Management Accounting - Project 2 Report
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AI Summary
This report analyzes Mr. Amana's touring company's financial situation, including initial budgeting, flexibility spending plan, and real expenditures, along with recommendations for improvement. It also provides an analysis of going digital and the costs and benefits of two options. The subject is Management Accounting, and the course code and college/university are not mentioned.
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Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................3
Part A...............................................................................................................................................3
QUESTION 1..............................................................................................................................3
QUESTION 2..............................................................................................................................4
QUESTION 3..............................................................................................................................5
CONCLUSION................................................................................................................................6
PART B...........................................................................................................................................7
ALTERNATIVE 1.......................................................................................................................7
ALTERNATIVE 2.......................................................................................................................2
RECOMMENDATION...................................................................................................................3
REFERENCES................................................................................................................................4
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................3
Part A...............................................................................................................................................3
QUESTION 1..............................................................................................................................3
QUESTION 2..............................................................................................................................4
QUESTION 3..............................................................................................................................5
CONCLUSION................................................................................................................................6
PART B...........................................................................................................................................7
ALTERNATIVE 1.......................................................................................................................7
ALTERNATIVE 2.......................................................................................................................2
RECOMMENDATION...................................................................................................................3
REFERENCES................................................................................................................................4
INTRODUCTION
Administration bookkeeping is a type of financial reporting in which executives assess their
present condition in terms of overall budgeted and real spending to acquire a picture of its
corporation's overall position prior making certain judgment calls (Alsharari and Abougamos, 2017).
Throughout this assessment, we examine Mr. Amana's touring company, including the initial
budgeting, flexibility spending plan, and real expenditures, as well as significant deviations. An
evaluation would be undertaken in the initial part of this study, and a complete review relying on
such study would be created subsequently, along with several possible recommendations for Mr.
Amana. In the next half of such study, a full assessment of Mr. Amana's intention to participate into
internet commerce would be provided, taking into account the necessary costs of doing so. Mr.
Amana is an English tourism entrepreneur who has had numerous challenges in managing his
company as a result of the COVID-19 crisis. They conduct company via its brick and mortar store
and use its webpage as a means of communication. They've given a financial analysis of company
costs. Let us just look at his company's coefficient of determination, taking into account the initial
budgeting, the flexibility cost estimate, and the real price.
Part A
QUESTION 1
Monthly Monitoring Statement of Mr. Amana
Particular Original
budget
(1)
Flexible
budget (2)
Actual cost
(3)
Activity
variance
(1-2)
Cost
Variance
(2-3)
Units 100,000 80,000 80,000
Variable cost
Materials (Note 1) 250,000 200,000 280,000 50,000 (F) (80,000)
(U)
Labor (Note 2) 400,000 320,000 440,000 80,000 (F) (120,000)
(U)
Overhead (Note 3) 150,000 120,000 120,000 30,000 (F) -
800,000 640,000 840,000 160,000(F
)
(200,000)
(U)
Fixed cost
Warehouse rent 200,000 200,000 170,000 - 30,000 (F)
Administration bookkeeping is a type of financial reporting in which executives assess their
present condition in terms of overall budgeted and real spending to acquire a picture of its
corporation's overall position prior making certain judgment calls (Alsharari and Abougamos, 2017).
Throughout this assessment, we examine Mr. Amana's touring company, including the initial
budgeting, flexibility spending plan, and real expenditures, as well as significant deviations. An
evaluation would be undertaken in the initial part of this study, and a complete review relying on
such study would be created subsequently, along with several possible recommendations for Mr.
Amana. In the next half of such study, a full assessment of Mr. Amana's intention to participate into
internet commerce would be provided, taking into account the necessary costs of doing so. Mr.
Amana is an English tourism entrepreneur who has had numerous challenges in managing his
company as a result of the COVID-19 crisis. They conduct company via its brick and mortar store
and use its webpage as a means of communication. They've given a financial analysis of company
costs. Let us just look at his company's coefficient of determination, taking into account the initial
budgeting, the flexibility cost estimate, and the real price.
