This report discusses the efficiency of Amana Ltd business in the financial year 2020 and provides suggestions to the CEO for upgrading the task of the administration in the enterprise. It also computes whether Amana should go online or establish its own online store.
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Accounting Project 2 Report Table of Contents
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INTRODUCTION...........................................................................................................................1 MAIN BODY...................................................................................................................................1 PART A...........................................................................................................................................1 (a) Create a monthly control report showing original budget, flexed budget, and variances.....1 (b) Study the control report, measure productivity of Amana Ltd. in the Financial year 2020..3 (c) Provided some suggestions to Amana’s CEO on field of betterment..................................4 PART B............................................................................................................................................5 ComputationthroughidentificationthatwhetherAmanashouldtaketogoonlineor establishing its own online store, by applying all the costs which are relevant for the organization................................................................................................................................5 CONCLUSION................................................................................................................................8 REFERENCES...............................................................................................................................9
INTRODUCTION This case study discuss about the efficiency of Amana Ltd business in the financial year 2020 and if any issue in the operational activity of the organization and saw a disruption in results then provide some recommendation to the CEO of the company for upgrading the task of the administration in a enterprise. So, essentially this assist to know the various problems of the company and then they make strategic idea to solve the misconception of the organization. Basically its mainly concentrate towards the growth and development of the firm. In the second instance of this case its talk about what type of judgement Mr. Amana take to improve the productivity of the company and also discuss about that Mr. Amana establish his company in its self-owned website or sell its products to the to the amazon which occurred expense for the company(Ansaripoor and Oliveira, 2018). On the other side this case also involve the abstract of budget. It involves identification of budget and also determine the total of cost and income which is occurred for particular period of time. It mainly shows that how much value a individual can spend and save for a particular time duration. Budget can be prepare and manage by anyone it include some individual people, any firm and government sectors. It assist them to recall that they have sufficient budget to pay out. MAIN BODY PART A (a)Create a monthly control reportshowing original budget, flexed budget, and variances. This case discuss about the formation in quality of budget, flexed budget and its variances. In the very first step it' crucial to know the monthly power budget. Generally, the budget shows the details depends upon the data of payroll task in the business, overhead expenditure show the changes in expenses and its wants. The crucial circumstance of the firm is to assist the proprieter or the supervisor to identify the illustrate of investing by the owner. It can be hard to the company to know its revelation. This case also authorize the high level of the firm to calculate the working expense fixing of the division and begin to understand the method to decline the expense and cost of the organization(Badr, 2021). Flexiblebudget: This budget also talk about the establishment of results or levels of the business. On the other hand the budget discuss about the constructing of price which does 1
not change. When it provide the flexed budget then its continuously fluctuate with the company variations of expenses and the advantage of this flexible budget assist to create high devastation of money. In other words more opportunity and fast results to fluctuate the market as well as organization situation. Data Quality: This idea of budget assist to understand the historical data of expenditure as well as profits. The budget is provided to take expenses as a basic of it and also assists in measuring the fresh income of the business(Hansen, Mowen and Heitger, 2021). Now, it's discuss about one more term is variance of budget. In other words, this budget assist to understand the deviation of actual and quality budget and talk about the current situation of the company and express some kinds of betterment in results of the firm also. To understand the situation of the budgeted financial year 2020. The below table express the working of original budget. Flexed budget and variances of budget. AMANA LTD Monthly Control Report Particulars Original Budget Flexed BudgetVariancesVariance (%) Revenue25000001600000-900000-36.00% Less: Cost of Goods Sold800000840000400005.00% Raw Material2500002800003000012.00% Direct labor4000004400004000010.00% Overheads150000120000-30000-20.00% Gross Profit1700000760000-940000-55.29% Less: Non- operating / Fixed Expenses 350000305000-45000-12.86% Warehouse rental200000170000-30000-15.00% Insurance10000010000000.00% Full time Warehouse Supervisor salary 5000035000-15000-30.00% Net Profit1350000455000-895000-66.30% 2
