Performance Analysis, Recommendations, and Decision for Amana's Ltd

This management accounting report examines the financial performance of Amana's Ltd, a souvenir seller in England. It includes a monthly control report comparing budgeted and actual figures, highlighting variances in sales, materials, labor, and overhead costs. The report analyzes Amana's performance in 2020, noting a decrease in sales and profitability, and offers recommendations to the CEO for improvement, such as online sales, cost reduction, and employee engagement. Furthermore, the report analyzes the decision of Amana's to establish an online presence, comparing the costs of setting up an independent online shop versus selling through Amazon, and advising on the best course of action to increase sales and profitability.

Management
Accounting

Table of Contents
INTRODUCTION ..........................................................................................................................3
Task..................................................................................................................................................3
Part A...............................................................................................................................................3
The monthly control report of Amana's Ltd................................................................................3
Prepare a report on Amana's performance during the year 2020................................................5
Recommendations to Amana's CEO on areas of improvement..................................................6
Part B...............................................................................................................................................7
Analysis the Amana's decision....................................................................................................7
To give the advise of the Amana's to established the business through online shop or sell on
amazon........................................................................................................................................7
CONCLUSION ...............................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Management accounting is the application of the principles of accounting and financial
management to create, protect, preserve and increase value for the stakeholders of for profit
oriented organisations and non profit oriented organisations in the public and private sectors. It
records both qualitative and quantitative aspect. It provides the information to management for
the decision making. It focuses to the future projects. It does not follow the specific rules and
regulation. It sets budget and standards for a particular period or activity beforehand and theses
are compared with the ascertained cost (Aumeyo and Manas 2022 ). In this report, to discuss the
Amana's Ltd that is situated in England that sells souvenirs to tourists to prepare the monthly
control report and provide recommendations to Amana on areas of improvement. Further in this
report, discuss to the Amana's decision if they should set the business on Amazon.
Task
Part A
The monthly control report of Amana's Ltd
A budget is a instrument tool that are used by management in the planning, programming
and control of the business activity. It includes income, expenditure and employment of capital.
It is a financial plan of business organisation to be continued over a given time. The planning
stage is a necessary to forecast a probable course of action for the business. It is prepared in the
future period on the basis of past data. It is need to be updated, corrected and controlled every
time. It is a continuous process. Different types of budget are prepared by the enterprises
according to the business requirement. Budgets should be quantifiable and master budget should
be broken down into various functional budgets. It is the system of management control and
accounting in which all the operations are forecasted and planned in advanced to the extent
possible. The main goals of budget is to help in achieving the overall objective of the
organisation. The characteristics of budgets are as follow:
1. Defining business objectives- A budget is a plan for the achievement of organisation
objectives. The goals should always in the written form. It will give a clear
understanding of the plan and its scope to all those who must cooperative to make it
successful (Bogt and Scapens, 2019).

2. Key budget factor- There are various key budget factors that set a limit to the total
activity. Sometimes non availability of power does not allow production to increase in
heavy demand and lack of demand may limit the production. Such a factor is known as
key factor (Chand and Sharma, 2020).
3. Budget time- The time covered in the budget is known as budget time. There are no rules
and regulation to selection of the budget period. It can divided into the shorter period. It
can prepared monthly and quarterly.
4. Budget manual- The budget is made to decide how much an enterprise would earn and
spend and in what manner. A budget is a document that sets out the responsibilities of
the persons engaged in the routine of and the forms and records required for budgetary
control. The following contents of a budget manual may include:
 It is the statement of the functions and responsibilities of each executive, both regarding
preparation and execution of budgets.
 It should be the timeline to the preparation of each budget.
 It is necessary to maintain the reports, statements, forms and other records.
 The copies of all the forms should be completed by those responsible for preparing
budgets, with explanations concerning their completion (Herschung and Weber, 2018).
The monthly control report of Amana's Ltd:
Particulars Original budget Actual budget Variances
Quantity 100000 80000 20000
Selling price per unit 25 20 5
Total sale price 2500000 1600000 900000
Less- Variable costs:
Materials 250000 280000 30000
Labour 400000 440000 40000
Overhead 150000 120000 30000
Contribution 1700000 760000 940000
Less- Fixed

overheads:
Warehouse rental 200000 170000 30000
Insurance 100000 100000 0
Fulltime warehouse
salary
50000 35000 15000
Profit 1350000 455000 895000
Prepare a report on Amana's performance during the year 2020
The performance of Amana's had fall down in the year 2020 because sales had decreased
by 20000 units as compare to original budget. The selling price of the product is also decreased
by 5 per unit. The Amana's should adopt best strategy to increased the sale unit and selling price
of per unit. The cost that is imposed by the consumers had fall to 20 per product becomes an
important role in the business. In the original budget the variable costs of materials is lesser than
the actual budget. The material cost of actual budget is incurred of Rs 2800000, while in the
original budget the material cost is incurred only Rs 250000. The labour cost is also increased as
compared to original budget of Rs 40000. The company should increased the sale unit and
decreased the material cost and labour cost. These cost such as material and labour cost affects
negatively the Amana's performance while the overhead cost had positively impact to the
Amana's performance because the overhead cost decreased by 30000. It is good sign to the
company owner (Jermias and Juliana, 2018). The material and variable cost was decreased so
that the contribution of the product was also decreased by 940000. The fixed costs of the ware
house rental, insurance and full time warehouse salary that are reduced by the original budget. It
is helped in the Amana's performance. After showing the sales and overall fixed and variable
costs, the net profit of the Amana's Ltd was decreased of Rs 895000. After analysing the overall
data of Amana's Ltd, there are various strategies and tools which are helped to achieve the
original budget. The budget should always make easy and flexible so that they can change in
according to the business requirement. When Amana's make original then should involved all the
departments to understand the budget. They should disclose the company goals to the predict
corporation's monetary future. There is an destructive variances between the budgeted expenses
and real charges, this is due to Amana now not sticking to their original price range and they

must have a look at all prices and find a manner to reduce the amount they may be spending on
variable value or constant cost. They might additionally budget a lease sum of money for the
whole expenditure as they now recognise how plenty it is possibly to price and Amana need to
reduce down on the wages via making reduction in range of body of workers, hiring such
workforce a good way to do the process for a lower wage (Jiang, 2020). In the given case study
of Amana's Ltd that the actual sales were fall down by 20000 units and sale price also decreased
of 5 per unit it means the company gave the discount of the existing customers. This report is
utilised to identify how many units are to produced to fulfill the demand for sale. It also analysed
how much incurred the labour cost, material cost and overhead cost to earn a business
profitability (Libby and Salterio, 2019).
Recommendations to Amana's CEO on areas of improvement
The Amana's Ltd performance is dependent on the team performance. The CEO prepares
to the new business year. There are many ways that improvement is connected with Amana's
Ltd. They should sell their products through online web based services, to improved the
advantages of souvenirs, interconnected the consumers with social media, to identify the travel
market and increased the B2B network. It's miles relatively endorsing to Amana Ltd, they should
not reduced the selling prices. They need to maintain the original budget price of Rs 25. If they
do not reduce the company profit then they should attract the new consumers by providing some
benefits. To increased the net profit the company should decreased the material and labour costs.
The material must need to handled properly. To improve the Amana's performance the following
principles are to be followed by the company.
 The upper level management should to define the proper goal of the company and
communicated with the employees. A lack of understand can imposed the negative effect
on the Amana Ltd.
 Worker engagement is the most important aspects to define their work performance. The
workers to deliver the best strategies and tools to handle the materials. The company
should engage more skilled employees so that improve the productivity of the company.
 Amana's should give the training of their existing employees. All the employees are
interconnect with each other and discuss how they achieve the profit of the company.
 The company should monitor all the activities by performing the SWOT analysis,
because it plays an important role in the company. It identifies the strength, weakness,

