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BUS 5110 Portfolio Activity Unit-4

Managerial Accounting (University of the People)

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1 Portfolio Activity Unit-4

Qualitative factors are non financial are in nature
Managerial Accounting

BUS 5110: MANAGERIAL ACCOUNTING

Portfolio Activity Unit-4

Differential Analysis

Md Delowar Jahan

Date: 20-26 February, 2020

Masters of Business Administration (MBA)

Faculty of Business Studies

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Portfolio Activity Unit-4
Qualitative factors are non financial are in nature
Managerial Accounting
Qualitative factors are non-financial in nature but are important for management to consider

when making decisions. The outcomes of qualitative factors are impossible to

measure from certain actions. Based on relevant costs and revenues usually, managers make the

decision. Through a certain decision and actions, managers try

to forecast what the future costs and revenue will be.

Qualitative factors are:

Morale: The impact on employee the morale of adding a break room to the production area and

give an extra 30 min break for launch and prayer in the afternoon which is

boost up the energy of the employee is extremely important for all successful companies. If we

consider vacuum manufacturing company and the production costs than

morale can play a significant role to minimize the production cost results in not going to the

vendor with a high price. Also, we can say about google cafeterias where all the

employees can eat in the daytime which boosts them up and felt very energetic and production

will come automatically.

Customers: In business, the customer would get the highest priority around the world. The

opinions of the customers in a business is a big asset. Based on the interaction

approach with the customers, develop total quality management with the customers, customer

relationship management, and customer experience management together

an organization can develop comprehensively which can not be measured financially but

qualitatively it will bring the good results.

Community: Motivation is identified is one of the best qualitative factors. Some of them may be

financial and non-financial as well as personal recognition, personal development, and

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Portfolio Activity Unit-4
Qualitative factors are non financial are in nature
Managerial Accounting
working conditions, etc. In order to maintain engagement and motivation can bring good fruits

for the organization.

Justified a situation where the qualitative factors would outweigh the quantitative results:

Qualitative factors may outweigh the quantitative results in making a decision. For example,

assume management at XYZ company believes there will be a decline in the

country for donor grants after next year. As a result, they have to cut the staff to implement a big

project. Hiring local contractual staff is much easier than

fixed-term staff but they are not enough eligible for an international standard. The significant

fixed-term staffs often associated with many other facilities/costs like pension, medical,

insurance, etc which is very difficult to reduce in the short-run if fund declines. Thus, the

qualitative factor of being able to reduce fixed-term staff costs quickly by recruiting local staff

may outweigh the quantitative factors.

If the quantitative differential analysis for XYZ company brings a different result, it showed the

company should recruit local staffs, management should consider the

qualitative factors before implementing this decision.

Management must consider whether short term local staff quality would remain the same as

fixed-term staff. Of course, the financial stability of the company must

be considered as well. It will not bring good results if suddenly deduct or change the staff. Rather

need to explore other donors who are willing to donate the company along

with common donors. Because employee morale will be spoiled if some of them are terminated

because of fund which will bring a negative impact on the company in the

long run. So, the qualitative factors would outweigh the quantitative results when performing

differential analysis.

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Portfolio Activity Unit-4
Qualitative factors are non financial are in nature
Managerial Accounting

References
Qualitative factors — Accounting Tools

https://www.accountingtools.com/articles/2017/5/8/qualitative-factors

What are Qualitative Factors?

https://www.myaccountingcourse.com/accounting-dictionary/qualitative-factors

Be Aware of Qualitative Factors

https://saylordotorg.github.io/text_managerial-accounting/s11-09-be-aware-of-qualitative-
factor.html

Improving customer-oriented decision making through the ...

https://www.tandfonline.com/doi/full/10.1080/12460125.2016.1187417

Faculty of Business Studies

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