Management Accounting: Budgeting and Digital Business Strategy

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................4
PART A...........................................................................................................................................4
A. Set up the control report that denotes the actual, flexible budget and the budget deviation
on each month basis. ..................................................................................................................4
B. Computation the actions of the Amana Ltd by employing the control report in the year
2020 that is presented above.......................................................................................................6
C. Suggestions to the management of the Amana for alterations in the strategy........................8
TASK 2 ...........................................................................................................................................9
Analyse the decision of Mr. Amana to take the businesses in digital mode and give
suggestions to establish the own digital business or to merchandise on Amazon by decide the
various expense...........................................................................................................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................13

INTRODUCTION
Budget is the statement of projected income and the expenses to be spend in the future
time period. The preparation of the budget report helps the organisation to know the allocation of
the cost and the money to be spend on the various departments. It is utilize to understand the
monetary performance or the position of the enterprise. It is the essential element of the planning
function. The company prepare the fixed and the flexible budget to estimate the production level
of the business. The first part of the report mention to build the controlled report to analyse the
performance of the organisation and to track the expenses of the company. These controlled
reports is prepared on the monthly basis to find out the deviations. Company has taken several
decisions to measure the outcome by measuring the budgeted report of the business. In the last
part organisation wants to diversify the business online and Amana Ltd has two choice whether
to collaborate with the Amazon site or to sell the goods through its own website (Hoque, 2018) .
PART A
A. Set up the control report that denotes the actual, flexible budget and the budget deviation on
each month basis.
Control report: It is the written document which provides the data about the several kinds of
expenses which is directly related to the production or manufacturing expenses. The control
report assist the manager to keep record of all the monetary expenditure with the aim to reduce
the over all cost related to the goods and service. It provide an idea to business of spending
estimated cost and the revenue will be earned in the future. It aids to compare the actual or
budgeted figures of the cost. This document helps us to take relevant decisions which is essential
for the operation of the business (Ikram, and Meslouhi, 2019).
Flexible budget: It is that type of budget that vary due to the modifications in the income or
profit of the business. It alters in short run or long run production function. In the long run of
production on the large scale all the factors become variable.
Original budget: It shows the current information of the budget which helps to predict the
future. The past information or historical data of cost or revenue is considered to for forecasting
the budget. This data of the budget furnishes to think that how organisation will function for the

next upcoming years. It will show the capacity of the organisation to boost the sales and increase
the revenue of the organisation.
Budget variance: Variance is the difference between the actual or standard output. After
executing the budget the next phase is to monitor or supervise the tasks of budget. The analysis
of the budget guides the organisation to know positive or negative consequence of the results. It
heps the business to know those areas where company show the poor performance (Khoruzhii,
Pavlychev, and Khoruzhii, 2018). The effective budget will be where the actual output is more
than the standard output and shows the ineffectiveness of the company when actual result is less
than the standard output. The differences of the output can have critical impact on the financial
health of the businesses. The function of budget variance is to work with the accuracy and to
foresee the company future in longer period of time.
The budgeted controlled report of Amaan Ltd is mentioned below: