Amana Ltd: Control Analysis, Productivity Evaluation, Recommendations

This report provides a detailed analysis of Amana Ltd's financial performance for the fiscal year 2020, examining the company's control mechanisms, productivity, and strategic decisions. It highlights discrepancies between the initial budget and flexible budgeting analysis, offering insights into areas needing improvement. The report evaluates the control analysis, identifies factors affecting the gross income margin and net income, and proposes recommendations for the CEO to enhance the company's performance, including strategies for boosting sales and managing costs. Furthermore, it discusses the advantages and disadvantages of Amana Ltd establishing its own digital storefront versus partnering with an existing online platform like Amazon, considering the associated costs and potential sales volumes for each option. This analysis helps in understanding Amana Ltd's financial standing and provides actionable recommendations for future growth and efficiency.

Accounting Project 2
Report

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
PART A...........................................................................................................................................1
Provide a monthly control summary including the initial estimate, the flexible spending plan,
and the variations.........................................................................................................................1
For the financial year 2020, evaluate the control analysis and examine Amana Ltd.'s
productivity..................................................................................................................................2
Make additional recommendations to Amana's CEO about how to improve the sectors that it is
lacking..........................................................................................................................................4
PART B...........................................................................................................................................5
Explanation of the decision on whether Amana Co. must open its personal digital storefront or
take the opportunity to do so with other firms that are operational like Amazon.......................5
REFERENCES................................................................................................................................8

INTRODUCTION
The accompanying research investigates Amana ltd's capability for the fiscal year 2020, as
well as the misunderstandings which it has made in its operations (Al-Dmour, Zaidan and Al
Natour, 2021). It also indicates the differences between the initial statistics and the flexible
budgeting analysis, along with the appropriate comments and ideas. In addition, the study
identifies the problem sectors which have to be addressed. Essentially, this paper discusses
variations and techniques for controlling these discrepancies by giving significant information
for every component. Furthermore, it elucidates how a company's gross income margin impacts
its net income. It also explains the advantages and disadvantages of starting your own internet
firm and marketing your goods through current digital channels.
PART A
Provide a monthly control summary including the initial estimate, the flexible spending plan, and
the variations
On a regular foundation, the monthly control statement reflects the firm's operating and fiscal
achievements. Such statistics assist the organization in determining the expense, activity, and
output. It's a concise and also thorough method to listing the important goals and priorities for
the coming weeks and months (Alsharari, Dixon and Youssef, 2015). This might aid in the
advancement and consistent performance of a firm.
 The initial spending plan is accepted at the beginning of the budgeting process. The
modifications for all forms of deposits, carry-forward sums, grants, acquisitions, as well
as other administrative modifications relevant to the budgeting process are included in
this plan.
 Flexible budgeting: A spending plan which adapts or adjusts in response to variations in
quantity or engagement (Andarwati, Nirwanto and Darsono, 2018). When contrasted to a
fixed spending plan, this is thought to be the most beneficial. The flexible spending plan
would respond to variations in expense and engagement since it uses an adjustable price
per component of engagement rather than a set price. This is the most appropriate way to
assess a supervisor's effectiveness.

 Variable spending plan: The fluctuation spending plan analysis assists an organization in
identifying the cause of variances. In a nutshell, this paper explains when real expenses
diverge from the conventional expenses (Armitage, Webb and Glynn, 2016).
Amana ltd's monthly control summary is shown underneath for the year 2020
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%
For the financial year 2020, evaluate the control analysis and examine Amana Ltd.'s productivity
The productivity of Amana ltd is demonstrated in the previously provided analysis for the
2020 fiscal year. The assessments in the study indicate the production capability of Amana ltd's
projected processes and projects (Bloom, Sadun and Van Reenen, 2016). It also depicts how this
firm has dealt with flexible budgeting deviations and how it has projected spending and earnings
in addition to helping the corporation analyze the effectiveness of its commercial venture. The