Part A
QUESTION 1
Monthly Monitoring Statement of Mr. Amana
Particular Original
budget
(1)
Flexible
budget (2)
Actual cost
(3)
Activity
variance
(1-2)
Cost
Variance
(2-3)
Units 100,000 80,000 80,000
Variable cost
Materials (Note 1) 250,000 200,000 280,000 50,000 (F) (80,000)
(U)
Labor (Note 2) 400,000 320,000 440,000 80,000 (F) (120,000)
(U)
Overhead (Note 3) 150,000 120,000 120,000 30,000 (F) -
800,000 640,000 840,000 160,000(F
)
(200,000)
(U)
Fixed cost
Warehouse rent 200,000 200,000 170,000 - 30,000 (F)
Insurance 100,000 100,000 100,000 - -
Supervisor salary 50,000 50,000 35,000 - 15,000 (F)
350,000 350,000 305,000 - 45,000 (F)
Total overhead cost 1150,000 990,000 1145,000 160,000
(F)
155,000
(U)
*F = Favourable
*U = Unfavourable
Note 1: Materials cost
Original budget = (100,000*2.50) = 250,000.
Flexible budget = (80,000*2.50) = 200,000.
Note 2: Labour
Original budget = (100,000*4) = 400,000. Flexible budget = (80,000*4) = 320,000
Note 3: Overhead
Original budget = (100,000*1.50) = 150,000. Flexible budget = (80,000*1.50) = 120,000.
QUESTION 2
Variation Assessment Evaluation- To assess the present state of this business, we developed
a monthly management statement that includes a fixed budgeting, a flexibility expenditure, real
expenditure, and variations in both productivity and controlling costs. We analyse both productivity
and expense management deviations to make suitable decisions, ensuring that no frivolous decisions
are made (Andarwati, Nirwanto and Darsono, 2018). We could observe that overall productivity and
controlling costs variation are beneficial in Mr. Amana's company. The following information have
been provided:
Deviation assessment has been conducted on both fixed and flexible budgets. The distinction
among a fixed and a flexible budget fundamentally denotes activity volatility. Since the value per
component is the sole variation between 2 expenditures (100,000 and 80,000). We simply adjusted
the units cost to observe the activities variation, and this could be stated that now the fluctuating
costs have indeed been lowered in each instance of fluctuating expenditure as a result of the lower
price per unit. Although overall constant expenses do not fluctuate despite adjustments in product
(engagement), each unit static expenses significantly risen due to a 20,000-unit fall in pieces
supplied in real occurrence. As a result, the static expenses per item have grown. In the monthly
management assessment, we additionally ran a cost-control variation assessment. Since it is
irrational to contrast true costs to fixed budgets since in the fixed plan, a completely separate
component quantity (100,000) was utilised, however in actuality, the units was reduced (80,000)
Supervisor salary 50,000 50,000 35,000 - 15,000 (F)
350,000 350,000 305,000 - 45,000 (F)
Total overhead cost 1150,000 990,000 1145,000 160,000
(F)
155,000
(U)
*F = Favourable
*U = Unfavourable
Note 1: Materials cost
Original budget = (100,000*2.50) = 250,000.
Flexible budget = (80,000*2.50) = 200,000.
Note 2: Labour
Original budget = (100,000*4) = 400,000. Flexible budget = (80,000*4) = 320,000
Note 3: Overhead
Original budget = (100,000*1.50) = 150,000. Flexible budget = (80,000*1.50) = 120,000.
