Amana Ltd: Financial Performance, Budget Variances & Online Strategy

This report analyzes Amana Ltd's financial performance in 2020, focusing on budget variances, productivity, and strategic recommendations for improvement. It examines the original budget, flexed budget, and variances, providing insights into the company's operational efficiency. The report also explores whether Amana should transition to an online business model, comparing the costs and benefits of establishing its own online store versus selling through Amazon. Key areas of analysis include cost tracking, identification of high-spending areas, and suggestions for enhancing revenue generation and budget planning. Ultimately, the report aims to provide actionable insights for Amana's CEO to optimize financial performance and strategic decision-making.

Accounting Project 2
Report
Table of Contents

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
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. ...............................................................................................................................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 report showing 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).
 Flexible budget: 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
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 labor 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%
Full time Warehouse
Supervisor salary
50000 35000 -15000 -30.00%
Net Profit 1350000 455000 -895000 -66.30%
2

(b) Study the 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

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 £ 1,85,000 and 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.
Basis Selling through Amazon Setup the cost of it own
online shop
Scope The business has more
consumer base which higher
the chance of sales.
essentially in Amazon they
advance provide it's good
image in the market and
because of this the various of
consumer demand its product
in amazon website. They
have number of customer
present in various nations(Tu
and et.al., 2021).
It takes comparatively more
duration to get the customer.
In easy term executing its
own website take so much
duration to complete the
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
business wants to make its
own site than it's take more
duration to make good image.
Cost administration It 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's take an example of
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 control The page and the value of
goods and service is not
controlled and powered by
the retailer.
The owner of the
organization have the full
control of page designing,
change products and sign in.
Expenses Distributor need only £
50,000 for setting up a
retailer account on
Amazon(Whyte-Givans,
2020).
Judgement of selling after
preparing an online shop will
expenditure more to the
owner of the site. It will
value to £ 1,85,000.
company data It is a set up company which
have an advanced set of data
which is identify to
understand the quality of the
buyer.
It will take some duration to
retrieve data from a new
business. The flow of
customer will take some
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

the consumer. Otherwise organization not manage its stability in website on the
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

REFERENCES
Books and Journals
Ansaripoor, A.H. and Oliveira, F.S., 2018. Flexible lease contracts in the fleet replacement
problem with alternative fuel vehicles: A real-options approach. European Journal of
Operational Research. 266(1). pp.316-327.
Badr, D.H., 2021. Nonparametric regression model of autocorrelation problem in the general
budget of Arab States through (2008-2020). Journal of Statistics and Management
Systems. 24(4). pp.791-799.
Hansen, D.R., Mowen, M.M. and Heitger, D.L., 2021. Cost management. Cengage Learning.
Kim, S.J., Jung, Y.C. and et.al., 2021. Low-thermal-budget (300° C) ferroelectric TiN/Hf0. 5Zr0.
5O2/TiN capacitors realized using high-pressure annealing. Applied Physics
Letters. 119(24). p.242901.
Kiselev, A and et.al., 2018. Information function of civil budget. International Journal of Law
and Management.
Kotake, H and et.al., 2022, March. Link Budget Design of Adaptive Optical Satellite Network
for Integrated Non-Terrestrial Network. In 2022 IEEE International Conference on
Space Optical Systems and Applications (ICSOS) (pp. 240-247). IEEE.
Mutilba, U and et.al., 2019. Traceability of on-machine tool measurement: Uncertainty budget
assessment on shop floor conditions. Measurement. 135. pp.180-188.
Ruan, D.B and et.al., 2019. Performance enhancement for tungsten-doped indium oxide thin film
transistor by hydrogen peroxide as cosolvent in room-temperature supercritical fluid
systems. ACS applied materials & interfaces. 11(25). pp.22521-22530.
Shi, T and et.al., 2020, October. Location-aware and budget-constrained application replication
and deployment in multi-cloud environment. In 2020 IEEE International Conference on
Web Services (ICWS) (pp. 110-117). IEEE.
Tu, A and et.al., 2021. Water budget components estimation for a mature citrus orchard of
southern China based on HYDRUS-1D model. Agricultural Water Management. 243.
p.106426.
Whyte-Givans, S., 2020. The Political Economy of the Budget-Making Process in Jamaica,
1991-2010. Available at SSRN 3576878.
Xue, Z and et.al., 2018. Maximization of data dissemination in UAV-supported Internet of
Things. IEEE Wireless Communications Letters, 8(1). pp.185-188.
Zhang, M and et.al., 2019. Energy budget analysis and engineering modeling of post-flutter limit
cycle oscillation of a bridge deck. Journal of Wind Engineering and Industrial
Aerodynamics. 188. pp.410-420.
9