Amana Ltd: Accounting Analysis, Efficiency, and Recommendations

This report provides an in-depth analysis of Amana Ltd's financial performance in the accounting year 2020. It examines the monthly control report, including original budget, flexed budget, and variances, to assess the company's efficiency. The report identifies areas of improvement and offers recommendations to the CEO, focusing on revenue generation, budget planning, and future preparedness. Additionally, it evaluates the strategic decision of establishing an online presence, comparing the costs and benefits of creating an independent online store versus selling through Amazon, considering factors like sales revenue, fixed expenses, IT programmer salary, and delivery system expenses. The analysis aims to guide Amana Ltd in optimizing its operations and enhancing profitability.

Accounting

Table of Contents
INTRODUCTION...........................................................................................................................1
PART A...........................................................................................................................................1
(a) Make a monthly control report expressing original budget, flexed budget, and variances.
................................................................................................................................................1
(b) Examine the control report, analyse efficiency of Amana Ltd. in the accounting year 2020.
................................................................................................................................................3
(c) Give some recommendation to Amana’s CEO on areas of improvement.......................4
PART B............................................................................................................................................5
Estimated through determination that whether Amana should accept to go online or set up its
own online store, by accepting all the costs which are relevant for the company.................5
CONCLUSION................................................................................................................................8
REFERENCES................................................................................................................................9