QUESTION 2
Variation Assessment Evaluation- To assess the present state of this business, we developed
a monthly management statement that includes a fixed budgeting, a flexibility expenditure, real
expenditure, and variations in both productivity and controlling costs. We analyse both productivity
and expense management deviations to make suitable decisions, ensuring that no frivolous decisions
are made (Andarwati, Nirwanto and Darsono, 2018). We could observe that overall productivity and
controlling costs variation are beneficial in Mr. Amana's company. The following information have
been provided:
Deviation assessment has been conducted on both fixed and flexible budgets. The distinction
among a fixed and a flexible budget fundamentally denotes activity volatility. Since the value per
component is the sole variation between 2 expenditures (100,000 and 80,000). We simply adjusted
the units cost to observe the activities variation, and this could be stated that now the fluctuating
costs have indeed been lowered in each instance of fluctuating expenditure as a result of the lower
price per unit. Although overall constant expenses do not fluctuate despite adjustments in product
(engagement), each unit static expenses significantly risen due to a 20,000-unit fall in pieces
supplied in real occurrence. As a result, the static expenses per item have grown. In the monthly
management assessment, we additionally ran a cost-control variation assessment. Since it is
irrational to contrast true costs to fixed budgets since in the fixed plan, a completely separate
component quantity (100,000) was utilised, however in actuality, the units was reduced (80,000)
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owing to the COVID-19 condition. When we evaluate the real expense to the fixed plan, we could
notice each of the positive variations in the monitoring summary. As a result, we conducted a
deviation assessment among the flexible plan and the real expenditure to resolve the price variation.
We could see that components have had an unfavourable variation, with such an increment of
80,000 in real price. Only with real volume delivered, labour costs have climbed by 120,000.
However, the building costs has already been cut by 200,000 dollars. In the event of permanent
expenses, one could certainly see a decent budgeting. Especially while researchers knew that
permanent expenses would not alter as the output changed. However, owing to the lockout, this
firm's permanent expenses have been lowered by 45,000. Lease were cut by 30,000 dollars, while
the manager's compensation were cut by 15,000 dollars. This occurred as a result of the shutdown;
as there have been no visitors, therefore there is little requirement to pay additional lease for such
storage; on either side, owing to a commercial deficit, the administrator's compensation was reduced
by 15,000 dollars. As a result of the epidemic, equipment and labour costs have soared. We
understand that practically all companies will stay closed in the year 2020. As a result, when
companies were establishing or running respective operation, firms raised product and labour prices
to compensate for company deficits throughout the COVID-19 phase. There own fluctuating costs
had grown as a result of this scenario, despite the fact that the item supplied were lower than that
of the fixed expenditure (Bühler, Wallenburg and Wieland, 2016).
QUESTION 3
Recommendations on aspects that could be improved- Mr. Amana, as the owner of a
tourism firm, is having certain issues running his operation because the administration have set
various regulations on tourism. However, there are several areas where the production expense could
be improved. Several suggestions had been provided based on the findings in the preceding part:
This firm's equipment costs have soared. Manufacturers require various goods that may be
offered, as well as resources to produce these goods, because they are marketing tourism
products. Companies must develop a strategy connection with their commodities provider,
such as by entering into an agreement with such a predetermined fee with the provider so
therefore manufacturers could handle pricing fluctuations in the event of lack of raw
materials.
The firm could do vendor verification to determine whether suppliers provide high
performance at a reasonable cost. Following the screening, managers could compile a
shortlist of providers and approach people for a commercial arrangement that will benefit the
company in the longer term.
notice each of the positive variations in the monitoring summary. As a result, we conducted a
deviation assessment among the flexible plan and the real expenditure to resolve the price variation.
We could see that components have had an unfavourable variation, with such an increment of
80,000 in real price. Only with real volume delivered, labour costs have climbed by 120,000.
However, the building costs has already been cut by 200,000 dollars. In the event of permanent
expenses, one could certainly see a decent budgeting. Especially while researchers knew that
permanent expenses would not alter as the output changed. However, owing to the lockout, this
firm's permanent expenses have been lowered by 45,000. Lease were cut by 30,000 dollars, while
the manager's compensation were cut by 15,000 dollars. This occurred as a result of the shutdown;
as there have been no visitors, therefore there is little requirement to pay additional lease for such
storage; on either side, owing to a commercial deficit, the administrator's compensation was reduced
by 15,000 dollars. As a result of the epidemic, equipment and labour costs have soared. We
understand that practically all companies will stay closed in the year 2020. As a result, when
companies were establishing or running respective operation, firms raised product and labour prices
to compensate for company deficits throughout the COVID-19 phase. There own fluctuating costs
had grown as a result of this scenario, despite the fact that the item supplied were lower than that
of the fixed expenditure (Bühler, Wallenburg and Wieland, 2016).
