Management Accounting: Control Report, Performance Analysis, and Online Business Decision

Management
Accounting

Table of Contents
INTRODUCTION...........................................................................................................................3
PART A...........................................................................................................................................3
A.Prepare the control report which shows the real, flexible budget and the budget variances on
monthly basis. ............................................................................................................................3
B. Estimate the performance of the Amana Ltd by using the control report in the year 2020
that is discussed above................................................................................................................4
C. Recommendations to the manager of the Amana for improvement of the areas...................5
TASK-2 ...........................................................................................................................................6
Analyse the decision of the Mr. Amana for establishing its business online or to fixed his self
online shop or to sell on the website of the Amazon by contemplating all the elements of cost
.....................................................................................................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................9

INTRODUCTION
Budget is an document of forecasted revenue and cost to be occurred in future period of
time. It gives the idea to the organisation how much company will spend the expenses on the
business and estimate the funds on different departments. It is used to analyse the financial
performance or position of the entity. It is the important tool of the planning function. It includes
the preparation of the master budget which means the summary of the documents of budget. In
this report organisation has prepared the control report that helps to control the cost and to
identify the variances. Control reports helps to measure the performance of the company and to
monitor the operations of the business (Akbari, and Pourzamani, 2018). In the last company take
the decision to set up the own website or bring out its business in to the online mode. It helps to
estimate the pros or cons of fixing the own website or to pay the cost to the amazon company.
PART A
A. Prepare the control report which shows the real, flexible budget and the budget variances on
monthly basis.
Monthly control report: It is the report which is prepared at the end of the month, yearly or
annually. It denotes the amount of expenses direct or direct such as trading expenses, workers
salary, administration cost, selling or distribution cost and production expenses. This report
provide advantage to compare the real cost or income with the predicted expenses to find out the
deviations. Through this it helps to mitigate the cost and reduce the spending on redundant items.
It is key measurement tool which furnishes the management to see those areas of the company
that requires some improvement and those meet the criteria of the budget goals. The control
report mention the particular characteristics or traits and provide the several information
regarding the budget variances (Birjandi, Khodamipour, and Pourheidari, 2019).
Real budget: The budget that is build on the relay of the past information and expenses is
known as the original budget. It gives the data about the current level of production also. It will
make the easier for the budget manager to predict the position of the enterprise in the present or
future years. It will give the clear picture how much company can sales the good and earn the
profit from that.

Flexible budget: It is the budget which alters due to the flexibility in the production level or
volume. It is more comprehensive than the fixed budget. This budget is changed with the level
of output. This budget utilize the income or expenses incurred in the present level of production.
Budget variance: It is the financial term which indicates the possibility of actual cost may be
lower or higher as compared to the standard or budgeted expenses. The outcome of the budget
results may be positive or negative. The favourable result of the budget means budget has meet
the expectations of the business and organisation has earned more revenue. The negative
consequence of the budget represents that company has spend more money on the expenditures
that reduces the profit of the business (Christensen, Greiling, and Christiaens, 2018). In the
whole time company should managed its budget in optimised manner to achieve the specific
goals and targets. The deviations in the budget has severe impact on the profits of the enterprise.
The time and cost involved in making the budget is huge so it is difficult to bring frequent
changes in the reports.
The following is the budgeted control report of the Amana Ltd :