Management Accounting System of Agmet Company : Assignment
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Added on 2020-10-05
Management Accounting System of Agmet Company : Assignment
Added on 2020-10-05
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Management Accounting
TABLE OF CONTENTSINTRODUCTION...........................................................................................................................1A. Enumerating meaning of management accounting and essential requirements ofmanagement accounting and types.........................................................................................1B. Discussing management accounting reports and justifying significance of reports..........3C. Evaluating benefits of systems in the business..................................................................5D. Critical analysis of management accounting systems and management accounting reportsare integrated in company......................................................................................................5TASK 2............................................................................................................................................6A. 1) Absorption and marginal costing..................................................................................62. Producing income statements by utilising costing methods...............................................7B. Computation of Break-Even analysis................................................................................9TASK 3............................................................................................................................................9A. Explaining merits and demerits of planning tools in the business....................................9B. Application of planning tools for preparation, forecasting and analysing budgets.........11C and D. Comparing management accounting systems of different organisation for resolvingfinancial problems................................................................................................................12E. Following are the benefits and drawbacks of planning tools which responds to thefinancial problems................................................................................................................13CONCLUSION..............................................................................................................................14REFERENCES..............................................................................................................................15
INTRODUCTIONManagement accounting refers to the function of planning, directing and, controlling etc.The term management accounting is consisted of two words management and accounting. Thisreport is consisted of all the managerial tools which provide the efficiency for decision making.The assignment provides an essential requirement of management accounting system of Agmetcompany. Project has also given the management accounting reports of Agmet company. Thereport provides the deeper insights of absorption and marginal costing. Further, in the reportincome statements has also been prepared. This project has discussed the advantage anddisadvantage of the planning tools and its application. Report will give the information about themanagement accounting techniques which are helpful to the Agmet for further decision making. A. Enumerating meaning of management accounting and essential requirements of managementaccounting and typesAccounting is an integral part of the company in recording and classifying it in thatmanner which are easily understandable to management. It is essentially required so as toprovide management and stakeholders' important information for taking better decisions. Thewhole process includes various activities such as recording, classifying and summarizingaccounting related information is known as financial accounting (Brausch, 2017). It serves as abase for management, as managerial reports are provided by taking such information supplied byaccounting and as such better decisions are made. On the other hand, management accounting isa summarized way of information derived from financial accounting which is imparted tomanagement of firm internally and not disclosed to the external parties. It is useful for AgmetCompany which is engaged in chemical manufacturing and production business For attainingprofits in large quantum, it is required that internal operational activities may be strengthened ina better way. This task is accomplished by management accounting information which analysescosts of production and other related elements needed to be streamlined in that way by whichmaximum output can be generated with minimum cost of input. The essential requirement ofdifferent types of management accounting systems are as follows-BasisManagement accountingFinancial accountingInformation All monetary and non-monetary information isIt records all monetarytransactions.1
suppliedUsers of informationOnly management team ofAgmet Company uses it.All stakeholders use theinformation.ReportsReports are in summarizedmanner.Complete information isprovided in the report.ExampleCost accounting report,accounts receivable report All financial information suchas journal entries, ledger, trialbalance is used to preparefinancial statements. 1. Cost accounting system-The costs are required to be controlled in a better way so that maximum production canbe achieved with minimum cost. Such system is important in management accounting as throughthis, various expenditures are effectively minimised so as to increase production. The costingsystem are-Actual costing- As the name suggests, actual costs incurred on quantities of production is beingused by Agmet Company to assess cost of particular item. For instance, total productionexpenses are to be find out by management (What is Actual Costing?. 2018). Labour costscan be calculated by analysing how much production is made in hours and employees arepaid accordingly. Normal costing- This method allocates cost to items on the basis of actual raw materials, labourand overheads in the manufacturing process. For instance, depreciation on equipmentsutilised for producing commodities.Standard costing- The costing method is used to identify whether actual costs that have incurredto produce output is known as standard costing. If deviations are there between actual andbudgeted costs, then corrective actions are taken. For example, management of AgmetCompany has made quarterly budget regarding cost and if costs of production are more thanbudgeted than corrective action is required to be taken for reducing expenditures (Ax andGreve, 2017). 2
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