QUESTION 3
Recommendations on aspects that could be improved- Mr. Amana, as the owner of a
tourism firm, is having certain issues running his operation because the administration have set
various regulations on tourism. However, there are several areas where the production expense could
be improved. Several suggestions had been provided based on the findings in the preceding part:
This firm's equipment costs have soared. Manufacturers require various goods that may be
offered, as well as resources to produce these goods, because they are marketing tourism
products. Companies must develop a strategy connection with their commodities provider,
such as by entering into an agreement with such a predetermined fee with the provider so
therefore manufacturers could handle pricing fluctuations in the event of lack of raw
materials.
The firm could do vendor verification to determine whether suppliers provide high
performance at a reasonable cost. Following the screening, managers could compile a
shortlist of providers and approach people for a commercial arrangement that will benefit the
company in the longer term.
Because company activities have still not returned to usual, companies could hire certain
labourers immediately to create the memento in a skillful manner and negotiate a price with
individuals.
Certain administration and marketing expenditures are included in operating expenses.
Companies could minimise certain operational costs because they are producing fewer
transactions. One could observe that expenses have already been paid in accordance with
plan, implying that they may have borne such expense including during shutdown. So
companies could devise a strategy for reducing operating expenses, at minimum in the event
of an epidemic (Daniel, Persson and Sandorf, 2018).
As a result of this position, they may be able to reduce storage rental. Additional inventories
do not required to be tanked up owing to lower demand. Therefore, for the time being, the
organisation could decrease that lease expenditure or lower it a little further than it is now.
Companies must make an effort to expand selling by taking advantage of the present
marketplace potential of getting digitally. Individuals who are bored during the shutdown
would like to redecorate one‘s homes or buy anything which will improve overall appearance
of respective homes. As a result, firms must begin to promote these goods electronically.
CONCLUSION
As the globe begins to recover properly, businesses such as tourism that have been severely
harmed by the circumstances, may reclaim previous profitability. As a result, the business must
strengthen all expense and administration linked sectors such that, whenever things return to regular,
it could get back to business rather than spending money and effort on budgetary control.
labourers immediately to create the memento in a skillful manner and negotiate a price with
individuals.
Certain administration and marketing expenditures are included in operating expenses.
Companies could minimise certain operational costs because they are producing fewer
transactions. One could observe that expenses have already been paid in accordance with
plan, implying that they may have borne such expense including during shutdown. So
companies could devise a strategy for reducing operating expenses, at minimum in the event
of an epidemic (Daniel, Persson and Sandorf, 2018).
As a result of this position, they may be able to reduce storage rental. Additional inventories
do not required to be tanked up owing to lower demand. Therefore, for the time being, the
organisation could decrease that lease expenditure or lower it a little further than it is now.
Companies must make an effort to expand selling by taking advantage of the present
marketplace potential of getting digitally. Individuals who are bored during the shutdown
would like to redecorate one‘s homes or buy anything which will improve overall appearance
of respective homes. As a result, firms must begin to promote these goods electronically.
CONCLUSION
As the globe begins to recover properly, businesses such as tourism that have been severely
harmed by the circumstances, may reclaim previous profitability. As a result, the business must
strengthen all expense and administration linked sectors such that, whenever things return to regular,
it could get back to business rather than spending money and effort on budgetary control.
PART B
Following getting affected by the epidemic, the hospitality sector, like many other sectors, has
considered different modes of functioning for its operations (Ejiogu and Ejiogu, 2018). Rivals of this
company have also shifted to using the internet to do company, either offering or advertising, in
order to attract clients' interest. This organisation could also go digitally, and it has two options for
doing so. This group does have a webpage, however it is just used for communicating with people
and not for anything else. As a result, the company could offer as well as promote their items
electronically, either via its personal internet commercial site or via Amazon. Let's look at the costs
and benefits of each of the two possibilities prior choosing one.
