Evaluation of Monthly Control Report for Amana Ltd. and Analysis of Online Trade Decision

This report evaluates the monthly control report of Amana Ltd. which presents the flexible, original budget and variances. It suggests improvements and analyzes the decision of Mr. Amana to go with online trade and settle with Amazon. The report also provides recommendations to the CEO of Amana Ltd. for better performance.

Accounting

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
PART A...........................................................................................................................................1
Evaluation of monthly control report which is presenting the budget of flexible, original,
variances......................................................................................................................................1
B) Analyse the performance or action of this company for the financial year 2019-20 with the
help of control report which is prepared above...........................................................................3
C) Suggest the CEO of Amana Ltd. with the improvable path...................................................4
PART B...........................................................................................................................................4
Present and examine the Mr. Amana's decision to go with the online mode and discuss about
the settlement of own online shop or trade with Amazon by considering the total costs............4
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
A budget is a procedure of symmetry the income, expenses and corporal goals for a
specific period of time. In other words, it is an estimation of the amount that organization needs.
They require to expend over the specific period of time such as an month, quarterly, half yearly
and an year. It is essential to prepare a budget before implement the activity or plan for all the
business firm. It includes the list related to the expenses and revenues that an company needs to
focused on the execution of the plan. It has been prepared by an individual, group of human
beings, business, MSME government and so on that aids to expend and maximize the
profitability (Ahn, Hoitash, and Hoitash, 2020). In this report, the explanation presents monthly
control's statements. These statements are crucial part of the organization for showing the real
and forecast budget of Amana ltd. It also aids to evaluate the variances on the basis of
differences.
PART A
Examination of monthly control report that is showing the flexible, original budget and
variances.
Control report on the basis of month: It consists the necessary and essential data or
information which relates with the several kind of direct and indirect cost like wages, salaries,
overhead and expenses. It is beneficial for the strategic manager of the company to search out the
total activities cost which has been expended to check out the cost that can be maximized. It also
provides the organization's internal data about earnings and incurring the cost that can occur in
future in a specific time period. It also states the deviations that is exist there in actual as well as
standard so it ios very easy for the business firm to taking the decisions to take down the
variances (Calabor, Mora, and Moya, 2019).
Original budget: It involves the budget that has prepared on the basis of previous data and the
assumptions or the production level as well. The business firm finds it very easy to evaluate the
performance of further year. It also aids in analysing the profits of the organization in further
period. It comprises the comparison between the fixed budget and the actual figure for the
company's income and expenses.

Flexible budget: It contains the flexibilities of the budgets i.e. that statement which can be easily
changed according to the actuality of the revenues that has earned by the business. It also
concentrates on the particular cost which is raised by the company. In general words it is mainly
used in modify the changes of actual level of income. It is implanted for constant cost and
variable rate is decided on the basis of per activity examine for variable cost. It includes two
parts fixed, variable cost and their semi cost portion (Christ, Rao, and Burritt, 2019).
Budget variance: It refers to differentiation between the real and standard budget. These factors
helps to measure the data that is already utilized by the enterprise to analyse the estimated and
potential figures. If the variances result comes in positive that means business is in profit but if it
comes in negative, then it presents the wrong impact of the business that have raised in standard
and real data. It is an accounting term that reports where real cost is either increase or decrease
than the projected cost. It is calculated by subtract the potential amount expend from the
estimated amount for every and each line items. It is continue caused by the wrong or bad
estimation or forecast the improper budget so the line is against that real results are evaluated is
not intellect. Many budget variances can be destructed through the basic accumulation of line of
the budgets (de Azevedo, and et al., 2020).
The budget control report of Amana Ltd. is discussed below:

B) With the help of control report, examine the performance or action of this organization for the
financial year 2019-20 that has shown above
These are the steps that can be used by the analysis of the Amana ltd.'s control report:
1. Lead the expenditures: It is the main part of the financial budget to control the extra
cost. These factors assist the management for the purpose of figure out the various
different expenses that have possibilities to incur in future of the organization. These
corporate statements are prepared yearly but the manufacture spent idea has been made
on the basis of month. The budget variance analysis aids the managers to taking the
decisions regarding save the costs (Eaton, Grenier, and Layman, 2019).
2. Evaluate the area of excess expenses: Due to planning and examine of the budget
reports, the space that has dealt with highly cost of expenses can be seen upon and all the
important decisions can be taken.
3. Figuring out the area where extra money is spent: This step helps to management for
comparing or check out the area where extra and less amount has been spent while
planning or preparation of new budget.
Followings are the real or potential analysis that is getting done for Amana Ltd.'s budget
report.
 The flexible budget presents the less trade with the real or original budget. That means
the business has to support their quantity while enhancing the selling cost or price. It will
aid the organization to gain the profit maximization for the year. The selling cost of the
items is £ 25 and the units sold are 100000 acc. to the actual budget. They are more than
the standard budget. The company can be affected due to heavy differences of cost.
 The variances of labour and raw material is higher. In the real budget, the cost of selling
is 10% per unit but the real cost £ 280000 that is higher than 10%. thus, the business has
to reduce the raw material cost which helps to cover the expenditures (Gunarathne, Lee,
and Hitigala Kaluarachchilage, 2021)
 On the bases of amount of units manufactured on monthly basis, the cost of labour per
unit can be felt down cause of declining the direct cost in flexible budget.
 The business's gross profit is less than the primary plan that is by 55.29%. The output of
the profits or revenues and the expenses presents in the manner of gross profits.

