Amana Ltd: Financial Control Report and Online Sales Strategy

This report presents a detailed analysis of Amana Ltd's financial performance using a monthly control report, comparing original and flexed budgets to identify variances. It evaluates the company's performance in 2020, highlighting areas needing improvement, such as revenue generation and cost control. Recommendations are provided to the CEO, focusing on maximizing earnings, minimizing resource wastage, and optimizing labor costs. Furthermore, the report analyzes the strategic decision of establishing an online presence, comparing the costs and benefits of setting up a proprietary website versus selling through Amazon, ultimately suggesting leveraging Amazon's existing infrastructure and customer base for increased revenue and reduced initial investment. Desklib provides access to similar solved assignments for students.

Amana Ltd - Control
Report

Table of Contents
INTRODUCTION...........................................................................................................................3
PART A...........................................................................................................................................3
1. Make a monthly control report showing the flexed budget, original budget and variances.
................................................................................................................................................3
2. Using the control report, analyse performance of Amana Ltd. In the financial year 2020.4
3. Give recommendations on the departments to the CEO of Amana...................................6
PART B............................................................................................................................................6
Provide an analysis to the decision of Mr. Amana that whether he should set up his business
by his own website or sell on Amazon by considering the cost which are significant..........6
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Budget refers to the estimation of expenses as well as income for about the specific time
period and it is commonly made and recalculated at the consistent intervals. Budgets are made
for a person, organisation, people, government or about something else which creates and spend
the amount (Arumsari and Sulistio, 2021). The following is based on the Amana Ltd in which a
monthly control statement is made viewing the normal and standardised budget of the company.
It will also cover about the variances that are calculated and supported on the differences. The
evaluation of the performance and productivity of the respective company in the year 2020
which is done at the time of pandemic. Also, the recommendation is given for the betterment.
Moreover, to it, the evaluation is done based on the several scenarios and the costs given which
the owner should start its own online store and also to sell it on the Amazon.
PART A
1. Make a monthly control report showing the flexed budget, original budget and variances.
Monthly Control Report of budgeting involves the data information that are linked to
payroll, overhead costs, fluctuation in expenses, utilities. It is essential in context of the fact
which assist the owner or the leader to examine the pattern of spending of the entrepreneur which
can be obstructive to the firm and understand those structures. The reports can similarly allow
the top authorities of the firm to evaluate the working cost of the maintenance of the office and
try to understand the method of how to decrease the cost and expenses for further.
 Flexed Budget- It refers to the dissent with the changes in the standard of the actual
income gained. In this structure, the flex plan of spending will support the cost of income
for particular expenses instead of certain numbers.
 Original Budget- This budget is made by understanding the data from the past,
expenditure and revenues as well. The budget is made and the expenses are evaluated on
the base of it. It also assists in measuring the new income of the firm (Caiden, 2020).
A Variance of the budget is cyclic evaluation used by the organizations, legislative, people to
analyses the comparison among actual data and standard figures for the certain bookkeeping
categorization. A preferable variance advert to the optimistic fluctuations or income and an
unfavorable variance shows negative difference, stating shortage or misshaping. It occurs in case
of the data in which for-tellers cannot anticipate the upcoming expenses and gains.

A favorable variance alludes to positive changes or gains and an unfavorable variance portrays
negative difference, demonstrating misfortunes or shortages (Elliott and Kellison, 2019). It
happens in light of the fact that forecasters can't foresee future expenses and income with
complete exactness.
AMANA LTD
Monthly Control Report
Particulars
Original
Budget
Flexed
Budget Variances
Variance
(%)
Revenue 2500000 1600000 -900000 -36.00%
Less: Cost of Goods Sold 800000 840000 40000 5.00%
Raw Material 250000 280000 30000 12.00%
Direct labour 400000 440000 40000 10.00%
Overheads 150000 120000 -30000 -20.00%
Gross Profit 1700000 760000 -940000 -55.29%
Less: Non- operating / Fixed Expenses 350000 305000 -45000 -12.86%
Warehouse rental 200000 170000 -30000 -15.00%
Insurance 100000 100000 0 0.00%
Fulltime Warehouse Supervisor salary 50000 35000 -15000 -30.00%
Net Profit 1350000 455000 -895000 -66.30%
2. Using the control report, analyse performance of Amana Ltd. In the financial year 2020.
The performance of the Amman LTD. has been analysed by analysing the above control report
has been discussed below. Following are the certain steps: -
 Can track the expenses: - by tracking the spending of the company a budget has been
make for future. With the help of this the organisation are able to identify all the
problems which are related with achieving the budget goals. It has been seen that the
most of the financial plan processes has been finished by the companies on yearly basis
but the spending plan is totally different. The spending plan is made by the organisation
on monthly basis. With the help of monthly spending plan the organisation are able to
identify the where the cash was gone in a very effective manner. It is very important for
an entrepreneur to properly audit their spending plan so that they can precisely gauge
any monetary necessities.

