Management Accounting Assessment 2 Report

Management
Accounting Assessment
2 Report

Contents
INTRODUCTION...........................................................................................................................2
MAIN BODY...................................................................................................................................2
PART A..................................................................................................................................2
1. Monthly control report preparation based on budget, actual, and deviation arrived:.........2
2.Performance statement of Amana Ltd during the financial year 2020:...............................4
3. The improvement points suggested to the Chief Executive Officer of Amana Ltd:..........5
PART B..................................................................................................................................6
The suggestion that has been given to Amana ltd that whether they should develop their
website for selling their products and services or use the amazon facility:...........................6
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
The budget is an estimate of expenditure that an organization has made based on experience
regarding the expenses and income they have made by the entity. The budget intends to compare
the actual performance of the business during the current operational year. With the help of such
analysis, the difference in the performance has been identified therein and such differences need
to be analysed and resolved by the corporation. Any deviation in the performance has been
identified with such comparative analysis that would help the organization to improve in those
areas of the business which need to be improved (Bulgakova, Bobryshev, and Dudaev, 2018).
MAIN BODY
PART A
1. Monthly control report preparation based on budget, actual, and deviation arrived:
 Control reports every month:
These are the reports that have been prepared based on the performance of the business
that has been prepared by the management of the organization and these reports are
linked to various departments of the organization such as payroll, utilities, sales,
purchase, etc. The benefit of this report is that it helps the business in the examination of
expenses that have been carried out by the department by carrying out the comparative
analysis relating to the cost and also ensures that any deviation that has been arrived so
far in all the business processes must be addressed accordingly (Cokins and Căpușneanu,
2020).
 Flexible budget:
These budgets are being prepared to check the performance of the organization on a
different level of output of the organization. These budgets are used as the benchmark of
the business to check on what level of output they are gaining maximum revenue and
profit. Similarly, the different levels will provide the business an idea that at what level of
production they cost they are incurring in terms of fixed and variable are being low.
These budgets are being prepared on an estimation basis and there are chances that the
results so obtained from them may get diverted.
 Original budget:

These budgets are being prepared considering the future performance of the business and
based on existing funds, the business is retaining. These budgets play an important role in
the finance department of the organization as they provide a road map for the expenses
and income the organization is expanding or earning. The main focus of these budgets is
to maintain certain limits on the expenses that must be maintained by the organization
throughout the year (De Araújo Wanderley, 2019).
 Budget variance:
It simply shows the performance of the business when the actual performance is being
compared to actual figures. These variances help the organization to check whether any
deviation has been taken place due to what reason and suggestion has been taken into
consideration to improve such variances. It is important for the business to properly
handle such variances and maximum deviations should be addressed accordingly so that
the funds of the business do not get misused throughout the year.
Below is the table prepared which is relating to the Amana Ltd that shows the
monthly control report of their business by comparing the actual figures with budgeted
and such deviation are being reflected in percentage terms: -
Particulars Budget Actual Variance Percentage
Selling price per
unit
2500000 1600000 -900000 -56.25
Less: Variable
cost
Material 250000 280000 30000 10.71
Labor 400000 440000 40000 9.09
Overhead 150000 120000 -30000 -25
Contribution 1700000 760000 -940000 -123.68