MANAGEMENT ACCOUNTING assessment 2

Management
Accounting - Report

Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
Part A:..........................................................................................................................................3
Part B:..........................................................................................................................................8
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
The financial transactions of a company need to be recorded in an effective manner so that
better decisions can be carried out. In this aspect management accounting (MA) plays a key role
as this is linked to analysing, interpreting financial and non-financial data in a systematic way so
that managers can get needed data at the time of decision making (Chorley, 2019). The project
report is based on a company which is XLG, this company produces different types of cleaning
products and sell all around the United Kingdom. On the basis of provided information about
company, part A and B are covered in report that consists distinct information. In part A,
information about calculation of different variances along with merits and demerits is included.
While part B analysis is done about whether company should apply make product at home or
import from other nation.
MAIN BODY
Part A:
(i) Sales price and volume contribution variance.
Sales Price Variance- This variance can be defined as difference between actual sales of
market price and actual sales at budgeted price. In accordance of given data, calculation of this
variance has been done in such manner:
Formula: (Actual Price-Standard price) x Actual number of units
Chemical X:
Given data:
Actual price= 45 Pounds
Standard price= 35 Pounds
Actual number of sales unit= 850 units
Sales price variance: (45-35) *850
= 8500 (F)
Chemical Y:
Given data:

Actual price= 37 Pounds
Standard price= 30 Pounds
Actual number of sales unit= 750 units
Sales price variance: (37-30) * 750
= 5250 (F)
Sales volume contribution variance- This variance can be defined as analysis of change in profit
due to variation between actual and budgeted sales quantity (Zhang, 2020).
Formula: (Actual units sold × Budgeted price for each unit) – (budgeted unit sold × Budgeted
price for each unit)
Chemical X:
Given data:
Actual units sold= 850 Units
Budgeted price for each unit= 35 Pounds
Budgeted unit sold= 595 Units
Budgeted price for each unit= 35 Pounds
Sales volume contribution variance: (850*35) – (595*35)
= 8925 (F)
Chemical Y:
Given data:
Actual units sold= 750 Units
Budgeted price for each unit= 30 Pounds
Budgeted unit sold= 595 Units
Budgeted price for each unit= 30 Pounds
Sales volume contribution variance: (750*30) – (595*30)
= 4650 (F)