Management Accounting: Budgetary Control Report and Online Selling Decision for Amana Ltd

Management
Accounting

Table of Contents
INTRODUCTION ..........................................................................................................................3
TASK 1............................................................................................................................................3
A) Prepare a monthly control report with flexed budget, original budget and variances for
Amana Ltd...................................................................................................................................3
B) Using the above prepared control report, analyse the performance of Amana Ltd. for the
year 2020.....................................................................................................................................4
C) Recommend the CEO of Amana with the ways they can improve........................................6
TASK 2 ...........................................................................................................................................6
Give and analysis Mr. Amana's decision to go online and advise whether he should set up his
own online shop or sell on Amazon by considering all the important costs...............................6
CONCLUSION ...............................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
A budget refers to an approximation of incomes and expenses which would be taking place over
a certain future period of time. These estimated figures are revalued at regular intervals to be
accurate over a period of time. These budgets can be used by an individual, group of individuals
a corporate, the government authorities (Kasasbeh, 2018). They uses these budgets to
strategically plan better. This report highlights how the budgetary control report are prepared
showing the actual and standard budget of the case of Amana Ltd. For a 2020. The report also
shows a detailed analysis about the performance of the company during Covid-19 pandemic with
needed recommendations for the same. The next part of the report gives an analysis of the
scenarios present with Amana if he wants to sell online, should he go with Amazon or set up his
own online shop.
TASK 1
A) Prepare a monthly control report with flexed budget, original budget and variances for Amana
Ltd.
Monthly Control Report of budgeting consists of crucial information which is related to
different kinds of direct and indirect cost like wages, salaries, overhead costs and other expenses.
This report helps the strategic managers of a business to check their spending activities in the
view of minimizing all the costs related to it (Herschung, Mahlendorf, and Weber, 2018). It gives
insights to the business about how much they will earn in a period and how much costs will they
incur for same. These report also shows how much deviations are there in the actual and
projected figures as only then the business can take required decision to bring down these
variances.
Flexed Budget refers to that kind of budget which changes according to the actual revenue or
income earned by the business. It also focuses on the specific costs incurred by the business
which have changed from the projected i=
Original Budget refers to that kind of budget which is prepared on the basis of past data, costs
incurred in the past and level of production reached. By this budget the firms find it easier to
contemplate how the business would perform next year and coming years. And also about the
profits of the business in the coming period.

Budget Variance refers to the differences that have arised in the actual and projected budget.
These refers to the measure which is used by the institutions to compare the standard and actual
figures. If the variance is favourable, it shows the gains of the business but if the variance is
unfavorable, it shows the negative difference that have occurred in standard and actual (Libby,
and Salterio, 2019). The concept of budget variance is that it shows that the budgets can not
foresee the future and income with accuracy.
Following is the Budgeted control report of Amana ltd:
AMANA LTD
Monthly Control Report
Particulars Original
Budget
Flexed Budget Variances Variance (%)
Revenue 2500000 1600000 -900000 -36.00%
Less: Cost of Goods sold 800000 840000 40000 5.00%
Raw Material 250000 280000 30000 12.00%
Direct Labour 400000 440000 40000 10.00%
Overheads 150000 120000 -30000 -20.00%
Gross Profit 1700000 760000 -940000 -55.29%
Less: Non- operating /
Fixed Expenses
350000 305000 -45000 -12.86%
Warehouse rental 200000 170000 -30000 -15.00%
Insurance 100000 100000 0 0.00%
Full-time Warehouse
Supervisor salary
50000 35000 -15000 -30.00%
Net Profit 1350000 455000 -895000 -66.30%