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(b)Studythe control report, measure productivity of Amana Ltd. in the Financial year 2020. The above case clearly describe about the productivity of Amana Ltd in the financial year 2020. The formulation of above table express the efficiency of the operational task of Amana Ltd and how it cope up the fluctuations of flexible budget and how it calculate the expenditure and incomes of quality data and assist the firm to identify the results of the company(Kim, Jung and et.al., 2021). Here are some crucial points which helps in determining the performance activity of the business budgeted report: Cost which are easier to track: This idea of budget is a crucial instance of expense which assist the business to identify the spending money and then make a budget according to that in coming future. It will help the business to identify the issues which create a disruption in a company while it execute the task to accomplish it budgetary objectives. This case basically express the financial judgement of the business and it create such decisions on annually basis they don't create kinds of plan on monthly basis and it can also based upon the identification of production expenses, material expenses and other expenditure also which it incurred while firm execute the task into the enterprise. But if it create a plan of paying out money then It's totally dissimilar as compare to the financial strategy. It can be ready by the organization on monthly basis because expenses can be occurred in firm at anytime. While it executing the budgeted objectives into the enterprise. But this monthly paying out strategy assist the business to measure where money is highly spend in a very effective manner. In company its basic objective of the proprietor to better identify the paying out plan and attempt to decrease the cash outflows and expenses of the business. In general, the firm can payout money on a important activity rather than spending in devastating tasks(Kiselev and et.al., 2018). Identify the more spend cost: If business utilize to improved the path in which company face difficulty to execute the activity then they require to measure the area in which firm high spend on expenses and attempt to recover the activity in which it occurred high 3
expense and decline firm's revenue. This problem can be solved by spending less on wasteful activity and more focus to provide high income into the business. Determine the field in which it incur more cost: Business need to identify the various kinds of task in which it occurred more expenses and that was the reason to make low value of revenue. In general, company attempt to improve the cost figure and create appropriate strategy and then it pay out such kind of tasks which are better for the firm and not make any issue for the income of the business. The above structure of the table express the kind of field of Amana Ltd company which was very crucial to better its results. It mainly describe that the business predict the quality budget of the financial year 2020 but company accomplish the actual budget less than its original budget in various fields it involves: In a very first step of this table express the revenue of the business and its quality budget. It can express that the company revenue is higher than its actual budget of the company. In other words it's mainly describe that the company predicted more revenue in the financial year 2020 but they acquire lower than it justify that business necessary to higher it sales rather than more spend on expenditure(Kotake and et.al., 2022). In second step of the above table express that the firm more invest on the expense because of this circumstance gross profit of the business turn out decreases in comparison to the original budget. In the third step of the above table show the revenue and gross profit are lower in comparison to the original budget and because of this net profit of the financial year 2020 is also reduced. In 2020 business pay out high money in the expenses of the company and not focused on the income and it show less efficiency of the organization and reduce the capability to execute the task with the accomplishment of goals and objectives. (c)Provided some suggestions to Amana’s CEO on field of betterment. 1.The administration of the business necessary to create more income in the firm because every organization can generate more profit when it sale more and pay out less on the task into the enterprise. There is only one circumstance which decrease the actual budget of the business that is lower sales and pay out in high cost it decline the net profit of the organization(Mutilba and et.al., 2019). 4
2.Fix a better strategy for the budget: This is one of the most crucial point to make budget in early because before applying any strategy business necessary to create good plan and then move ahead to implement such strategy into the company for accomplishing the budgeted objective effectively. The table express that the firm not ready with the better plan and not productively execute that's the reason to become low profit as they predicted in financial year 2020. 