 The strict expenses or overheads thinks under the storage lease, securities and storehouse
remuneration. The last fixed cost is less from the initially funds from the active idea.
 The net profit or earnings is less by 66.30% from the last idea or primary plan. It should
be confiscated for the purpose of reduce the shifting and strict expenses. The ultimate
fiscal wellness of the business is figuring with the help of this budgets. If the net income
will be in the annihilation of net income will cause changes in executive these steps of
growth in Amana Ltd. (Haider, Singh, and Sultana, 2021).
C) Recommendation to the CEO of Amana Ltd. with the improvable path
Here are some suggestions which can be acknowledged on the basis of performance
report:
 The first concentration is enhancement of the revenues of the company. The business
management should focus on that how increase the quantity of producing units of the
business. In results, company would reach the highest profitability. After thinking about
the cost the organization should work on these crucial steps or methods which has been
taken carefully.
 The management of any organization or Amana ltd. Should be extra concentrated on cost
of direct material as comparison of actual budget. That means the organization's fund
includes the money for wastage of materials. The management needs to do research in
depth for figure out what or which action would appropriate to decline the wastages.
 The labour cost should be constant by the management of the business because this helps
to record the units manufactured by the workers and how much work has done by the
labourers on per hour basis. According to this, the allotment of these kind of finances or
funds can be done (Liao, Smith, and Liu,2019).
PART B
Examine the Mr. Amana's decision that is related to go with the online mode and explain about
the settlement of their own online shop with Amazon by contemplating the total costs.
The individual of Mr. Amana's organization is increasing the digital platform or trdae in
many countries such as Europe, UK and US. The company requires to definitely convert their
mercantile business in digital way and there are two site that are discussed:

 By winding up the section of Manchester, Brighton has increased the gross online sales
50%. Constant cost will be considered like compensation of maintaining the
transportation, gaining of information technology code and value arise on the social
sites. It has make sured the 100000 units of income yearly. Mr. Amana has a fund which
total cost is -
Disbursement of fixing transportation = £150,00
disbursement of enhancing real social site to clutch huge bulk of sales = £50,000
full-time wages of IT coder = £35,000 per annum
Total of all Expenses = 150000 + 50000 + 35000 = £ 235,000
 Besides of these expenses, it has the alternative of trading their commodities directly on
Amazon and do payments of their satisfaction tip or fees. It furnishes an assured sale of
65000 units per year with the help of enhancement of their demand (Linnenluecke,
Marrone, and Singh, 2020). The whole cost will occur
Amazon consummation fees - £ 50,000
hence, It will have to bear extra expenses to arranging and setting up the personal online platform
that have huge difference the amt. is £ 185,000.
Amazon is a mostly recognised platform. It has large number of clients and customers. To doing
trade with the amazon is favourable for the purpose of gaining the earrings from the individual
personal website because it takes heavy cost and time to set up the own internet site.
 The advance deviation will distinct the choices which has been discussed below in detail:
Basis Amazon Setting up the online store
Scope It is good customer base. It adds
up to 40% of the merchandising
annually for the company.
It can add minimum units for the
income which is assured.
Management The cost of managing internet
products of Amazon will be
quit expenses which can not be
beard by the sellers so they
require high professional
management team.
It has to be the department of
the owner so as to take care of
preservance of website and for
the upgradation of products also.
All the required cost arise in
operating the site is incurred by

owner.
Ownership The controlling of value of
goods and designing its page, it
is not matter of the seller
(Schaltegger,2018).
The entrepreneur has the whole
control over the page design,
signing in and terminating the
product.
Costs In order to sell directly on
Amazon 50,000 is required to
open a website.
The idea to sold a product on the
website required a huge
investment. This cost will take
235,000 which can be termed as
a big cost.
Data It has more data of the
customers who are shopping
online.
It should start from the very first
point and for the collection of the
information on data of online
customers is sometimes difficult.
Protection Selecting a good brand will
give protection to the company.
The consumers who knows
about it has loyalty and trust
towards a brand.
It has to develop its own brand
image and loyal customer base.
Control In this, it does not have a
command over the policy of
pricing of items and return
policy also.
This is how, the superterrene
management can regularize the
valuation and exchange policy of
the goods according to the
requirement (Shi, 2019).
From the above differences, it can be analysed that -
 By creating an own website, it will take much cost than by directly selling of Amazon.
So, accordingly investment should be benefited for the organisation in status of expenses.
 The sales of the products assured in their own website by 35000 units in comparison to
the amazon. However, Mr. Amana's website will generate more revenue than Amazon.

 Mr. Amana can not control the value of the commodities but it can be controlled if he
develops his own online store.
 The concern of maintaining the website, will be beard by the amazon, if he chose to do
trade with the amazon directly (Tweedie, 2022).
 Hence, from the above analysis it has been recommended to Mr. Amana to choose to
make his own online store, because ultimately the profits of the company will be earned.
By making more sales through website it will be helpful for more profit.
CONCLUSION
The above discussed report can be concluded that any organization and person or
individual should not be based on the budgeted values of various kind of cash and revenue's
factors. The business management gets the data with the help of budgets like what the costs
might be faced by the company. These elements help to evaluate the overall organization. The
variances present the main places or area in which company needs to focus for better operation
and maximize the profits. It has presented that if the production unit increase then the price need
to be increased for meet up the cost of business. The result of the above report or study was that
the owner of the company needs to create their own website of company for the guaranteed sales
by them. If they start create own website, they are able to get more profits than being depended
on other platform such as amazon.

REFERENCES
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