following are some of the different steps that a corporation could implement in order to get
positive outcomes:
 Maintaining record of monetary objectives as a spending plan, in addition to managing
spending, is critical because it provides a foundation for determining whether or not a
firm will be capable to meet its monetary objectives. Whenever a firm produces a
spending plan, it establishes monetary limitations to ensure that the firm stays on course
and achieves its investment objectives (Brink, Hobson and Stevens, 2017).
 Expenditure management as by creating an expending plan, a company may prioritize its
operations. Such objectives assist an entrepreneur or a firm's proprietors in achieving
large earnings.
 Recognizing higher value locations as a corporation should look into the places where it
requires to spend a lot of money. It will provide a good assessment for achievement goals
while reducing expenses. Excessive expenditures linked to tasks which are not required
to be performed should be eliminated by the company organization (Chiarini and
Vagnoni, 2015). Implementing all of above steps could assist a business in cutting costs
and increasing revenue.
The numbers and statistics in the column show the priority sectors where Amana Ltd has to
focus in order to enhance its efficiency. The variations are clearly represented by the quantitative
numbers given previously. There seem to be circumstances in which the corporation has failed to
meet its initial plan, i.e., the real outcomes achieved are lower than those expected. The
foregoing are some of the numerous aspects:
 Additional consideration is the expense of the merchandise manufactured, which
comprises basic materials, direct labor, and administration. Once contrasted to the initial
spending plan, the expense involved with all of those things has risen to $40,000 for the
financial year 2020 (Glushchenko, Yarkova and Kucherova, 2017). As a result, the gross
income margin calculated is 76000, with a variance of 94000. This implies that the firm
is unable to manage expenditures and generate revenues, which will almost certainly
result in the bad effects that Amana Ltd is experiencing.
 The quantity of net income margin for 2020, which really is 4,55,000, is shown in the
final column of a spreadsheet. And the difference is 8,95,000, which is adverse. It implies
that the corporation is not adopting preventative efforts to keep costs under check. The

fall in net income margin can be attributed to a reduction in gross income margin. This
indicates that the organization is focusing more on its expenses rather than profitability
and earnings creation. A company must develop appropriate strategies and consider
numerous options in order to regulate every one of those variables (Jermias, Gani and
Juliana, 2018).
 The fundamental of all the aspects is the first element in the column is earnings, which is
the most important source of profit for each and every business. According to the
research, there is a disparity of roughly 90,000. The real volumes are lower than the
budgeted amount. This is not at all a beneficial strategy; instead of spending for charges,
a commercial corporation should employ certain effective techniques to increase selling.
Make additional recommendations to Amana's CEO about how to improve the sectors that it is
lacking
For the initial category, earnings, the corporation should boost selling by developing
effective advertising tactics and longer run regulations that are closely related to advertising
(Kramer, Maas and Van Rinsum, 2016). Amana ltd. could use value-based sales tactics because
this method is determined on the basis that what a consumer receives from using a particular
commodity. This company should pay close attention to the client's corporate system in order to
suit the viewer's needs. It must keep a watchful eye on its rivals' marketing strategies. In addition
to avoid excessive costs, Amana's CEO must use efficient price reduction strategies. By settling
bill on schedule, it could build solid relationships with vendors. This would assist the company
in gaining the confidence of its vendors, and the provider may be able to lower certain input
components costs as a result. It may also maintain a record of both day-to-day and permanent
spending. Apart from that there are many other factors too that must be taken into consideration
and hence it can help the firm in the long term and thus they are given below:
 It will develop an effective budgeting strategy to accomplish the intended results.
 Amana Ltd. should prepare for prospective uncertainty so that it can rely on alternate
means to solve problems, if they are financial or administrative (Maheshwari Maheshwari
and Maheshwari, 2021).
 Amana ltd. will take a detailed check at the operating expenses involved with the
operations which are conducted on a regular schedule in a company venture and aim to
reduce them. Consequently, as the scenario illustrates, the gross profitability margin used

