Management Accounting: Monthly Control Report and Amana's Performance in 2020

This report provides a monthly control report and analyzes Amana's performance in 2020. It includes recommendations for improvement and an analysis of Mr. Amana's decision to go online.

Management Accounting

Contents
INTRODUCTION.......................................................................................................................................3
TASK..........................................................................................................................................................3
Monthly control report.............................................................................................................................3
Amana’s performance during the year 2020............................................................................................5
Recommendations to areas for improvement...........................................................................................6
PART B.......................................................................................................................................................8
Provide an analysis of Mr. Amana’s decision to go online and advise to set up online business.............8
CONCLUSION.........................................................................................................................................10
REFERENCES..........................................................................................................................................11

INTRODUCTION
Management accounting is the demonstration of monetary information and process operations to
the company's inner management. Management accounting is used only by important core team,
and that's the only difference between it and financial accounting. During this procedure, finance
management shares credit statements and documents with the company's board of directors,
along with invoices and comparative balance statements (Ciuhureanu, 2018). This report based
on the Amana Ltd which is an established in England and sells souvenirs to tourists. The Covid-
19 pandemic recent times erupted in England, prompting the government to enact limitations on
motion and transport, significantly influencing the tourism sector. In this report consist of actual
and original budget calculation and present performance of company. Along with provide
appropriate recommendations for the appropriate improvement.
TASK
Monthly control report
A budget results report is a management report that measures a period's real revenues and
costs to the planned benefits and expenditures based on historical overall sales. In other terms,
it's a study that reveals the difference between real and planned business results. This report is
given by management at the close of a financial reporting cycle to see if there are any significant
variations in the projected budgeted figures announced at the start of the process and the real
closing figures. This is an important tool because it helps managers to assess which aspects of
the organization are achieving budget targets and which areas or divisions require change
(Moshchenko and et.al, 2018).
Particulars Cost per unit Original Flexed Actual Variances
Units 1,00,000 20000 80,000
Selling price 25 2,000,000
Revenues 2,000,000
Variable
costs:

Materials 2.50 2,50,000 3000 2,80,000 (30000)
Labor 4 4,00,000 40000 4,40,000 (40000)
Overhead 1.50 1,50,000 30000 1,20,000 30000
Contribution 17 17,00,000 5400000 11,60,000 540000
Fixed
Warehouse
rental
200000 2,00,000 30000 1,70,000 30,000
Insurance 100000 100,000 Nil 100,000
Fulltime
warehouse
supervisory
salary
50,000 50,000 15000 35,000 15,000
Profit -70000
Budgeted Actual Variances Favorable/
Unfavorable
Units 1,00,000 80,000
Materials 2,50,000 2,80,000 (30000) Unfavorable
Labor 4,00,000 4,40,000 (40000) Unfavorable
Overhead 1,50,000 1,20,000 30000 Favorable
Contribution 17,00,000 11,60,000 540000 Favorable
Fixed
Warehouse rental 2,00,000 1,70,000 30,000 Favorable
Insurance 100,000 100,000
Fulltime
warehouse
supervisory salary
50,000 35,000 15,000 Favorable

As per the performance report get variances that category into favorable and unfavorable
manner.
Amana’s performance during the year 2020
According to performance report it is analyzing that there is identifying differences in
original and actual budget that identify by the variances. There are huge differences in amount
predications that impact on decision making procedure in broad manner. The finance department
set budget for future activities like production units 1, 00,000 and in actual produce 80,000. The
direct material of company 250000, labor 400000 and overhead 150000. But in actual these are
getting in increasing manner so it is not match with the budgeted amount and identify
differences. Some conditions are in favorable and some are in unfavorable manner (Zadorozhny
and et.al, 2018).
Amana's turnover was hit hard in April 2020 when visitors were unable to fly for the
Easter break. Revenues improved marginally in the summer of 2020, but the extended lock down
between December 2020 and February 2021 drained any extra revenue generated in the season.
Amana ltd has previously only operated in physical stores, with a functional website acting as a
channel for promoting their company. Mr. Amana, the company's owner, has appointed as a
management team and offered a salary reduction. It supports to get sustainable in proper manner
and get effective results. After the Covid 19 Company prepare estimated budget and set
particular amount but after execution get different results that was not match with the budgeted
amount. It is not sustainable strategy to reduce selling price to improve profitability. For this
require to apply these strategies:
 Improve employee morale by using worker success assessments to acknowledge and
encourage employee achievements, as well as teaching them business skills and how to
up sell items so that consumers make many transactions at once (Bukhoriev, 2018).
 Create new product lines by polling consumers on what they want to see.
 Find new customers: Potential users will assist in the expansion of your market.
 Find new opportunities: Do market research to see how you can extend the company into
new fields.
 Customer Support: Establish a workforce preparation programme to strengthen customer
support.

