Management Accounting and Variance Analysis in XLG Company

Businesses

INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
PART A...........................................................................................................................................1
1. Calculate the price and sales volume contribution variance....................................................1
2. Calculation of material price planning variance and material price operational variance.......3
3. Critically evaluate merits and demerits of variance to evaluate manager’s performances......4
PART B...........................................................................................................................................7
1. Report assessing the decision to make famaQ in house in the UK to keep importing it from
Brazil............................................................................................................................................7
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Management accounting is a technique that could be used by many companies to track
productivity of the workforce and to make spending decisions (Chibili, 2019). With the aid of it,
the administrators will be able to continue determining to choose whether or not allow
administrative adjustments or operational improvements. Various internal members, like
employees, executives, key shareholders, lenders etc., used documents and suggestions to
determine whether or not a organization is functioning properly. This paper is linked to company
XLG which is a drug distribution firm situated on England's northwest part. The business is
composed of two separate cleaning items which were two different ingredients, X and Y. The
business demand is very high for businesses. Due to corona virus, government announced
lockout the company agreed to switch all of its online purchases. For that purpose different items
should be discussed. These include measuring variances, such as sales value, product price
forecasts, and operational variability, and evaluating the advantages and demerit points of and
use them in administrative performance analysis. However, this paper also reveals the intention
of a comprehensive security council to convert famaQ at residence in the UK or to start
purchasing it from Brazil.
MAIN BODY
PART A
1. Calculate the price and sales volume contribution variance
Regardless of sales statistics, commodity costs, budgeted or real values, administrators
should be able to quantify variances in various ways. This data helps in calculation of both
Chemicals like X & Y's sales and material price variances, these are as follow:
Given Information:
Total units sold: 1600
Material price variance: £ 27000 Favourable
Sales and Contribution:
Chemical X Chemical Y
Budgeted total sales 595 units 595 units
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Actual Sales Volume 850 units 750 units
Standard sales price £ 35 £ 30
Actual sales price £ 45 £ 37
Standard margin £ 25 £ 20
Sales price variance:
This variance is used to evaluate the gross profit change projection as a result of the
difference between the actual and normal market prices (Das, 2019). Variance in Sales Price
could be defined in various ways as seen in the methodologies below. In fact, the calculation of
variance is very clear because it merely considers the intent of receiving the variation, i.e. how
much change from the definition in overall revenue is due to the shift in market value. Its
calculation mentioned in below table:
Sales price variance
Chemicals X Details Amount
Sales Price Variance ( X ) ( Actual Price – Standard Price ) * Actual Unit
= ( 45 – 35 ) * 850 8500
Favourable
Chemicals Y
Sales Price Variance ( Y ) ( Actual Price – Standard Price ) * Actual Unit
= ( 37 – 30 ) * 750 5250
Favourable
Interpretation: According to estimation, after putting the quantities in the formula, the
findings of Chemicals X and Y are obtained and the outcomes 8500 in favor of X and 5250 in
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