opportunities and threats to the workers. It improves the productivity of the product and
helps to reduce the variable cost. The CEO must to summarize the budget and share with
all the employees of the company that may receive the flexible budget of the group of
ideas. There must established the goals of every department. When to prepare the budget
there should make best alignment of the company objectives (Marlina and Tanjung,
2020). There are some areas that the Amana's CEO must to improvement the work and
give assistance that the company and workers are secure.
Part B
Analysis the Amana's decision
To increase the competitors in the UK, and US, there is need to sell their products
through online. If the company do not want to sell their products through online market then it is
necessary to sell their souvenirs in different countries where the consumers prefer to purchase
products by offline mode. Now in days consumers purchase the product online because they are
available at lower cost with best quality. Amana wants to closed the business in the Brighton,
Birmingham city and Manchester city that they can make proper arrangements of the enterprises
activities. The company should move their half percentage of sales through online. It is a positive
or favourable sign to the management and company because they save the variable costs as well
as fixed costs (NICOLETA, 2019) . It helps in improving the profitability of the company.
Amana's should go online because it makes the good image in the mind of tourist. It provides the
24 / 7 hours facilities to their customers. Through online the set up cost incurs very low. It should
closed some departments that are increased the overall cost of the company. These department
should started the online marketing so that they can maintain the profit of the company. They are
able to compete with global leaders by making their website in aesthetic design with excessive
nice product photos by way of giving them appealing reductions or by way of making their
product free transport (Ostaev and Khosiev, 2018).
To give the advise of the Amana's to established the business through online shop or sell on
amazon
The Amana's take the decision to sell their products through online, now it is analysed that they
set their own shop or sell their products through amazon by doing consider with the given data. If

they wanted to establish their own website they will spend the following expenses by the fixed
sales of 10000 units annually:
Setting up delivery cost £150,000.00
Upgrading cost due to manage the large
volume of data
£50,000.00
Salary of full time IT programmer £35,000.00
Total cost by set up their own website £235,000.00
The total costs of the one year is £235,000.00 if they sales the 100000 units it means the cost will
incurred per unit of £2.35(Serrato Guana, 2019).
If Amana's adopt the second option it means they sell the product through directly on
Amazon then they would incurred the following expenses by guaranteed sales of 65000 units
yearly:
Amazon fulfilment fees £50,000.00
Total £50,000.00
As noted, there's lack of manipulate on pricing through Amazon because of this that there
may be personal non-public label goods by using Amazon implies it places order with vendors
for items, will pay for the goods and sets rate for the goods on its web page. It in reality mean
there is high chance of losses to Amana and one extra purpose for dealer to incur losses, there
exists go back coverage which denotes souvenirs will return via clients. Amana does not want
by way of promoting its products on line through Amazon due to lack on pricing control and
there exist return coverage as they can handiest 65000 devices. Amazon prices fulfilment prices
from its supplier. Alternatively, they can promote their product via their personal internet site
through incurring an quantity of £235,000 with the guaranteed income of 100,000 units which
virtually denotes that they will incur £2.35 according to unit of output offered. Amana can
sustain for long as they've manage over pricing by using which they are able to promote
souvenirs at any expenses through promotional reductions. There's assured sales which means
that they could sell more and may function from any places with 24/7 hours.
To analysing the above decision, the company will earn high profit if they sell the
products to establish their own website as compare to sell the product through Amazon. If

Amana's sell their product by Amazon there are various competitors of each product sector,
There's loss of control which means that Amana have very limited method to show off its
emblem presence. Despite the fact that there is hazard to boom their revenue through being on
Amazon however it comes to fulfilment value. As clear from above information, there may be
guaranteed sales of a 100000 devices or they can acquire more which leads to more earnings. It's
miles because Amana can discover a way to lessen its operating price like team of workers
wages, rentals and some utilities (Vakhrushina and Grishanova, 2018). Casting off these
overheads will allow Amana to decrease its fees, so their enterprise gives some real competitive
facet. It's far advised to the respective company they should cross for making or upgrading its
personal website (ПАНЧЕНКО, 2018).
CONCLUSION
This report concluded the performance of Amana's Ltd. In the Part A, the original budget
are compared with the actual budget and found the variance between them. The company adopts
various strategies, tools and techniques to reduce the variable costs like as material and labour.
The company adopts the budgeting control methods and focuses to the sale and profit of the
company. The CEO makes the budget with all the workers and provides the specific task of each
employees. In Part B company should focused on online shopping to earn the highest profit of
the company. The Amana's should sell through its own website so that they control the business
their own website.

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