ALTERNATIVE 1
If the company wishes to offer goods through its personal webpage, it would have to pay for
shipping, infrastructure upgrades, and a computer software's compensation in extra to the previously
listed fluctuating and permanent expenses (Kadir, 2018).
Cost-benefit analysis
(In the event of fluctuating and static costs, the real level of price would be evaluated)
Total variable cost:
Materials = (280,000/80,000)
=3.5
Labor = (440,000/80,000)
=5.5 Overhead
= (120,000/80,000)
=1.5
10.5
Total Fixed cost
Rent = 170,000
Insurance = 100,000
Supervisor salary = 35,000
Cost of set up delivery network = 150,000
Following getting affected by the epidemic, the hospitality sector, like many other sectors, has
considered different modes of functioning for its operations (Ejiogu and Ejiogu, 2018). Rivals of this
company have also shifted to using the internet to do company, either offering or advertising, in
order to attract clients' interest. This organisation could also go digitally, and it has two options for
doing so. This group does have a webpage, however it is just used for communicating with people
and not for anything else. As a result, the company could offer as well as promote their items
electronically, either via its personal internet commercial site or via Amazon. Let's look at the costs
and benefits of each of the two possibilities prior choosing one.
ALTERNATIVE 1
If the company wishes to offer goods through its personal webpage, it would have to pay for
shipping, infrastructure upgrades, and a computer software's compensation in extra to the previously
listed fluctuating and permanent expenses (Kadir, 2018).
Cost-benefit analysis
(In the event of fluctuating and static costs, the real level of price would be evaluated)
Total variable cost:
Materials = (280,000/80,000)
=3.5
Labor = (440,000/80,000)
=5.5 Overhead
= (120,000/80,000)
=1.5
10.5
Total Fixed cost
Rent = 170,000
Insurance = 100,000
Supervisor salary = 35,000
Cost of set up delivery network = 150,000
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Cost of upgrading current website = 50,000 Salary of IT programmer = 35,000
Total fixed cost = 540,000
Total cost = 540,000 + (100,000*10.5) = 1,590,000
Total Revenue = (100,000*20) =2000,000
So, when one evaluate the past static expenses which are incorporated in the modern
internet firm, we could observe that the price is quite substantial. Suppose that the price of lease
and the income of the manager are connected to the locations that would be closed.
Thus fixed cost would be (1,590,000-170,000-35,000) = 1385,000.
So, if we incorporate all static costs, the overall gain from this choice would be 410,000
($2000,000-1590,000), and if we incorporate pay and storage lease for such locations, the
advantage would be 615,000 ($2000,000-1590,000). (2000,000-1385,000).
Cost-Volume-Profit analysis
Let us just assume that lease and wage are linked to the cities of Sussex, Wolverhampton,
and Liverpool in this study (Lai, Leoni and Stacchezzini, 2019). As a result, those expenses
would be removed from our Cost-Volume-Profit analysis.
Total variable cost per unit= 10.5 Total Fixed Cost = 335,000
Total selling price per unit = 20.
BEP = Fixed cost/(SP-VP) (Hansen et al, 2021)
= 335,000/ (20-10.5)
= 35,263 (unit)
Therefore, if Amana Ltd needs to cover its entire price, it should have delivered 35,263
pieces, and we assume that if it connects to the internet following conducting consumer study, it
could offer 100,000 units every year. As a result, the contribution margin unit would be 64,737
(100,000-35,263) and the sum would be 6,15,000 (64,737*9.5) under this alternative. Alternative
1 has the following things to consider:
According to the industry condition, Amana Ltd could offer 100,000 pieces digitally if it
maintains its personal webpage.
We didn't include wage and lease charges in the cost-benefit analysis because Amana
would close 3 of its locations if it begins its operations digitally, and therefore thought
that such expenditures are tied to such 3 locations. After taking into account just the
Total fixed cost = 540,000
Total cost = 540,000 + (100,000*10.5) = 1,590,000
Total Revenue = (100,000*20) =2000,000
So, when one evaluate the past static expenses which are incorporated in the modern
internet firm, we could observe that the price is quite substantial. Suppose that the price of lease
and the income of the manager are connected to the locations that would be closed.
