Management Accounting: Control Report and Business Performance of Amana's Souvenir Business

MANAGEMENT
ACCOUNTING

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
PART A...........................................................................................................................................3
I. Monthly Control report............................................................................................................3
2. Performance of Amana’s business in 2020.............................................................................5
3. Recommendations for Areas of Improvements.......................................................................7
PART B...........................................................................................................................................8
1. Determination of best business options on the basis of relevant costs – Own Website Vs
Amazon........................................................................................................................................8
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11
Books and Journals....................................................................................................................11

INTRODUCTION
Management accounting aims at providing such financial data that could be used within
the organization by advising management on several aspects to facilitate overall organizational
development (Bril and et.al., 2020). Common reports that are being prepared by the management
accountant involves budget reports, sales reports, department reports, inventory reports, etc. In
this report, with regards to the Amana’s tourist business selling souvenirs to the tourists
travelling to England. The financial results of this business have greatly affected because of the
fluctuations taking place in the revenue generation as a result of less tourists travelled during the
Easter days. This situation took place because of the lockdown implementation during 2020 and
2021. Accordingly, the flexed budget would be prepared to determine the variances in expenses
as a result of change in activity level. On the basis of this control report, the evaluation of
souvenir’s business would be done with respect to 2020 and recommendations would be
provided accordingly to indicate the areas of improvement. Secondly, the two business options
associated with operating online that is, through setting up own website or tying up with Amazon
will be compared in terms of relevant costs and benefits underlying these options.
MAIN BODY
PART A
I. Monthly Control report
Particulars Original
Budget (£)
Flexed
Budget (£)
Actual (£) Variance (£)
(Actual
budget –
Flexed
budget)
Favourable
or Adverse
Total number
of units sold
during the year
(A)
100000 80000 80000

Selling price
per unit (B)
25 25 20
Sales Revenue
(C) = A * B
1000000 * 25
= 2500000
80000 * 25 =
2000000
80000 * 20 =
1600000
1600000 –
2000000 =
-400000
Adverse
Less Variable
Costs:
Materials
(D)
100000 *
2.50 =
250000
80000 * 2.50
= 200000
80000 * 3.5
= 280000
280000 –
200000 =
80000
Adverse
Labour
(E)
100000 * 4 =
400000
80000 * 4 =
320000
80000 * 5.5
= 440000
440000 -
320000 =
120000
Adverse
Overheads
(F)
100000 *
1.50 =
150000
80000 * 1.50
= 120000
80000 * 1.5
= 120000
120000 –
120000 = 0
-
Contribution
(G) = C – D –
E - F
100000 * 17
= 1700000
80000 * 17 =
1360000
80000 * 9.5
= 760000
760000 –
1360000 =
-600000
Adverse
Less Fixed
overheads (H)
Warehouse
rental (I)
200000 200000 170000 170000 –
200000 =
-30000
Favourable
Insurance 100000 100000 100000 100000 –
100000 = 0
-
Fulltime
warehouse
50000 50000 35000 35000 –
50000 = -
Favourable