to have a negative impact on the net income margin as well. This is why, whether
compared to the initial statistics, the organization has experienced fewer operating costs.
PART B
Explanation of the decision on whether Amana Co. must open its personal digital storefront or
take the opportunity to do so with other firms that are operational like Amazon
According to the research study, Amana Ltd. is running quite properly and easily
throughout the Great Britain, Germany, and the USA (Mishra, Wu and Sarkar, 2021). Amana
Ltd., on either hand, wishes to offer its goods and operations electronically in order to increase
its selling earnings. All of this is feasible because to the closure of the Coventry, Liverpool, and
Sussex offices. However, it would be difficult to do so. The two choices accessible to Amana Ltd
are to move the full operation of its company to the internet and to offer merchandise and
products via an established web retailer such as Amazon. If all of the city's offices are shuttered
and the company's operations are moved digital, revenues will almost certainly drop by half.
This would occur as a result of a few of the necessary costs which a company must spend, such
as shipping costs and so on. However, if this requirement guarantees the sale of 10,000 units per
year. The overall expenditures will therefore be as follows:
Costs linked with the overall improvement of the digital webpage = £ 50000.00
Remuneration as the wages paid or set aside for the workers that are working with the firm
permanently and also for the salary of the technical expert = £ 35,000.00 yearly
Costs that occur as the delivery charges = £ 150000.00
Total expenses = 50000.00 + 35000.00 + 150000.00 = £ 235000.00
Amana ltd has an additional alternative open to them. Is the process of offering items and
services on the well-known internet marketplace Amazon. This assures a yearly sales volume of
65000 components (NGUYEN and NGUYEN, 2021). The fee which the company will have to
spend to move its company in digital platform is £ 185000, and the incentive cash which it will
need to give to Amazon is £ 50000. Amazon is a well-known global firm which advertises goods
and provides internet transaction assistance providers to its customers all over the world. From
the foregoing explanation, it is clear that there is a distinction to be made among searching the
internet and marketing items via the internet.
Foundation Amazon the platform to offer Creating a personal digital

things storefront
Costs In this case, the expense expended
is only $50,000.
When particularly in
comparison to attempting to
offer items on Amazon, this has
a higher start-up expenditure.
Statistics Since Amazon does have the
current information of its
customers, it is simple to contact
them.
Since Amana ltd. had recently
changed to an electronic form,
gathering information would be
difficult in this case.
Clients range If Amana ltd. offers its goods on
Amazon, it could attract a large
number of people. Since it is a
great network that distributes its
merchandise all over the world. In
addition, since Amazon is the
greatest electronic buying site and
is generally supported by
individuals, this approach would
be extremely straightforward to
earn client confidence.
It could be quite difficult for
Amana ltd. As it would have a
fresh profile on that kind of a
network, it would need to
connect out to clients
effectively. Due to the obvious
scams which have occurred in
the context of digital networks,
the public will be unable to put
faith in the freshly established
webpage.
Controlling The authority would be
completely in the powers of
Amazon's operator, allowing it to
set the pricing of products and
activities.
Amana ltd would have
complete authority. As a result,
competing webpage could
not affect the pricing of the
goods (Nkundabayanga,
Tauringana and Muhwezi,
2018).
The expense of
maintaining
This method would not be the best
choice because Amazon could
cost shops more than that for
brand identification.
This is correct in this context
because Amana ltd would be in
charge of the webpage. As a
result, it would not be ordered

to contribute additional service
charges in order to offer the
item.
On the foundation of the variations among the 2, the accompanying things may be examined
by the preceding data depiction.
 However, since there are potentially several 3rd parties associated with shipping the
merchandise, retailing things on Amazon might result to a security leak. Since
information protection stays with the corporation's operator on the firm's personal
webpage.
 Additional factor which really is evident is the expense of upkeep and its impact on
pricing. Whenever these 2 phrases are reviewed and debated, Amana ltd. may be made to
confront the unfavorable outcome of losses.
 Establishing out its personal internet marketplace comes at a high expense when
contrasted to the other options which are accessible to Amana Ltd.
As a result of the preceding assertions, it could be stated that moving its shop to an internet
site is a viable choice (Sledgianowski, Gomaa and Tan, 2017). Since the most important aspect is
information, which contains confidential information about clients and products. If this
information is exposed, it would be extremely difficult for any business to recover it. Clients are
the cornerstone of just about any business, and privacy violations will inevitably lead to a
reduction of public confidence and, as a consequence, downstream earnings. Amana ltd. would
be best off establishing its personal internet site to prevent having to spend these charges on a
monthly level, given additional aspect of costs which it would need to spend for administration
purposes of $50,000.
CONCLUSION
As a result of the foregoing analysis, it could be determined that the corporation will need
to cut costs in order to fulfill its financial targets. Because a group's expenditures could influence
its gross profitability margin and net income margin both good and detrimental ways. It is also
obvious that how such sectors are managed has an impact on a company's productivity and
performance. Furthermore, this study has provided a comprehensive comprehension of the
profitability for the fiscal year 2020 as well as the economically optimum approach which a
company must use to reduce its costs and achieve a high profitability ratio.

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