Thus fixed cost would be (1,590,000-170,000-35,000) = 1385,000.
So, if we incorporate all static costs, the overall gain from this choice would be 410,000
($2000,000-1590,000), and if we incorporate pay and storage lease for such locations, the
advantage would be 615,000 ($2000,000-1590,000). (2000,000-1385,000).
Cost-Volume-Profit analysis
Let us just assume that lease and wage are linked to the cities of Sussex, Wolverhampton,
and Liverpool in this study (Lai, Leoni and Stacchezzini, 2019). As a result, those expenses
would be removed from our Cost-Volume-Profit analysis.
Total variable cost per unit= 10.5 Total Fixed Cost = 335,000
Total selling price per unit = 20.
BEP = Fixed cost/(SP-VP) (Hansen et al, 2021)
= 335,000/ (20-10.5)
= 35,263 (unit)
Therefore, if Amana Ltd needs to cover its entire price, it should have delivered 35,263
pieces, and we assume that if it connects to the internet following conducting consumer study, it
could offer 100,000 units every year. As a result, the contribution margin unit would be 64,737
(100,000-35,263) and the sum would be 6,15,000 (64,737*9.5) under this alternative. Alternative
1 has the following things to consider:
According to the industry condition, Amana Ltd could offer 100,000 pieces digitally if it
maintains its personal webpage.
We didn't include wage and lease charges in the cost-benefit analysis because Amana
would close 3 of its locations if it begins its operations digitally, and therefore thought
that such expenditures are tied to such 3 locations. After taking into account just the
essential expenses, it is clear that Amana could profit from this choice following
absorbing all of its charges.
ALTERNATIVE 2
Amana Ltd also offers an internet shopping alternative via Amazon. We would analyse, as
in alternative 1, both pay and renting as significant costs and sans them.
Cost-benefit analysis
Total Variable cost = 10.5
Total Fixed cost
Fulfilment fees = 50,000
Insurance = 100,000
Total Fixed cost = 150,000
Total Revenue = 65000*20 = 1300,000
Total benefit = (1300,000 – 150,000) = 1150,000.
We could observe from the foregoing cost-benefit analysis that even if 2 static costs are
included, a gain of 1150,000 would be generated. If such 2 charges are taken into account, the
profit would be (1300,000-150,000-170,000-35,000) = 945,000. So, if the appropriate expenses
(wage and lease) are taken into account, a gain of 945,000 would be generated (Modell, 2020).
CVP analysis
Total fixed cost = 150,000 (without rent and salary)
Total variable cost per unit = 10.5 Total Selling price per unit = 20
BEP = 150,000/ (20-10.5) = 15,789 units.
As a result, if Amana chooses this alternative, the contribution margin unit would be
(65,000-15789) = 49,211. BEP = 355,000/9.5 = 37,368 units if such 2 charges are taken into
account. As a result, the contribution margin units total 27,632 units. There are a few things to
keep in mind with this alternative:
Amana must contend with a number of competitors on Amazon, and it must develop a
number of items in strategies to succeed on this market.
We all understand that Amazon is an electronic marketplace wherein individuals may
select, buy, and reject products. As a result, if Amana does not offer distinctive items, it
will be unable to engage with its rivals (Sledgianowski, Gomaa and Tan, 2017).
absorbing all of its charges.
ALTERNATIVE 2
Amana Ltd also offers an internet shopping alternative via Amazon. We would analyse, as
in alternative 1, both pay and renting as significant costs and sans them.
Cost-benefit analysis
Total Variable cost = 10.5
Total Fixed cost
Fulfilment fees = 50,000
Insurance = 100,000
Total Fixed cost = 150,000
Total Revenue = 65000*20 = 1300,000
Total benefit = (1300,000 – 150,000) = 1150,000.
