Management Accounting: Analysis and Recommendations

Management Accounting
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Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
Part A...............................................................................................................................................3
(i). Prepare the monthly control report:......................................................................................3
(ii). Report on Amana’s performance during the year 2020:......................................................4
Provide recommendations to Amana’s CEO on areas of improvement:....................................6
Part B...............................................................................................................................................7
Analysis of Mr Amana’s decision to go online:..........................................................................7
CONCLUSION..............................................................................................................................10
References......................................................................................................................................11
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INTRODUCTION
Management accounting practices used to communicate a plan of action to the rest of the
company. It represents the operational viability and continuity of different parts of a strategy in
its early stages. Afterward, it addresses the success of the proposals and the positions of various
parties in bringing them into effect. For decision-making, managerial accounting should not limit
itself to quantitative data. It considers qualitative knowledge that cannot be quantified in contexts
of money. Industry trends and strength of analysis including development are only a few
instances of qualitative data which a company may gather through special surveys
(Abdusalomova, 2019). The study covers different aspects of managerial accounting in two
sections: Part A and Part B. The first part covers preparation of monthly control report consisting
of original budget, flexed budget and actual outcomes along with variances. Further, this part
covers thorough analysis of business’s performance based on above budgets along with key
recommendations. The second part comprises discussion based on case study while covering
analysis of business as to support decision to go online on Amazon along with key advices
relating to this matter.
MAIN BODY
Part A
(i). Prepare the monthly control report:
Particulars Original
Budget
Flexed
Budget
Actual
Figures
Variance
Units 100000 80000 80000
Selling price 25 25 20
Sales 2500000 2000000 1600000 -400000
Variable costs:
Materials 250000 200000 280000 80000
Labour 400000 320000 440000 120000
Overhead 150000 120000 120000 0
Contribution 1700000 1360000 760000 -600000
Fixed overheads:
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Warehouse Rental 200000 160000 170000 10000
Insurance 100000 80000 100000 20000
Fulltime warehouse supervisor
salary
50000 40000 35000 -5000
Profit 1350000 1080000 455000 -625000
Working Note: Calculation of fixed overheads:
Fixed Overheads: Flexed Budget
Warehouse Rental 200000 / 100000 * 80000 = 160000
Insurance 100000 / 100000 * 80000 = 80000
Fulltime warehouse supervisor
salary
50000 / 100000 * 80000 = 40000
(ii). Report on Amana’s performance during the year 2020:
Amana’s Performance Report:
Income Statement
Particulars Amount
Sales 1600000 100.00%
Variable cost:
Materials 280000 17.50%
Labour 440000 27.50%
Overhead 120000 7.50%
Total Variable Costs 840000 52.50%
Contribution 760000 47.50%
Fixed Overheads:
Warehouse Rental 170000 10.63%
Insurance 100000 6.25%
Fulltime warehouse supervisor 35000 2.19%
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