3.Prepare with the future schemes: Every company face issue while they executing the task. So, the firm need to ready in advance for the problems and assist the company to cope up with the fluctuations. PART B Computation through identification that whether Amana should take to go online or establishing its own online store, by applying all the costs which are relevant for the organization. The above report could be identify that Mr. Amana's Business is execute and run very normally in the nations of United Kingdom, Europe and United states. On the other side Mr. Amana attempt to sell their goods and create it firm online for increasing its sales revenue. It could be occur by closing some of the division which are setup in the cities of Birmingham, Manchester and Brighton. But its complex between the two scenarios of improving the firm, one is it should transferral its total firm online and the remaining sell the goods with the assist of Amazon(Ruan and et.al., 2019). Taking the expectation of the cities are closed and shift online, it will automatically decrease the sales turnover and support to make only 50% of the revenue with the assist of online website because of this firm is borne to partial some of the expenditure which are fixed, betterment, delivering expenditure and others but it create a confirmation of selling 10000 units annually. This will incur a total expenditure like: Betterment expenditure of treating the online website =£ 50000.00 Salary of a full- day IT engineer = £ 35,000.00 yearly Delivery method expenditure = £ 150000.00 Total expenses = 50000.00 + 35000.00 + 150000.00 =£ 235000.00 5
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The second instance include settle achievement for selling the products directly to amazon. It will provide an secured sale of 6500 units yearly. It justify that the expenditure for setting up the company into online framework is£ 1,85,000and amazon achievement stake is£ 50,000. Amazon is a very important international online gateway payment method which create various kinds of goods and services to the consumer and assist seller to sell their product with this level. It also create online payment facility to the consumer from one person to another(Shi and et.al., 2020). on the basis of above report it express the interaction between the setup it own online shop or selling products in amazon. BasisSelling through AmazonSetupthecostofitown online shop ScopeThebusinesshasmore consumer base which higher thechanceofsales. essentiallyinAmazonthey advanceprovideit'sgood imageinthemarketand because of this the various of consumer demand its product inamazonwebsite.They havenumberofcustomer present in various nations(Tu and et.al., 2021). It takes comparatively more duration to get the customer. Ineasytermexecutingits ownwebsitetakesomuch durationtocompletethe desire of consumer and take more duration to develop the trust in the mind of consumer for the website. Amazon and many more online sites takes high time to prepare goodwill in the market. So, that if a businesswantstomakeits own site than it's take more duration to make good image. Cost administrationIt will demand the fix cost of the website from the retailers. essentially if any retailer sell its good in some online sites Each and every circumstance is in the control of the owner of the company. In this step no fees to be paid because 6
let'stakeanexampleof amazon if a retailer sell it's product in amazon then it will demand fees it's fix cost to the seller. everything is in the power of the proprietor(Xue and et.al., 2018). Power and controlThe page and the value of goodsandserviceisnot controlledandpoweredby the retailer. Theownerofthe organizationhavethefull controlofpagedesigning, change products and sign in. ExpensesDistributorneedonly£ 50,000forsettingupa retaileraccounton Amazon(Whyte-Givans, 2020). Judgementofsellingafter preparing an online shop will expendituremoretothe ownerofthesite.Itwill value to£ 1,85,000. company dataIt is a set up company which have an advanced set of data whichisidentifyto understand the quality of the buyer. It will take some duration to retrievedatafromanew business.Theflowof customerwilltakesome duration of time for the public to meet the online website of the firm. The above table show and tell about some various steps: The expenditure of developing own site will make cost high in comparative to the already set up business which have energetic public on the administration. If a business sell the goods in their own site then the data of the company will be secure but if some organization supply its product in some other site like amazon then there is no chance to the security of data it include high risk of data unsafe(Zhang and et.al., 2019). If organization supply it's goods and service in amazon then its advance perform the task on the good service given to the customer. But if a business supply its goods in its own site then they have a opportunity to select its own path to give good service and facility to 7
theconsumer.Otherwiseorganizationnotmanageitsstabilityinwebsiteonthe competitive market and it create difficulty for the firm to maintain its long term stability. On the basis of above report it can be recommended that Mr. Amana have to setup its own site and generating page will directly create the profit for Mr. Amana. By manufacturing more quantity will reduce the per unit cost and higher the profit situation of the enterprise. CONCLUSION The above report conclude that the reason to decline the revenue, gross profit and net profit of the business is it's high spend on expenses and decline its concentration on the income of the firm because of these circumstance the productivity of the organization gets low and it's make a problem for accomplishing the goals and objectives of the business. The above case study clearly show that in 2020 some other circumstance also make a issue for the enterprise. In the end it suggest some requirement of improving and control the higher expenditure of the business. So, that company can create more revenue. 8
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