Management Accounting Report on Amana Ltd.

Management accounting

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY..................................................................................................................................3
PART – A........................................................................................................................................3
Monthly Control Report Showing Original Budget, Flexed Budget, And Variances.................3
Report on the performance of Amana Ltd. for year 2020...........................................................4
Recommendations to Amana’s CEO On Areas of Improvement................................................6
PART B...........................................................................................................................................7
CONCLUSION..............................................................................................................................10
REFERENCES................................................................................................................................1

INTRODUCTION
Management accounting us related with having the significant formulation of reports and
statement so that help for making the strategic decision in order to incline the business
performance. In the current era, it is important for the organization to have effective management
accounting in turn attaining the effective level of growth & development to achieve competitive
performance. The current report is based on Amana Ltd which operates in tourist business by
offering the varied level of locations. It will pay attention on having the significant information
regarding the original and flexed budget and variances. This will help in gaining the corrective
information regarding evaluation of the options regarding going online by setting up own
platform or selling on Amazon so that depth understanding to make decision in effective pattern.
MAIN BODY
PART – A
Monthly Control Report Showing Original Budget, Flexed Budget, And Variances
Amana Ltd
Budget Report
Particulars Original Budget Flexible Budget Actual
Per
Unit
In
Amount
Per
Unit
In
Amount
Per
Unit
In
Amount
Units 100000 80000 80000
Selling Price 25 2500000 25 2000000 20 1600000
Variable Cost:
Materials 2.5 250000 2.5 200000 3.5 280000
Labour 4 400000 4 320000 5.5 440000
Overhead 1.5 150000 1.5 120000 1.5 120000
Total Variable Cost 8 800000 8 640000 10.5 840000
Contribution 17 1700000 17 1360000 9.5 760000
Fixed Overheads:
Warehouse Rental 200000 200000 170000
Insurance 100000 100000 100000
Fulltime warehouse supervisor 50000 50000 35000

salary
VARIANCES
Material Cost Variance -80000 (unfavorable)
Standard Cost of Materials Used (2.5 * 80000) 200000
Actual Cost of Materials Used (3.5 * 80000) 280000
Material Price Variance -1 (unfavorable)
Standard Price of Material per unit 2.5
Actual Price of Material per unit 3.5
Labor Cost Variance -120000 (unfavorable)
Standard Wages for Labor hours used (4 * 80000) 320000
Actual Wages for Labor hours used (5.5 * 80000) 440000
Labor Rate Variance -1.5 (unfavorable)
Standard Rate of labor for producing one unit 4
Actual Rate of labor for producing one unit 5.5
Variable Overhead Cost Variance 0
Standard Variable Overhead (1.5 *80000) 120000
Actual Variable Overhead (1.5 *80000) 120000
Variable Overhead Rate Variance 0
Standard Variable Overhead Rate 1.5
Actual Variable Overhead Rate 1.5
Fixed Overhead Cost Variance 45000 (favorable)
Standard Fixed Overhead (200000 + 100000 + 50000) 350000
Actual Fixed Overhead (170000 + 100000 + 35000) 305000
Fixed Overhead Per Unit Variance -0.6 (favorable)
Standard Fixed Overhead Per Unit (350000 / 80000) 4.4
Actual Fixed Overhead Per Unit (305000 / 80000) 3.8
Report on the performance of Amana Ltd. for year 2020
On the basis of the control report the performance of the Amana Ltd. can be analysed.
The control report showing original, flexed and actual budgets is prepared on the basis of the
units. The original budget is prepared as per the production expectations of 100,000 units. The
actual expenditures for the month are for 80,000 units. The preparation of flexed budget is done