Amana's Ltd: Performance Analysis, Control Report & Recommendations

This management accounting report provides a detailed analysis of Amana's Ltd, a souvenir business in England, focusing on its performance in 2020. The report includes a monthly control report comparing original and actual budgets, highlighting variances in selling units, material costs, labor costs, overhead costs, and overall contribution. It identifies areas where Amana's performance fell short of the original budget due to decreased sales quantity and selling price, increased variable expenses, and decreased contribution. The report recommends strategies for improvement, such as increasing online promotion, maintaining standard selling prices, reducing variable costs, and implementing flexible budgeting. Additionally, it analyzes Amana's decision to expand online, suggesting the company should leverage online sales to reduce costs and improve profitability. The report concludes with a discussion of various techniques like SWOT analysis and employee engagement to enhance overall performance. Desklib provides this and many other solved assignments for students.

Management
accounting

Table of Contents
SSINTRODUCTION ......................................................................................................................3
TASK...............................................................................................................................................3
Part A...............................................................................................................................................3
Preparation of monthly control report of Amana's Ltd...............................................................3
Analysis of Amana's performance during the year 2020............................................................5
Recommendations for improvement...........................................................................................6
Part B...............................................................................................................................................8
Analysis the Amana's decision....................................................................................................8
To give the advice of the Amana's to established the commercial enterprise through on line
shop or sell on amazon................................................................................................................8
CONCLUSION ...............................................................................................................................9
REFERENCES..............................................................................................................................11

INTRODUCTION
The term management accounting represents a merger of two words management and
accounting. Management refers to the function of planning and controlling while accounting
refers to record, analysis and presenting of various financial transactions. In this content that
form of accounting is called management accounting. Management accounting is concerned with
presentation of accounting information in a manner which can assist the management in creation
of policy and decision making. It is an integral part of management concerned with identifying,
presenting and interpreting information used for formulating strategy, planning and controlling
activities, decision making, optimum use of resources, discloser to employee and safeguard
assets (Albergaria, 2020). In this report, to prepared the monthly control report of Amana's Ltd
which is situated in England ans sells souvenirs to tourist. This report also includes the decision
of Amana's Ltd if they should business on amazon and set up their own business.
TASK
Part A
Preparation of monthly control report of Amana's Ltd
Budget:
 it is an item wise estimate of income and expenditure of the government for a fixed
period of time that is Annual financial statement.
 A budget is basically a financial plan for defined period, normally a year.
 A plan of operation based on those estimates.
 An instrument of fiscal policy for the government.
 One of the major instruments by which the use of public resources are planned,
controlled and public welfare are delivered.
Features of budget:
1. It is basically a policy statement funding to different program scheme reflect policy
decisions. Fiscal policy is solely impressed through budget.
2. Budget is presented on a particular day of year, the budgeting process continue round the
year (Banker, Fang and Mehta, 2020).
3. Till 2016 Railway budget was presented separate from general budget.

4. Budget is finest example of how executive and legislative collaborate in policy process in
democracies.
5. Budget is not everything about Indian economy. The monetary policy are managed by
RBI, outside the budget. It is only about government income and expenditure but does
not include income and expenditure investment of private sector.
6. Importance of budget is further diluted due to GST and major tax proposals and program
announcements outside budget (Bescos, Deville and Foulquier, 2020).
Function of budget:
 Resources are allocated to different sectors and segments of population as per the society
needs and priority.
 Progressive taxation and subsidies are the way of income/ wealth distribution.
 By tweaking fiscal policy demand is increased/ decreased to stabilize economy.
The budget can be classified into the various parts such as production budget, sales
budget, fixed budget and flexible budget. But to calculate the monthly control report of Amana's
Ltd, only to discuss of two budget such as flexible and fixed budget.
Flexible budget- Flexible means adjustable and budget refers to an anticipated plan made for the
financial activity of the entity. Therefore, the flexible budget is a financial plan created for
different activity levels. It is changed as per the activity level or production of units.
It is more useful and an effective tool for cost control. It clearly shows the impact of expenses on
operations and it helps in accurate forecasts. It is a series of static budgets for different levels of
activity. Such budgets are especially useful in estimating and controlling factory costs and
operating expenses. It is more realistic and practicable because it gives due consideration to
behaviour of revenue and cost at different levels of activity. While preparing the flexible budget,
the expenditures can be classified into three parts such as fixed, variable and semi variable
(Borba and et.al, 2021).
Fixed budget- A budget prepared on the basis of standard or fixed level of activity is known as
fixed budget. It does not change with a change in the level of activities. Thus a budget prepared
on the basis of standard or fixed level of activity is known s fixed budget. It becomes an
unrealistic yardstick in case the level of activity actually attained does not confirm to the one
assumed for budgeting purpose. The management will not be in a position to assess the