 Identification of area of over expenses: - the organisation can effectively determine all
the areas where the expenditure is done by analysing the report.
 Areas where the extra money is spent: - with the help of above analysis different areas
has been evaluated by comparing the different budget. By doing this the spent of extra
money in different categories has been identified (Hendrick and Hu, 2020) (Ichii, 2021).
From the above monthly report, it is analysed that the revenue, raw material and direct
labour can be should be focused to improve the performance of Amana Ltd.
 The interchanging of real budget is more than the flexed budget. It explains that
Amana requires to foster its amount of produced good and sold goods or maximise the
selling cost. It will assist it in earning more revenues. In the primary budget, the
100000 units are sold out with the value of £ 25. Whereas to the exact, in the real both
the quantity of sold and selling cost is low. Because to which the activity of Amana is
impacted is an harmful method.
 The raw material and labour is much more than the actual budget in others original
budget. In the primary budget, it values 10 % of the cost per good. Whereas in real it
amounted in price £ 280,000, which is more than 10%. so, the instate requires to
minimise the value of raw material which will assist in minimising the over expenditures
of the company.
 The total revenue of the firm is very much less in comparison with the primary
budget. Which is by 55.29%. the impact of the income and the activity expenses is
presented in the structure of gross value. So, from the start itself, the value and the
variable cost must be controlled appropriately.
 Rent of the warehouse, insurances fixed asset and employees, salaries of the employees
and warehouse supervisor salary and many more has been comprising in the fixed over
heads. Fixed expenses which have been set by the company is less in comparison form
the actual budget (Jha and Arora, 2019).
 It has been seen that from original budget Net profit of the company has been decreases
by 660.30 %. so the company is going to focus on reducing the variable as well the fixed
expenses. By doing this the financial health of the respective company has been grow. If
the net profit of the company shows in negative number, then the performance of the
Amana LTD has been affect in a very effective manner.

The performance of the Amana Ltd has been effectively analysing form the above points,
which said that company have to focus on lowering their expenses and increasing their
productions unit.
3. Give recommendations on the departments to the CEO of Amana.
The recommendations can be given a per the above discussion.
 To maximise the earnings, the institute must concentrate in growing the amount of
production graphs which will assist it in maximising the profitability. The merchandising
cost of the firm must also be enhance by significant all the values and expenditures.
It is very important to examine the backlog in the details recording and taken certain
steps to betterment it (Kim, Lee, and Waggle, 2020).
 The resources value is much more compared to the original details and the groups which
are generated. It states that the ideal value or the material which are decomposition
must not be occurred. The administration which have to initiate some serious steps in
order to reduce the wastage of raw material.
 The worker wages can be minimised as per the goods produced and the operations
operated by the each and every employee. The per unit price of worker must be fixed,
so that the additional value didn't happen (Klatzer, Brait, and Schlager, 2018).
PART B
Provide an analysis to the decision of Mr. Amana that whether he should set up his business by
his own website or sell on Amazon by considering the cost which are significant.
The business of the Mana is developing rapidly in the nation such as Europe, US and UK. The
Amana has taken the decision of moving its business online, but there are two scenarios to move
the business, that are:
 If the branches of the businesses in Brighton, Manchester and Birmingham are closed for
the shift of the venture online, it will generate overall 50% of the revenue online. But for
this shift, the certain fixed cost will be borne such as: salary of the programmer for the IT
Department, upgradation of website, the delivery of the costs of getting the goods

delivered. But the guaranteed sales are of 100000 units annually. So, the total cost which
has to be paid by Mr. Amana is:
Cost of upgrading current website to handle large volume of sales = £50,000
Salary of a full-time IT programmer = £35,000 per annum
Cost of setting up delivery network = £150,00
Total Cost = 150000 + 50000 + 35000 = £ 235,000
 The second alternation which it has is to pay off just its fees of fulfilment for selling its
products directly on Amazon. It will thereby provide an assured sale of 65000 units
yearly, also the demand of its good will also elevate. The total cost that will incur to the
firm is –
Amazon fulfilment fees = £ 50,000
Hence, the setting up of the cost of the online platform is more a there is a major
difference in the expenditure also of £ 185,000.
Amazon is a well – recognised platform for delivering and selling its products online.
The customers are very huge and it also maintain a loyalty of its consumers. So, it is better to sell
its products online through the Amazon. It will give more revenue comparative top sell from its
own websites. It will also save the time and expenditure of the firm to set up its own website.
As there is difference of Amazon in Selling and Setting up the online store that are as
follows -
Basis Amazon Setting up the online store
Reach It has higher term of consumer base. It
deals with approximately 40 percent of
the yearly sales (Montes and Piñeiro,
2022).
It consumes high time to reach to
consumers if the marginal sales of
units are guaranteed.
Management It will maintain the maintenance and the
operating of the website. The sellers on
this require not to maintain it, they just
have to pay the value.
It will be the division of the
proprietor and as well as taking care
of the maintenance of the website
and to update the goods suitably. As
the essential value that are to be
pain as per to the owner.

