Management Accounting: Monthly Report Evaluation and Online Store Decision

This report evaluates the monthly control report of Amana Ltd. and discusses the differences and deviations in real and basic budgets. It also examines the decision of opening an online store and settling with Amazon. Recommendations are given to improve the path of the business.

Management Accounting

Contents
INTRODUCTION...........................................................................................................................1
PART A...........................................................................................................................................1
A) monthly report evaluation that present the flexible and original budget variances................1
B) computation of the financial year performance of the business by using monthly control
report that are mentioned above:..................................................................................................3
C) There are some recommendation that are given to the manager of the Amana Ltd.for
improving the path.......................................................................................................................4
PART B............................................................................................................................................5
Examination of the decision of the Mr Amana Ltd. Regarding open a online store and
eloborate the settlement of online merchandise with Amazon by observing the total cost.........5
CONCLUSION ...............................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
A budget refers to an idea that states the level of the earnings of human beings as well as
the corporation. It helps to evaluate the requirement of the money that will needed to the
organization. It is the process of examine the capabilities of the business firm to expend the
money in a particular time that has set up by the organization. Budget has been utilized for
predicting the position of the financial of the business as well as results for further time period. It
aids in analysing and planning the action or performance of the company that can involve
expending the fixed assets, furnishing the training to the workers, setting up the plan that are
related to the bonus and so on (Agyekum and Singh, 2018). The budget can be created on the
basis of requirements of the company such as monthly, quarterly, half yearly and so on. It is very
crucial part to preparing a budget before putting the action into plan of the project. It comprises
the revenue and expenses list. This process aids to earn the profits and control the over
expenditures as well. In this report, the examination or discussion states the statement that create
on the base of the month and make or prepare the budget of Amana Ltd. that are estimated and
evaluate the variances as well as differences. The examination of their action or performance has
been done at the time of pandemic.
PART A
A) monthly report evaluation that present the flexible and original budget variances.
Monthly control report: It helps to provide the important and crucial data that contains the
various cost of direct and indirect such as wages, overheads, expenditures and salaries. With the
help of this report, the owner of the business evaluate the action or operation activities cost that
has expended for selecting the alternative that how to decline the activity cost. It aids to furnish
the internally data of the business entity that relates with the upcoming income or that have
possibility to arise in future (Atkinson and et al., 2019). These income or earnings occur in
future in particular time period. It shows the differences between the predicted and actual. It
assists to organization to take the appropriate decision in order to reducing the variances.
Original budget: This budget has been already prepared. It is depended on the past information
that occurred the value and production level in last time. The manager of the business
contemplated it as very simplest way to analyse the performance of the corporation of upcoming
year's budget. It assists to evaluate the flow of income or earnings in future of the organization.
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It presents the difference among the fixed budget that can not be flexible and the real budget for
knowing the status of the income and expenditures of the business firm.
Flexible budget: This budget is required for adjusting the changes in level of actual revenue. It
utilized in measuring that come into this budget after completing the financial budget. It aids to
concentrated on specific cost that can be raised in the business enterprise. It is used to do some
modification or changes in same level of the income (Austin and Ejike, 2019). It has been set up
for deciding the constant cost and variable as per the action or practices. The flexible budget is
separated in two part variable and semi variable as well. Variable cost are those that fluctuate
according to the units and semi variable are those cost that have some fixed part and some
variable.
Budget variance: It refers to the difference that has been shown in estimated and real budget.
These factors assists to examine and analyse the information that is used by the corporation to
figure out the value of predicted and real (Baard and Dumay, 2020). If the output or outcomes
receives favourable then it shows the highest profit level of the company and if it comes
unfavourable then it states the negative impact of the organization. It is an accounting or
bookkeeping term which aids to observe the actual cost position that mean if the real cost is
reduced or risen than standard.
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B) computation of the financial year performance of the business by using monthly control
report that are mentioned above:
There are steps that can be used for evaluate the Amana Ltd.'s monthly control report.
 Track the expenses: It is considered as a crucial part of the financial budget that aids to
supervise the over cost. The owner of the company oversees the various types of
expenses by using these elements that have possibilities to incur in upcoming time of the
corporation. These kind of statements are made annually but the manufacturer or
producer exaggerate the plan monthly (Barth, 2018). The budget evaluation aids the
owners or managements as well to take the appropriate decision in saving the cost.
 Evaluation of the range that comprises excess expenses: It refers the analysation of
the budget at the time of planning and helps in identifying that particular area which take
extra cost and try to reduce the cost and expenses by taking decision efficiently.
 Oversee and evaluate the space that contains over cost: The manager of the business
do comparison and directing the area that carry high cost or low cost on a specific
business operation activity during planning of the budget through utilizing these steps.
Analysation of the budget that is prepared for the Amana Ltd. Monthly report are discussed
below:
 The flexible budget shows less trade or revenue than the real budget. It mean the
business has to maximize the level of the production while enhancing the price of
selling. It will aid the organization to increase the level of income as well on annual
basis. The product's selling value is £25 and the 100000 units are sold according to the
original budget. The basic budget is less than the original budget. The business entity
can be changed cause of the differences in the cost (Bigoni, Maran and Ferramosca,
2021).
 The variances of law and the raw material contain high cost. In real budget, the selling