performance of different heads on the basis of budget prepared by them, because they on serve as
yardstick (Chang, Hall and Paz, 2021).
Monthly control report of Amana's Ltd:
Particulars Original budget Actual budget Variances
Selling unit 100000 80000 20000
Selling price each
quantity
25 20 5
Total selling price 2500000 1600000 900000
Deduct- Variable
expenses:
Material costs 250000 280000 30000
Labour costs 400000 440000 40000
Overhead costs 150000 120000 30000
Contribution 1700000 760000 940000
Deduct- fixed
overheads
Rent of warehouse 200000 170000 30000
Insurance premium 100000 100000 0
Salary of full time
warehouse worker
50000 35000 15000
Net profit of Amana's
Ltd
1350000 455000 895000
Analysis of Amana's performance during the year 2020
The term variance refers to the difference between the original budget and actual budget.
A positive variance shows positive numbers for company key performance indicators.
Favourable variance includes more sales than the budgeted, more revenues than the forecasted

and lower expenditure than predicated in original budget (Dalla Via, Perego and Van Rinsum,
2019). The unfavourable variance includes sales are lower than financial forecasts and actual
expenses are more than the budgeted. The performance of Amana's had fall down in the year
2020 due to the original budget because the sales quantity was decreased by 20000 which was
the performance has decreased. The selling price of the product has also decreased by 5 per unit
due to which the total amount of sales was fall down of Rs 900000. When it came to variable
expenses, production cost is raised than the anticipated authentic price range with the aid of a
great amount of 30,000 and salary labour force cost is expanded than unique price range via a
notable amount of 40000. The above two direct costs which is negatively affected the Amana's
performance. The overheads had decreased by 30000 which is positive impacts on the
performance of the company (Gusrita, 2020). By using reviewing income and variable expenses,
there has been great decline in Amana’s contribution with the aid of a sum of 940,000. The fixed
cost includes the rent of warehouse which turned into reduced via its unique budgets assist in the
outcome by 30,000, insurance cost which turned into same as so there is no impact on Amana’s
overall performance and salary of full time warehouse worker which became additionally had
decreased of 15,000 that positive impact of the company performance. The overall profit of the
company was decreased by the 895000. After analysing the data of Amana's Ltd there are many
ways which can improve the performance as compare to the original budget. The budget should
be flexible and easy to understandable. The company should involved all the workers and
manager while preparing the original budget (Hope and et.al, 2022).
Recommendations for improvement
There are numerous regions in which development is highly encouraged for Amana Ltd
like sale units, they must to need their increasing their selling unit by using promoting through
online net primarily based offerings, highlights the advantages of souvenirs, interact with
customer on social media, discover a journey area of interest market and enlarge its B2B
community etc. It is recommend to the company, they should not decreased the selling price of
the product because company needs to stuck on the standard budget. If they want to sell the
more product of tourists without decreased selling prices then they must need to give the benefits
of their existing consumers, offer special benefits, encourage consumers to give reviews, ask to
referrals and Amana should started the blog. To improve the profit, the company should reduced
the variable cost such as materials, labours and overheads. The material should be checked in

proper time interval and reconcile with the standard budget figure, used of the lower cost
material where possible, minimise wastage and reduced the unnecessary product features. There
are some ways to improve the performance of Amana's they are as follow:
1. Keep budgeting and forecasting flexible- Inflexible forecasts and budgets are not very
beneficial. Things alternate because the year progresses, and company need with the
intention to factor in those adjustments and how they will affect commercial enterprise.
The company should created the flexibility into the budgeting and forecasting so that it
will improve the results of the company.
2. Implement rolling forecasts and budgets- the company should done forecasting process
for the next quarter and not involved the whole year. Every quarter represents the
forecasts broader so that they will updated again after the quarter ended. Rolling forecasts
can help of the company to better align budget with stated plan whilst enhancing the
accuracy of company projections (Inger and Vansant, 2019).
3. Budget to company plan- It requires that spending selections be made based on actual
revenue, in preference to on possibilities. Imposing this approach of handling company
finances is definitely beneficial in addressing possibilities that were not part of the
original price range.
4. Communicate early and often- It affects all components of the commercial enterprise, and
want to preserve an open line of conversation with all workers during the entire technique
to assist reduce troubles and ensures alignment among company's operational and
enterprise strategies.
5. Involve the entire team- It should be a team attempt in order that departments and
devices have a clearer understanding in their wishes. Moreover, using of complete team
members of the company lets to have more than one perspectives on wherein enterprise is
now and wherein it could be in the future.
6. The company should provide the training of their current employees. All of the workers
should discuss how they improved the earnings of the company.
7. With the help of SWOT analysis, company should analyse all the activities of the
employees because it is very technique of the company. It evaluates the weakness,
strength, opportunities and threats of employees. It increases the productivity level of the
company by decreasing the labour material and overhead costs. The top level

