Management Accounting: Sales Price and Volume Variances, Merits and Demerits of Variance Analysis, Make-or-Buy Decision

Management Accounting
Contents

INTRODUCTION...........................................................................................................................4
MAIN BODY...................................................................................................................................4
Computation of the Sales price variances and sales volume contribution variances:............4
Efficacious analysis of all major merits as-well-as demerits relating to the application of
variances in assessing managers' performance:......................................................................8
Part B....................................................................................................................................11
CONCLUSION..............................................................................................................................14
REFERENCES..............................................................................................................................15

INTRODUCTION
Under management accounting, managing personnel apply accounting information
provisions to effectively comprehend themselves before determining matters within their
organisations, which helps to manage and control effectively all functions and outcomes.
Management accounting allows for effective reporting of the company's financial status with
facts and information needed (Hutaibat and Alhatabat, 2019). It recognizes, tracks, analyses,
interprets and incorporates information so an entity can achieve its objectives. This study
comprises multiple aspects of directly or indirectly concerned with management accounting in
context of provided case-study of XLG. A practical calculation of different variances is covered
in report along with vital advantages and demerits of variances in relation to the assessment of
managerial performance. Moreover, this study helps to take decision whether to import FAMA Q
or in-house the production of FAMA Q based on respective case-study.
MAIN BODY
Computation of the Sales price variances and sales volume contribution variances:
Sales Price Variance: It is the difference between actual and standard selling price. Change in
the market condition is the main reason of such deviations. As product sold for lower price
than anticipated than it reflects unfavourable result and if the price is higher than budgeted it
shows favourable results.