INTRODUCTION
This report talk about the productivity of the Amana Ltd company in the accounting year
2020 and if any misconception in the task of the enterprise and saw a problem in performance
then give some suggestion to the CEO of the business for improving the activities of the
department in a firm. So, basically this helps to understand the various issues of the organization
and then they create strategic plan to resolve the disruption of the firm. In general, it's main focus
towards the expansion and development of the business. In the second part of this report discuss
about what type of decisions Mr. Amana take to upgrade the efficiency of the firm and also talk
about that Mr. Amana setup his business in its own website or sell their goods to the amazon
which also incurred cost in the company. On the other hand, this report also includes the concept
of budget (Bera and et.al., 2018). It includes analysis of budget and identify the total of expenses
and income which is incurred for specified duration of time. It basically express that how much
amount a person can pay out and save for a specific time period. Budget can be maintaining by
anyone it involve some individual person, any business and government sectors. It helps them to
remember that they have limited budget to spend.
PART A
(a) Make a monthly control report expressing original budget, flexed budget, and variances.
The report talk about the preparation in originality of budget, flexibility of budget and its
variances. In very first instance it's important to understand the monthly control budget. In
general, the budget express the information based on the data of payroll activities in the
company, overhead expenses express the fluctuations in expenditure and its utility. The
important factor of the company is to help the owner or the leader to analyse the sample of
investing by the entrepreneur. It can be difficult to the firm to understand its disclosure. This
report also permits the high department of the organization to formulate the working cost
maintenance of the department and start to know the technique to reduce the cost and
expenditure of the business (D'ALFONSO, 2019.).
 Flexed budget: The budget also discusses about the set of performance or stages of the
company. In other words, the budget talk about the structuring of price which does not
fluctuate. When it creates the flexible budget then it is back to back change with the firm
variations of expenditure and the benefit of this flexed budget helps to decrease the
destruction of money. On the other hand, high chances and speedily performance to
change the market as well as business conditions.
 Data originality: This concept of budget helps to know the past data of expenses as well
as incomes. The budget is created to take expenditure as a base of it and also helps in
calculating the new revenue of the firm.
Let's talk about one another term that is variance of budget. In general, this budget helps to know
the difference of actual and original budget and discuss about the recent condition of the business
and show some various improvement in performance of the company also. To know the
condition of the budgetary year 2020(Fong, 2021). The below table show the working of original
budget, flexible budget and variances of budget.
AMANA LTD
Monthly Control Report
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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%
(b) Examine the control report, analyse efficiency of Amana Ltd. in the accounting year 2020.
The above report clearly state that about the efficiency of Amana Ltd in the accounting
year 2020. The calculation of above table shows the productivity of the projected activities of
Amana Ltd and how it cooperates the changes of flexed budget and how it formulates the
expenses and revenues of original data and help the company to determine the performance of
the business (Gaskew, 2019.). In mainly some various steps which assist in identifying the
resultant task of a company budgetary report:
 Cost which are easily traceable: This concept of budget is an important step of cost which
help the company to determine the paying out money and then prepare a budget
according to that in near future. It will assist the company to analyse the problems which
create a misconception in a business while they perform the activities to achieve its
budgeted goals. This report mainly shows the financial decision of the company and it
make such decisions on yearly basis they don't make various strategy on monthly basis
and it can also depend upon the determination of manufacturing expenditure, material
expenditure and other expenses also which occurred while company perform the activity
into the organization. But if it makes a strategy of spending money then it's completely
different as compare to the financial plan. It can be preparing by the enterprise on
monthly basis because expenditure can be incurred in business at any time. While they
performing the budgeted goals into the firm. But this monthly spending plan helps the
company to analyse where money is high pay out in a very efficient manner. In a
business its main goal of the owner to best determine the spending strategy and try to
reduce the cash outflows and expenditure of the enterprise. Basically, the business can
spend money on a useful task rather than the investing in destructive activities.
 Determine the high pay-out cost: If company use to better the way in which firm face
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hard to perform the task then they need to analyse the place in which organization high
pay out on expenditure and try to retrieve the task in which it incurred high cost and
reduce company's income. This issue can be resolved by paying out less on unused task
and increase the focus to create more profit into the organization (Ghossoub, 2019.).
 Identify the area in which it occurs more cost: Firm necessary to determine the various
activities in which it incurred high expenditure and that was the reason to become low
value of income. Generally, business try to better the cost structure and make proper plan
and then it spends only such type of activities which are good for the company and not
create any problem for the profit of the enterprise.
The above figures of the table show the various kind of areas Amana Ltd company important to
improve its performance. It clearly state that the company forecast the original budget of the
accounting year 2020 but firm achieve the actual budget lesser than its original budget in various
areas it includes:
 In a very first instance above table show the income of the company and its original
budget. It can show that the business revenue is more than its actual budget of the
firm. Basically, it clearly means that organization estimated high revenue in the
accounting year 2020 but they get less then it proves that company need to increase
its sales rather than high pay out on expenses (Jamalellail and et.al., 2022).
 In second point the above table show that the company high invest on the cost
because of this factor gross profit of the company becomes less in relation to the
original budget.
 In the third instance it expresses the revenue and gross profit are less in relation to
the original budget and because of this net profit of the accounting year 2020is also
declined. In 2020 company spend more money in the expenditure of the firm and
unfocused on the profit and it express low productivity of the company and decline
the ability to perform the activity with the attainment of goals and objectives.
(c) Give some recommendation to Amana’s CEO on areas of improvement.
1. The Department of the company need to generate more revenue in the organization
because every company can create high profit when it sale high and spend less on the
activities into the firm. There is only one factor which reduce the actual budget of the
company that is low sales and spend in more cost it reduces the net profit of the company.
2. Prepare a good plan for the budget: This is one of the most important step to create
budget in advance because before implementing any plan company need to make best
strategy and then move forward to apply such plan into the business for achieving the
budgetary goals efficiently. The table show that the company not prepare with the good
strategy and not efficiently perform that's the reason to get less profit as they estimated in
accounting year 2020(Konrad, 2018.).
3. Ready with the future scenarios: Every business face problem while they performing the
activity. So, the company necessary to prepare in before for the future issues and helps
the firm to cooperate with the changes.
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PART B
Estimated through determination that whether Amana should accept to go online or set up its
own online store, by accepting all the costs which are relevant for the company.
The above case study could be determining that Mr. Amana's company is performing and
run very smoothly in the countries of United Kingdom, Europe and United states. On the other
hand, Mr. Amana try to sell their products and make it business online for increasing its sales
turnover. It could be happening by closing some of the branches which are established in the
cities of Birmingham, Manchester and Brighton. But it’s complicated between the two schemes
of developing the company, one is it should transfer its complete firm online and the other sell
the product with the help of Amazon (Lee and et.al., 2019).
 Accepting the prospects of the cities are closed and transfer online, it will automatically
decline the sales revenue and lead to create only 50% of the turnover with the help of
online website because of this organization is borne to inclined some of the expenses
which are fixed, improvement, delivering expenses and others but it provides a surety of
selling 10000 units yearly. This will occur a total expense like:
improvement expenses of handling the online website = £ 50000.00
Salary of a full- time IT programmer = £ 35,000.00 yearly
Delivery system expenses = £ 150000.00
Total costs = 50000.00 + 35000.00 + 150000.00 = £ 235000.00
The second point involves settle accomplishment for selling the goods directly to amazon. It will
create an assured sale of 65000 units annually. It proves that the expenses for establishing the
business into online platform is £ 1,85,000 and amazon accomplishment fees is £ 50,000.
Amazon is a very big international online gateway platform which provide various goods and
services to the customer and help retailers to sell their product with this platform. It also provide
online payment service to the customer from one individual to another.
Now on the basis of above case study it show the distinguish between the establish it own online
store or selling products in amazon (Mazzoni, Heggy and Scabbia, 2018).
Basis Selling on Amazon Establish the cost of it own
online store
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Reach The organization has highest
customer base which
increases the opportunity of
sales. Basically in Amazon
they already create it's better
goodwill in the market and
because of this the number of
customer order their product
in amazon website. They
have large amount of number
of users available in the
countries
It takes relatively high time
to reach the consumer. In
simple word operating its
own website take so much
time to fulfil the demand of
customer and take higher
time to build the trust in the
mind of customer towards the
website. Amazon and other
more online website takes
more time to create goodwill
in the market. So, if a
business also create its own
website than it's take much
more time to create goodwill
(Picchio and Santolini, 2020).
Management cost It will take the maintenance
charge of the website for the
sellers. Basically if any seller
sell its product in some online
website let's take amazon if a
seller sell its product in
amazon then it will charge it's
maintenance cost to the
retailer.
Everything is controlled by
the proprietor of the business.
In this point no charge to be
paid because everything is in
the control by the owner.
Control The page and the price of
products is not controlled and
directing by the seller.
The proprietor of the
company have the complete
control of page decorating,
removing products and sign
in.
5

