UNIT 5 Management Accounting - Agmet company

UNIT 5 MANAGEMENT
ACCOUNTING

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
(P1) Define management accounting and discuss essential requirements of different types of
management accounting.........................................................................................................1
(P2) Outline methods used for management accounting reporting........................................3
TASK 2 ...........................................................................................................................................6
(P3) Computation of marginal and absorption costing and stating differences.....................6
..........................................................................................................................................................7
TASK 3 .........................................................................................................................................10
(P4) Discuss merits and demerits of different types of planning tools in the organisation..10
(P5) Outline how company is adapting management accounting systems to respond to
financial problems................................................................................................................12
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Management accounting provides ample of benefits to managers while taking decisions
for the betterment of the company. The enclosed report deals with Agmet company which is
engaged in production of chemical products and as such, management accounting is essential
requirement for it (Ward, 2012). It has several types which is helpful in analysing and controlling
the costs effectually. Marginal and absorption costing are important methods of management
accounting. The organisation may be benefited by preparing management accounting as it
controls cost of various overheads and as such, resources are fully optimised effectively.
TASK 1
To: General Manager
Agmet company
From: Management Accounting Officer
Subject: Writing a report to General Manager of Agmet company
Introduction:
In order to improve the internal efficiency of the organisation, the management accounting
techniques and tools are required by it. The management accounting will help Agmet to flourish
in its operations.
(P1) Define management accounting and discuss essential requirements of different types of
management accounting
Management accounting is useful accounting tool for managers to make effective
decisions for the betterment of the company. It is an amazing tool for management as through this
they are able to strengthen the internal position so that it may satisfy the demands of customers in
totality. Agmet company effectively uses management accounting information so that it may
manufacture chemical products with much ease (Parker, 2012). The cost accounting technique of
management accounting helps Agmet company to control the costs in effectual manner. It is
really helpful for organisation to meet its objectives by controlling the expenditures nicely. The
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different types of management accounting are required by organisation so that it may accomplish
the operational activities with much ease. The types are as follows:
1. Cost accounting:
The cost accounting is an important part of management accounting which aims to control
the cost so that revenue may be earned by lowering the cost (Burritt, Schaltegger and Zvezdov,
2011). This technique is helpful for organisation to ascertain the cost so that expenditures may be
minimised too much extent. The various costs such as direct, indirect, fixed and variable costs
play vital role that are required by company to maintain efficiency in the production process and
also to control the costs on overheads. Agmet company uses cost accounting so that it may reduce
the operational costs and eventually maximise the production in the most proficient way.
2. Price optimisation:
Another technique which is essential for company is price optimisation. Through this
mathematical models are used to assess and determine whether demand of the product varies with
the price or not (Otley and Emmanuel, 2013). It is helpful technique to analyse that how much
price customers are willing to pay for it at the quoted price by organisation. Agmet company uses
price optimisation technique to assess the demand of products. This method is useful tool to
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