management should summarize the budget and share between all the departments (Malik
and et.al, 2021).
8. Employee engagement is very essential factor to outline their overall performance. The
employees should provide the best techniques and tools to handle the materials. The
employer must engage extra skilled personnel in order that improve the productiveness of
the company .
Part B
Analysis the Amana's decision
To growth the competition in the united kingdom, and US, there may be need to promote
their merchandise through on-line. If the company does not want to promote their products via
on-line market then it is essential to promote their souvenirs in distinct nations wherein the
clients choose to buy merchandise by means of offline mode. Now in present days the customers
want to acquire the product by online because the products are available at cheaper cost with
good quality. The company does not want to sell the product in the Birmingham, Manchester and
Brighton city so that they can make better arrangements of the business activities. The
organization must pass their half of percent of sales through on line. It is beneficial sign to the
Amana's because they can save the variable prices as well as fixed costs. It enables in improving
the profitability of the organization. Amana's must go online as it makes the best picture in the
thoughts of traveller. Through online company can provides 24/7 hours facilities to their
consumers. In online mode the installation cost incurs very low. It must closed a few
departments because due to which the overall cost of the company has increased. These branches
need to began the online marketing if they want to maintain the income of the organisation. They
are able to compete with worldwide leaders with the aid of making their website in aesthetic
design with excessive high-quality product photographs by way of giving them attractive
reductions or with the aid of way of making their product free transport (McGregor, 2020).
To give the advice of the Amana's to established the commercial enterprise through on line shop
or sell on amazon
After the selection to go online, now it is to be keep in mind that whether to installation
its own shop or sell their product on amazon with the aid of doing evaluation with given facts

(Richardson, 2020). If they installation their own website they may incurred the subsequent costs
by the guaranteed sales of 100000 devices annually:
Particulars Amount
Setting up delivery network expenses 150000
Upgrading cost of current website to handle the
big data
50000
IT programmer salary( full time worker) 35000
Total expenses incurred in online shop 235000
The total expenditure incurred during the year is 235000, if they sale 100000 units. The unit
cost of product is £2.35.
The Amana's Ltd has also have second alternative of selling their souvenirs directly on Amazon
and following cost are incurred if they sales 65000 units annually.
Particulars Amount
Fulfilment fees £50,000.00
Total £50,000.00
As noted, there's loss of control on pricing by Amazon due to this that there can be non-
public personal label items by way of the use of Amazon implies it places order with vendors for
gadgets, can pay for the goods and sets rate for the products on its web page.
To analysing the above selection, the corporation will earn excessive profit if they
promote the goods to establish their very own website as examine to sell the product through
Amazon. If Amana's promote their product by using Amazon there are various competition of
every product sector, there is lack of manage which means that Amana's have very constrained
technique to show off its emblem presence. Regardless of the truth that there's threat to boom
their revenue through being on Amazon however it involves fulfilment cost. In the above data, if
they developed their own website then there is guarantee sales of 100000 units and they can also
achieve the higher profit by selling more units. The company should adopted various strategies
so that they can reduce their variable costs (Sokil and et.al 2020).

CONCLUSION
In this report, analysed the performance of Amana's Ltd. This report was classified into
the two parts. In the first part of the report to identified the variances between the actual budget
and original budget. The company is used various tools, techniques and policies and to minimise
the material, labour and other costs. With the help of budgeting tools company is increased the
sale and profit. To retain the workers till long term company is provided various incentives like
bonus and other employment benefits. In the second part of the report is included the decision of
the Amana's Ltd. After analysed all the factors company wants to sell their product through own
website because they want to establish their own control in the business.

REFERENCES
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