We could observe from the foregoing cost-benefit analysis that even if 2 static costs are
included, a gain of 1150,000 would be generated. If such 2 charges are taken into account, the
profit would be (1300,000-150,000-170,000-35,000) = 945,000. So, if the appropriate expenses
(wage and lease) are taken into account, a gain of 945,000 would be generated (Modell, 2020).
CVP analysis
Total fixed cost = 150,000 (without rent and salary)
Total variable cost per unit = 10.5 Total Selling price per unit = 20
BEP = 150,000/ (20-10.5) = 15,789 units.
As a result, if Amana chooses this alternative, the contribution margin unit would be
(65,000-15789) = 49,211. BEP = 355,000/9.5 = 37,368 units if such 2 charges are taken into
account. As a result, the contribution margin units total 27,632 units. There are a few things to
keep in mind with this alternative:
Amana must contend with a number of competitors on Amazon, and it must develop a
number of items in strategies to succeed on this market.
We all understand that Amazon is an electronic marketplace wherein individuals may
select, buy, and reject products. As a result, if Amana does not offer distinctive items, it
will be unable to engage with its rivals (Sledgianowski, Gomaa and Tan, 2017).
Selling would rise in response to industry wants, and in order to raise consumer needs,
they might just have to spend money on ads. Therefore, in order to stand out, its labour
cost could be expensive.
Amana would possess minimal influence about the costing structure because Amazon
would be in charge of it, and company would also need to adhere to Amazon's refund
procedure that might or might not be viable for Amana (Vosselman, 2016).
RECOMMENDATION
We conducted two analyses for every alternative to gain assurance regarding profit
generating, and using CVP, we could determine what will be the minimal selling for every
alternative when all static and fluctuating costs are considered. Alternative has a larger
permanent expense since Amana will have to build its individual internet operation and, as a
brick and mortar store, it will not have any internet tools to begin with. As a result, all expenses
associated with hiring an IT specialist to assist with the upgrade process would be payable. On
either side, if it uses Amazon as an online system, this would suffer lower costs and have a lower
amount of selling than if it had its personal webpage, however the return would be greater than
alternative 1. The major downside of alternative 2 is that the company would lose authority
throughout its cost structure and would be unable to establish a refund policy, and that they
would confront fierce rivalry on Amazon. Alternative 1 on either side, might have had a greater
expense, but it would result in a bigger amount of business, and many of the costs, such as
updating costs and shipping costs, could fall afterwards. However, this alternative would help the
organisation in the longer term. They may remain to use this alternative even after the COVID-
19 issue has passed, and they could service consumers both physical and digital. Furthermore,
they would possess complete authority over all operations, and the fresh webpage revamp would
draw customers to the goods. As a result, I would advise Amana Souvenir to select Alternative 1,
as this alternative has a great potential and therefore could benefit this organisation in the longer
term by improving their operational abilities and expanding their sector share in the field.
they might just have to spend money on ads. Therefore, in order to stand out, its labour
cost could be expensive.
Amana would possess minimal influence about the costing structure because Amazon
would be in charge of it, and company would also need to adhere to Amazon's refund
procedure that might or might not be viable for Amana (Vosselman, 2016).
RECOMMENDATION
We conducted two analyses for every alternative to gain assurance regarding profit
generating, and using CVP, we could determine what will be the minimal selling for every
alternative when all static and fluctuating costs are considered. Alternative has a larger
permanent expense since Amana will have to build its individual internet operation and, as a
brick and mortar store, it will not have any internet tools to begin with. As a result, all expenses
associated with hiring an IT specialist to assist with the upgrade process would be payable. On
either side, if it uses Amazon as an online system, this would suffer lower costs and have a lower
amount of selling than if it had its personal webpage, however the return would be greater than
alternative 1. The major downside of alternative 2 is that the company would lose authority
throughout its cost structure and would be unable to establish a refund policy, and that they
would confront fierce rivalry on Amazon. Alternative 1 on either side, might have had a greater
expense, but it would result in a bigger amount of business, and many of the costs, such as
updating costs and shipping costs, could fall afterwards. However, this alternative would help the
organisation in the longer term. They may remain to use this alternative even after the COVID-
19 issue has passed, and they could service consumers both physical and digital. Furthermore,
they would possess complete authority over all operations, and the fresh webpage revamp would
draw customers to the goods. As a result, I would advise Amana Souvenir to select Alternative 1,
as this alternative has a great potential and therefore could benefit this organisation in the longer
term by improving their operational abilities and expanding their sector share in the field.
