaviour (Mueller and Trost, 2018). This implies that firm analysis demandof customers which are ready to pay for the price, firm is willing to sell. If customers do notprefer to buy commodity, then organisation quote price in accordance to their preferences. Thisway company set prices by assessing demand of potential customers and quote similar price sothat they may not be driven away by the rivals.4. Job costing-Job costing is the major essence of the manufacturing sector. In relation to this, AgmetCompany also uses job costing so that it may be able to control upon various job expenditures in4
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