ACC 5 Essay Example | Topics and Well Written Essays - 1000 words

ACC 5 - Essay Example Management accounting is as important as production in the modern agricultural environment. The solution offered here is a responsibility center approach that sets up cost and profit centers. The system enables comparisons based on crops and land. It also lets the farm track performance on a year to year basis. The solution is long term and will ensure that the farm will run well even after the management is taken over by the next generation. The cost centers are for support, and stages of production. We have production cost centers for land owners. One cost center is for management. The cost centers are grouped under the profit centers associated with each commodity. The accounting techniques presented here will be applicable to any farm. The farms can have any combination of land ownership, equipment and crop. The responsibility for accounting is with the top management. The automated system lets the owner perform detailed analysis that would not be possible without a software solu tion. The solution uses responsibility accounting. This approach is aligned with the organizational structure. It also lets us control finances better. There is an individual cost center for each activity. Costs can be allocated according to the land ownership. We also have cost centers based on crop. Each crop has its own marketing cost center. All the cost centers are grouped by crop and function as profit centers. This solution is beneficial because management control can be exercised from the farm field to the profits. Costs are allocated fairly amongst the crops so that we know accurately how much money has been spent to produce a particular crop. The allocation base is selected based on the right measure of the costs. The costs can be subdivided between the cost centers according to the allocation base. The individual costs associated with the use of equipment are considered. The software used generates the financial statements required. These include cost allocations,