price is 10% per unit but the cost is £280000. it is 10% less than the real cost. Thus, the
corporation has to decline the cost of raw material that helps in recovering the
expenditures.
 The production of the units has done by the manufacturer monthly. The labour cost has
been minimized due to declining the direct cost in budget of flexible (Goretzki, Strauss
and Wiegmann, 2018).
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 According to the previous plan, the gross profit of the corporation is reduced by the
55.29%. The outputs of the income and the revenue states the gross profit as well as
expenditures that are related with the operational activities of the firm (Boolaky,
Mirosea and Singh, 2018).
 The overheads that are constant in nature considers in storage lease, remuneration and
securities as well. The beginning funds that gained from the current idea are higher more
than the last constant cost.
 The past idea has more benefits for the business entities. The profit is less by 66.30%
from the previous. It should be closed for decline the expenditures of fixed as well as
variable. The corporation is overseeing the status of the organization through utilizing
the budgets.
C) There are some recommendation that are given to the manager of the Amana Ltd.for
improving the path.
 The company focuses on enhance the profitability of the firm. The management of the
business entity should do focus on manufacturing the units of the products for the
purpose of increasing the quantity of the business firm. When they contemplate abut cost
then the corporation should work on these steps (Church, Kuang and Liu, 2019). These
are very crucial and important for them and also these should be taken in appropriate
manner.
 The owner of the Amana ltd. Should be active about the price of the direct material than
the real budget. The fund or finance might be occur the idle material or wastages. They
must need to make the strategies to oversee on the wastages.
 The management of the business should not do modification in the labour cost because
the labour lost affects the production. The unit of the production has been reduced by
minimizing the labour cost.
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PART B
Examination of the decision of the Mr Amana Ltd. Regarding open a online store and eloborate
the settlement of online merchandise with Amazon by observing the total cost
The Amana Ltd. organization's member is setting up the online store or trade in many
nations such as UK, US and Europe. The business firm needs to do transformation from
commercial way to modern way it mean in online way.
 The company has been closed the 50% area of online sales through Manchester and
Brighton. There will be considered the fixed cost for compensating the transportation
cost, social sites cost and coding cost as well (ElKelish and Rickards, 2018). Beyond it,
they must have to be assure of sell the 100000 units annually. There has been explained
the cost that can be incur-
 There are many alternatives of trading in which they can merchandise in direct manner
through Amazon by giving them full payments for their satisfaction. It aids to furnish the
surety of selling the 65000 units per year and also rise their demands as well. The over
all cost that can be occurred-
Amazon has maintained their brand name that can be recognized easily by mostly people. It has
larger number of reach, it mean it is huge client base platform. For maximizing the company's
profitability, it is best for doing trade in modern way or online mode. If they choose the other
option that is setting up their own website then it will carry large amount cost so profit will not
be as much as first option (Fitria, 2021).
There are various differences about both the options that has been elaborated below:
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Basis Amazon Developing online store
Scope The amazon has cover the
large area of consumer so it
opt the 40% sale per year.
It can be taken huge time to
reach with the costumer.
Management It is able to manage their
website. It does not need any
management by anyone.
For establishing the online
store, it refers to the sole
proprietor so there is
compulsory to manage the
website by own. If there is
requirement for any changes
and modification in their
commodities then they can
change easily.
Cost There is £50000 cost required
for doing the trade with the
help of Amazon.
There will be taken £235000
cost for setting up their own
site and there can be suffered
various expenditures that
affects the cost.
Data It has contained the crucial
information and data in large
amount which helps in dealing
with online store.
For developing their own site.
They will have to start from
the beginning point so they
can be faced lot of issues
regarding collection of the data
and information of the clients
and consumer as well.
Control The traded corporation has no
right to control the cost and
policies of return of the goods
and services.
If they launch their own site
then they are able to come the
changes or modification in the
price and quantity of
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commodities .
As per the above differences, it can be examined that-
 It will carry heavy cost if they opt the option to trade by their own site instead of the
Amazon (Gisch, Hirsch and Lindermüller, 2021). Doing trading with the Amazon will
carry less cost. So it will be more convenient for the business firm in the manner of
invest in the Amazon.
 They get the surety to do more sell through Amazon rather than personal online site.
They sold the 35000 units by Amazon.
 Mr. Amana Ltd. has not ability to control and direct the commodity's price but it they
create their personal site then they are able to controlled the fluctuation of the price.
 The Amazon will be responsible for manage the website in the case of selecting the other
option it means doing trade with them directly (Gackstatter and et al., 2019).
 There has been given the suggestion to Mr. Amana as per the above report for the
purpose of settling their own website or online store. If they will be capable to achieve
the highest sale target through online site then they can enhance their incomes as well.
CONCLUSION
From the mentioned report, there has been concluded that the business firm and the
individual or person should not based or depended on anything such as budgeted value or other
resources that comes under the cash and the revenues as well. These monetary value are not
index. Because the budget furnishes an overview to the owner of the business and management
as well. These elements can be helped in evaluation of the corporation. The above mentioned
report has been discussed about Amana ltd. It is made for the purpose of the evaluate the
monthly control report of the Amana report. The main aim of the report is to examine the
differences and deviation that can be occurred in real and basic budgets. These kind of
differences has shown in the main area where the organization needs to focus for operation of
the business in appropriate manner. The management of the business firm gained the data or
information through budgets that relates with the cost and might be beard by the company.
These sources aids to compute the over all firm. In results, the owner of the business enterprise
need to manage their own internet site to get the highest profitability and get the surety about the
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sales. If they opt the option of initiate their own store of online or their own site then they have
ability to maximize their profits than Amazon.
REFERENCES
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