Recommendations to areas for improvement
There are providing recommendations to Amana for the different areas of improvement
as per the performance in 2020 such as:
Variable cost: This segment covers the expense of products or services, which can vary
depending on the company's performance. Assume have a product on the market that is getting
momentum. The next step will be to produce more of that substance. The prices of commodities
used in manufacturing, sales networks used to produce the commodity, and production labor will
all adjust as production increases, so they will all be called contingent expenses (Alsharari,
2017).
Fixed cost: A fixed cost occurs where a company spends the same price on a specific expense on
a consistent basis. Property leases, mortgage/utility fees, staff benefits, telephone access, payroll
software, and insurance rates are also forms of fixed costs. It is important to include these costs
in the budget so that you can put aside the same amount of capital available to fund these
expenditures. They can also be a decent starting point for troubleshooting if company revenues
aren't going as expected.
Estimated revenues: It is important area of improvement where calculate right amount of
revenues for future. On the basis of the amount prepare strategy for the investment and take short
term as well as long term decision. This is the amount of revenue that a company expects to gain
from the selling of products and services. Estimated revenue provides the following: market
projection and estimated cost of product delivered or services rendered. If the company has been
in operation for more than a year, expertise will help you in calculating these elements. Unless
the company is fresh, look at the sales of related local companies and use those statistics to build
some realistic revenue estimates. However, if the company is new or established, it is critical to
remain pragmatic in order to prevent over-estimation (Jusoh and et.al, 2018).
Cash flow: This is the cash that flows in and out of the company. They can also get a sense of
that by looking at recent financial statements and using the data to estimate results for the
financial planning year. They'll like to keep track of not only how often money is flowing in, but
also why it's coming in. Realizing how cash flow is greatest will enable schedule whether to
make major acquisitions or acquisitions if the company has a peak period and a dry weather.

Profit:
There are providing suggestions in regard of budget planning and management to CEO Amana
such as:
 Communicate early and often: Due to predictions and financial planning impact all
operations of the organization; it is critical to maintain an open conversation with all
agencies across the procedure in effort to reduce problems and make integration here
between corporation's organizational and individual techniques.
 Involve entire team: Budgeting and forecasting should be done collaboratively so that
agencies and units have a better adequate sample. Individuals with a wave on the multiple
agencies, in addition to those in the accounting department, can provide the data available
to develop good estimations and make appropriate expenditures. Furthermore, utilizing
the executive match requires multiple viewpoints on where the company is now and how
it could be in the future (Sharovatova and et.al, 2018).
 Be a scenario planner: Making predictions and being adaptable to possible situations and
growing economic conditions is an important aspect of running a business. Due to the
extreme volatile and sometimes erratic nature of the economy, technologies, and even
competition, a CEO must be able to anticipate accurately and deal with the occasional
rounds of their business. When planning about the budget that time require to involve all
those things that help to achieve set goals and objectives of a company.
 Accounting is everything: It is all too easy for CEOs to overlook important information
while budgeting and predicting, particularly when time is of the essence. Nonetheless,
these systems must compensate for any cost, element, and small target. As CEO, Amana
must keep track of every aspect of the company's spending during the financial year,
from ad strategies to card clip materials. It might be stunned by how little details will add
up. When it comes to forecasting, after you've finalized the schedule, consider every
possibility for the upcoming fiscal year. Pay special focus to market shifts and without
relying exclusively on historical evidence. Delegate experienced members of staff the
duties of pattern monitoring, responding to clients and consumers, and going to keep an
eye on rivalry, and continue to bring the minute specifics of their results into account
while creating the market outlook.