Expenditure Retailer necessary only £
50,000 for establishing a
seller account on Amazon.
Decision of selling after
creating an online store will
expense high to the proprietor
of the website. It will amount
to £ 1,85,000.
Firm data It is a establish company
which already have a set of
data which is determine to
know the nature of the buyer
(Richiedei and Tira, 2020.).
It will take time to recover
data from a new enterprise.
The flow of consumer will
take time for the public to
reach to the online website of
the company
The above table express and discuss the following steps:
 The expenses of expanding own website will create cost more in relation to the already
establish company which have active public on the management.
 If a company sell the products in their own website then the data of the business will be
safe but if any company sell its product in some other website like amazon then there is
no guarantee to the security of data it involves huge risk of data insecurity (Qin, Pi and
Shao, 2022.).
 If company sell its product in amazon, then its already work on the better facility and
service provide to the customer. But if a company sell its product in its own website then
they have a chance to choose its own way to provide better service and facility to the
customer otherwise, the company own website not maintain its stability in the
competitive market and it becomes difficult for the business to stable in long run.
Hence on the basis of above case study it can be suggested that Mr. Amana have to establish its
own website and creating page will automatically generate the profit for Mr. Amana. By
producing in more quantity will decrease the per unit cost and increase the profitability of the
organization (Yoshioka and et.al., 2018.).
CONCLUSION
As it is concluded from the above report that the reason to reduce the revenue, gross
profit and net profit of the company is it's more pay out on expenditure and reduce its focus on
the revenue of the company because of these factors the efficiency of the firm becomes less and
it's create an issue for achieving the goals and objective of the company. The above report clearly
state that the in 2020 some others factors also create a problem for the business like traceable
cost, High spend expenses and Area in which it incurred high expenses these are the barriers
which create issue for the firm. At last is also recommend some needs of up gradation to control
the high expenses and high sales. So, that business can generate huge profit.
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