Selling through Amazon vs Developing own online store: Amana's decision

ACCOUNTING
Table of Contents

INTRODUCTION.......................................................................................................................3
TASK........................................................................................................................................3
PART A....................................................................................................................................3
(ii) Develop report on ascertained performance of Amana’s during the 2020 year............................5
(iii) Give suggestions and recommendations to Amana’s CEO for specific areas that demand
improvement...................................................................................................................................7
PART B.....................................................................................................................................8
Provide related examination of Mr. Amana’s decision for switching towards online grounds and
provide related advice whether they must set up their own online shop or sell through Amazon.
Also consider related and relevant costs incurred during process.....................................................8
CONCLUSION.........................................................................................................................11
REFERENCES..........................................................................................................................12

INTRODUCTION
The report prepared below explains the significance and essence of preparation of budgets &
how to contribute in growth as well as expansion of business in competitive environment. The
budgets are useful in every area whether it is a small firm, large enterprise, a sole proprietor or
partnership contract-based projects. The budgets are helpful for serving as a tool and providing
related assistance for future courses of action that would help business to minimize costs and
risks. The report takes in account controlling and monitoring of funds reserved by Amana Ltd.
for a specific point of time (Aerts, 1994). It states various methods that would help in preparation
of budgets for example flexible budgets, original budgets and serves as a medium in calculation
of variances as well. Variance helps to compute the difference present in case of estimated
expenses and actual costs. It has been observed that pandemic has affected related economy and
smooth running of companies in market which is the main reason behind assessment of
conditions and situations.
TASK
PART A
(i) Prepare monthly control report that reflects preparation of flexed and original budgets and
computation of variances.
Variance of the budget: It can be explained as a tool which is helpful for respective persons,
government authorities and corporate parties. It is useful for finding the difference evident in
case of actual amount and the estimated quantity. The variance can be defined as deviation that
can be used for predicting whether the actual expenses is lower or higher than estimated costs.
There can be various reasons behind the presence of variance for example change in economic
situations, business surroundings, poor results, errors made by human. There can be two
circumstances such as favourable or unfavourable budgets. A favourable budget can be
explained when the costs are less as compared to expected expenses. The unfavourable variance
defines occurrence of higher expenses than what is expected cost in a budget (Arrington and
Puxty, 1991).

Monthly control report: It can be described as a report that considers the important
information and data taking in account fluctuations in costs, utilities, payroll and overhead
expenses as well. It is compulsory for every company to recognise areas that require spending
and investment of funds which would help to understand pattern adopted by them during the life
cycle of business. In every type of organisation, the budgets are being planned and carried out by
superiors, executives and top-level managers. The monthly control report can be used to examine
working expense or operating costs of an enterprise. It also serves as a guide and provide
suggestions that would contribute in recognizing areas that demand increase or decrease of
investment or funds. It also helps to find areas which generate more unwanted costs that can be
minimized well in time by implementing preventive measures (Brock, Hinings and Powell,
2012).
 Flexed Budget: It is transparent and clear from the above keywords that it is helpful
in keeping updated data which would ignore errors and mistakes while preparation
of budgets. Such budgets are helpful when business is recording enough alterations
in company. It is valuable in comparison of actual consequences with budgeted
accounts. It is counted as a helpful tool that is fixed in nature and might result in
preparation of flexed budgets.
 Original budget: Such budgets are developed and prepared with proper considerate
of information collected previously. The budget is framed and costs are dignified
with the help of proofs collected and put at one place from last year’s information.
It also assists in calculation of net revenue earned by a firm.