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REFERENCES
Books and journals
Alsharari, N. M. and Abougamos, H., 2017. The processes of accounting changes as emerging
from public and fiscal reforms. Asian Review of Accounting.
Andarwati, M., Nirwanto, N. and Darsono, J. T., 2018. Analysis of factors affecting the
successof accounting information systems based on information technology on SME
managementsas accounting informationend user. EJEFAS Journal. (98). pp.97-102.
Bühler, A., Wallenburg, C. M. and Wieland, A., 2016. Accounting for external turbulence of
logistics organizations via performance measurement systems. Supply Chain
Management: An International Journal.
Daniel, A. M., Persson, L. and Sandorf, E. D., 2018. Accounting for elimination-by-aspects
strategies and demand management in electricity contract choice. Energy Economics.
73. pp.80-90.
Ejiogu, A. R. and Ejiogu, C., 2018. Translation in the “contact zone” between accounting and
human resource management. Accounting, Auditing & Accountability Journal.
Kadir, M. R. A., 2018. Practising Management Accounting (MA) Techniques in Halal Food
Processing. International Journal of Research in Social Sciences. 8(3). pp.94-110.
Lai, A., Leoni, G. and Stacchezzini, R., 2019. Accounting and governance in diverse settings–an
introduction.
Modell, S., 2020. Accounting for institutional work: a critical review. European Accounting
Review. pp.1-26.
Sledgianowski, D., Gomaa, M. and Tan, C., 2017. Toward integration of Big Data, technology
and information systems competencies into the accounting curriculum. Journal of
Accounting Education. 38. pp.81-93.
Vosselman, E., 2016. Accounting, accountability, and ethics in public sector organizations:
Toward a duality between instrumental accountability and relational response-ability.
Administration & Society. 48(5). pp.602-627.
Books and journals
Alsharari, N. M. and Abougamos, H., 2017. The processes of accounting changes as emerging
from public and fiscal reforms. Asian Review of Accounting.
Andarwati, M., Nirwanto, N. and Darsono, J. T., 2018. Analysis of factors affecting the
successof accounting information systems based on information technology on SME
managementsas accounting informationend user. EJEFAS Journal. (98). pp.97-102.
Bühler, A., Wallenburg, C. M. and Wieland, A., 2016. Accounting for external turbulence of
logistics organizations via performance measurement systems. Supply Chain
Management: An International Journal.
Daniel, A. M., Persson, L. and Sandorf, E. D., 2018. Accounting for elimination-by-aspects
strategies and demand management in electricity contract choice. Energy Economics.
73. pp.80-90.
Ejiogu, A. R. and Ejiogu, C., 2018. Translation in the “contact zone” between accounting and
human resource management. Accounting, Auditing & Accountability Journal.
Kadir, M. R. A., 2018. Practising Management Accounting (MA) Techniques in Halal Food
Processing. International Journal of Research in Social Sciences. 8(3). pp.94-110.
Lai, A., Leoni, G. and Stacchezzini, R., 2019. Accounting and governance in diverse settings–an
introduction.
Modell, S., 2020. Accounting for institutional work: a critical review. European Accounting
Review. pp.1-26.
Sledgianowski, D., Gomaa, M. and Tan, C., 2017. Toward integration of Big Data, technology
and information systems competencies into the accounting curriculum. Journal of
Accounting Education. 38. pp.81-93.
Vosselman, E., 2016. Accounting, accountability, and ethics in public sector organizations:
Toward a duality between instrumental accountability and relational response-ability.
Administration & Society. 48(5). pp.602-627.
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