PART B
Provide an analysis of Mr. Amana’s decision to go online and advise to set up online business
Mr. Amana also found that many of his rivals now market their products online to
consumers in the United Kingdom, Europe, and the United States. Amana has considered
shutting branches in Brighton, Birmingham city centre, and Manchester city centre in order to
expedite corporate operations and shift 50% of revenue online. It is suggested to Mr. Amana to
set up online business and sell out their product on Amazon.
Reduce cost: While opposed to establishing a conventional office-based business, the biggest
benefit of running an online business is the cost savings. Although there are fees involved with
obtaining a trademark and putting up a website, they are small in relation to leasing and
managing actual property (Wahyuni and Putra, 2020).
Reduced Staff requirements: However in a physical store, the owner will need to hire a large
number of salespeople, in an online store; the entire job is done manually. When buying
something online, for example, there is no need for a store manager to take payment: the buyer
merely inputs his or her credit card information and the item are accounted for in minutes. When
Amana Ltd set up online business so do not require more staff member but require appointing
full time IT Programmer that cost is £35000 per annum.
Increase sales: With an online sector is that will sell company on a worldwide scale, targeting
future clients in other countries and cities. They would, though, require networks in place to
deliver products or services to these far-flung areas. However, while a conventional business will
only sell to people in their immediate neighborhood, developing an effective business allows
them to reach a much larger audience. As per the research it is getting that these would be
guaranteed sales of 100,000 units annually.
Easy to retarget: While operating an online business, it is indeed easy to comprehend online
advertising advertisements to reach out to local consumers, making it one of the most lucrative
ecommerce advantages. They can use a Facebook Pixel to target prospective consumers with ads
in their Social media feeds. They will use the Shoelace Shoplift makes to retarget customers who
come into the shop but don't make a purchase.

Personalized online experience: Website Personalization can further improve the shopping
experience. One of the most significant advantages of operating an online business is the
opportunity to produce customized email campaigns for mass stakeholders. This will entice them
to purchase from without any hard work on part. It's not about people who walk into a physical
shop and need to be nurtured right away. They should put in all of the effort before launching a
campaign and then sit back and enjoy until they begin selling to their client base (Ahmetshina,
Vagizova and Kaspina, 2018).
Sale out products on Amazon
There's a lot to be said for Amazon's incredible reach. Every month, more than 200
million people shop on Amazon. Retaining customers is the primary motivation for 85 percent of
businesses offering on Amazon, with 72 percent desiring to "represent my customers where they
are." Amazon's third-party platform has been a primary growth engine as the company has
expanded, with third-party retailers accounting for roughly 60% of Amazon's e - commerce
revenue. To become part of Amazon require to paid fees which is £50000.
Brands have found success on Amazon: Selling on Amazon will help even big and very well
stores with a high volume of traffic. Amazon's demand easily outnumbers that of any other store,
but having a location where the customers are is critical. Wouldn't a company like to be situated
in a mall where the majority of consumers shop, such as the largest mall in any town?
Access to world class logistics: Another advantage of selling on Amazon is Amazon fulfilment.
Businesses will take advantage of Amazon's immense supply chain capability by selling on the
site. If a company chooses to participate in Amazon's Distribution by Amazon (FBA)
programme, it sends the products to Amazon, which then handles the product's packaging,
distribution, and customer support (including returns).
Selling on Amazon has a tendency to re - activated products by removing the very
distinguishing features that distinguish them. How many times have you made an Amazon order
and failed to note the third-party seller's name? Amazon lowers brand recognition by directing
the attention away from the branded product and into consumer feedback. When I went to
Amazon to make an order lately, the offerings of a seller I have never heard of emerged at the
top of search heap (Holm and Ax, 2020).

Simply sale tax compliance: Most states also mandate out-of-state retailers to raise and
mandate sales tax under economic nexus rules. In most states, exchange coordinator rules
mandate that marketplaces raise and remit sales tax on behalf of third-party retailers. Even so,
exchange vendors will also have to report with the tax agency and file returns. Both facilitators
and retailers will benefit from sales tax optimization.
Rich customer data: One of the advantages of companies selling on their own platforms is the
potential to gather better consumer info, which they wouldn't have exposure to if they sold on
Amazon. For instance, rich consumer data may be used to deliver more customized goods and
services to consumers. If questioned what move they were more inclined to take as a
consequence of customized brand material, the most common response was to make purchases
(51 percent), accompanied by being loyal to the company (49 percent), and recommending the
brand to others (46 percent). Rich consumer data that brands transform into actionable
experiences can be a world changer (Basova, 2017).
Conclusion: After all the analysis it is recommended that set up their online business in which
earn revenues own brand basis. Along with it helps to generate own position in online market
and direct connect with customer that helps to add more new customers.
CONCLUSION
As per the above report it has been concluded that Management accounting is essential
for any business activity that helps to get effective results in broad manner. There are identified
different benefits of online business and Amazon selling.

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