Owned The control of the value of the goods
and structure of their pages is not the
involvement of the sellers.
The businessperson has the global
control over the page designing,
sign in, eliminating the goods. It can
maintain it as per to their preference
(Nikias, Schwartz, and Young,
2021).
Costs To sale directly on Amazon that need
only £ 50,000, this much of value that
are compared to opening of the website.
The decision to sale the goods on
own website that will need higher
investment. The cost will take £
235,000, that are high.
Data It has higher information of the
consumers who shops online.
It has to start from the starting and
to gather the information of the
online consumers that might be
hard.
Protection By selecting it, it will give a brand
security to the company. The
consumers understand about it, that
have brand loyalty and trust towards the
customers (Regan and Brown, 2021).
It have to develop their own brand
and make loyal customer base.
Control In it, this will not have control on the
costing policy of the products and
return policy.
In it, the top management can
develop the pricing and return
policy and return policy of the
products as per to their requirements
and necessities.
From the above differences, it can be measured that -
 By developing own webpage, it will take higher cost as compare to direct selling on
Amazon. Hence, as per to it, financing in amazon will be advantageous for the
management in terms of expenses.

 The sales of the goods secured is more in their own webpages by 35000 units as compare
to Amazon. Hence, it means that Mr, Amana's webpage will produce higher revenue as
compare to Amazon (Salem, Itani, and El-Hajj, 2020).
 By amazon Mr. Amana might not control the costs of the products but it can be
controlled when they create their own online stores.
 The manner of maintaining the webpages, will be termed by the Amazon, they select to
sale it out on Amazon directly.
Hence, from the above analysis it can be recommended to Mr. Amana to select to open their own
online store, as due to which ultimately the profits of the management will be seen. By producing
higher term of sales by this webpage it can earn higher profit (Vijay, Munnooru, and
Ramanamurthy, 2021).
CONCLUSION
From the above mentioned report it has been concluded that, the management should not
rely on yearly budget. It should check their actual and standard expenditure as monthly. It will
become easier for the business to identify the additional expenditure and to varied the price as
according to the requirements. Further, the performance report of Amana Ltd is made in which
the evaluation of the monthly control report is done and is based on the variances will be
calculated. It demonstrated that the unit of production will get maximised. The variable and as
well as fixed cost should be get changed. Then, the recommendation is given as per to their
performance report, that says that net gain is important for managing the financial health of the
management. Ultimately the net profit of the business will be higher from it as compare from
selling the goods and the services on Amazon.

REFERENCES
Books and Journals
Arumsari, P. and Sulistio, H., 2021. Soft system methodology for maintenance and treatment
budgeting for public-rented flats. Facilities.
Caiden, N., 2020. Budgeting in historical and comparative perspective. In Budgeting, policy,
politics. (pp. 41-54). Routledge.
Elliott, K. and Kellison, T., 2019. Budgeting for Success: Comparing Finances Between
Historically Black Colleges and Universities and Predominantly White
Institutions. Journal of Intercollegiate Sport. 12(1).
Hendrick, R. and Hu, X., 2020. Beyond Truth and Integrity in State Budgeting: Why State
Governments Use Budget Balancing Maneuvers (or Gimmicks)?. Public Budgeting &
Finance. 40(4). pp.104-127.
Ichii, R., 2021. Gender-Responsive Budgeting for Sustainable Development Goals. Gender
Equality pp.716-727.
Jha, A. and Arora, S., 2019. Literature Review of Capital Budgeting Practices with Special
Reference to Capital Intensive Industries of India. Prabandhan: Indian Journal of
Management. 12(5). pp.21-34.
Kim, T., Lee, K. and Waggle, D., 2020. Capital budgeting practices: evidence from
Korea. Managerial Finance.
Klatzer, E., Brait, R. and Schlager, C., 2018. The case of Austria: Reflections on strengthening
the potential of gender budgeting for substantial change. In Gender budgeting in
Europe. (pp. 137-157). Palgrave Macmillan, Cham.
Montes, G.C. and Piñeiro, W.E., 2022. Participatory Budgeting, Corruption and Government
Spending on Education: Evidence Based on Panel Data Analysis for Developed and
Developing Countries. The Journal of Developing Areas. 56(1). pp.117-142.
Nikias, A.D., Schwartz, S.T. and Young, R.A., 2021. The effect of information transparency on
capital budgeting with privately informed agents: a short research note. Journal of
Management Control pp.1-16.
Regan, T.H. and Brown, M.T., 2021. Budgeting. In Financial Management in the Sport
Industry. (pp. 186-219). Routledge.
Salem, D., Itani, H. and El-Hajj, A., 2020. A Guide for Optimizing Resource Allocation: Link
Assessment, Strategic Planning, and Budgeting to Achieve Institutional
Effectiveness. Planning for Higher Education. 48(2).
Vijay, A., Munnooru, R.R. and Ramanamurthy, M.V., 2021. Nutrient dynamics and budgeting in
a semi-enclosed coastal hypersaline lagoon. Environmental Science and Pollution
Research. pp.1-13.