INDIRECT COSTS ALLOCATION AND DECISION MAKING IN AGRICULTURAL PRODUCTION

The paper introduces a research on the changes occurred inside the accounting system of agricultural organisations in the transitional period. Changes of structure and accounting information system being results of privatisation processes were analysed. The introduction of modern methods in the preparation of relevant management information represents one of the preconditions for development of the privatised agricultural organisation during the transition period. Information prepared by the accounting, especially adapted to management requirements, is essential for rational decision making. Modern management system of reporting is fundamental task of management and a precondition for securing competitive production in agricultural industry. For this reason, it is necessary to define areas of responsibility and to enable application of a modern techniques for calculating expenses. The purpose of this paper is to emphasise the specialised use of accounting information by managers and to develop methods of management reporting in agricultural organisations. We propose an emphasis upon the application of modern management accounting techniques rather than financial accounting reporting approach. We support the contention that the need for high-quality management accounting is not debatable and tend to explain how and why accounting information is developed for the individual parts of a business entity, that is for each department or enterprise of an agricultural organisation. The responsibility accounting system should be introduced in agricultural business entities within our conditions, especially in larger organisations, as a measure of securing competitive production. We emphasise the importance of distinguishing between direct and indirect expenses and of using appropriate methods to allocate expenses among departments or enterprises. The research is based on information directly received from the largest agricultural companies in the area of Slavonia and Baranja.