Management Accounting 2 Report - Amana Ltd

Management
Accounting 2 Report

Table of Contents
Introduction....................................................................................................................................3
Part - A............................................................................................................................................4
(i) Prepare the monthly control report showing original budget, flexed budget, and
variances................................................................................................................................4
Statement of Original Budget................................................................................................4
Statement of Flexed Budget..................................................................................................4
Statement of Variances..........................................................................................................5
(ii) Using your control report prepared in (i) above, prepare a report on Amana’s
performance during the year 2020......................................................................................5
(iii) Provide recommendations to Amana’s CEO on areas of improvement..................7
Part – B...........................................................................................................................................8
Conclusion....................................................................................................................................10
References.....................................................................................................................................11
Books & Journals...............................................................................................................11

Introduction
Management accounting can be defined as an important tool that helps in attaining the end
objectives of the business organization in the most effective manner. It helps an organization in
recognizing, breaking down and translating to make the organizational structure stronger so that
it can achieve higher level of financial operational efficiency effectively. It is basically a type of
accounting that helps in the financial book keeping. In order to make various managerial
decisions it is highly important that the financial information of the company is made in an
efficient manner. In context to this report, different practical tools of management accounting are
used in order to prepare a budget for the organization namely Amana Ltd. So that the proper
management of the finances can be done effectively. Along with this, a critical discussion on
switching to the online business is performed so that the respective business can attain higher
level of profitability.

Part - A
(i) Prepare the monthly control report showing original budget, flexed budget, and variances.
A flexible budget can be defined as the budget which is majorly used by the organization when
the business organization is dealing with the shifting expenses as well as the incomes. For the
preparation of such kind of budget it is important to extract all the costs which includes the
incomes and the expenditures into the account (Ciftci and Salama, 2018). This helps in having
certain amount of projection that assists the business organization to deal with the financial
responsibilities effectively. For a longer duration, flexed budget is often used by many of the
organization because it is more effective as compared to the static budget. Except the fixed costs,
all the costs keeps on changing throughout the financial period.
Statement of Original Budget
Particulars Original Budget
Production 100,000
Variable costs:
Materials
Labours
Overhead
250,000
400,000
150,000
Fixed overheads:
Warehouse rental
Insurance
Fulltime warehouse supervisor salary
200,000
100,000
50,000
Statement of Flexed Budget
Particulars Original
Budget
Variable Cost
per unit
Flexed Budget
Production 100,000 Original Budget/
100,000
Average cost *
80,000
Variable costs: