Management Accounting: Amana Ltd Performance Analysis and Insights

This management accounting report provides a detailed analysis of Amana Ltd's performance, particularly in light of the COVID-19 pandemic. It includes a monthly control report with original budget, actual figures, and variance analysis for units, price, materials, labor, overheads, contribution, rent, insurance, and salary. The report assesses Amana's performance in 2020, highlighting both positive and negative deviations. Recommendations for improvement include sourcing materials from cost-effective vendors and hiring experienced laborers to reduce employment costs. The report also evaluates Mr. Amana's decision to sell products online, comparing the costs and benefits of using the company's website versus leveraging Amazon's platform, ultimately suggesting Amazon for its cost-effectiveness, broader customer reach, and enhanced security. This comprehensive analysis aims to provide insights for strategic decision-making and improved financial performance.

Management
accounting

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
PART A...........................................................................................................................................1
Monthly control report.................................................................................................................1
Amana’s performance during 2020.............................................................................................2
Recommendation for the improvement.......................................................................................4
PART B...........................................................................................................................................4
CONCLUSION................................................................................................................................6
REFERENCES................................................................................................................................7

INTRODUCTION
Cost estimates are incredibly crucial in calculating all of a firm's spending. Budgets may be
produced employing a variety of ways, according to research (Bondar, Iershova and Chaika,
2019). Budgets have also been discovered to be one of the very important components which
aids a company in planning its next way to proceed. A major consideration has indeed been
devoted to the findings and the deviations decided in a produced budgets in this current debate.
The focus of this paper is on Amana Ltd. that has been hit hard by the COVID-19 epidemic. The
conduct of such a firm has been examined in relation to the current topic. The corporation's
productivity deviations have been assessed on this criteria. Furthermore, if Mr. Amana need to
do his commercial operations digitally is also discussed in this conversation and that too in an
impactful and precise format. According to the findings of the investigation, the business has
experienced both positive and adverse fluctuation. In this case, it is suggested that the enterprise
concentrate on cost-effective personnel, as this will assist the firm reduce non-favourable
variation. Mr. Amana is also advised to offer the merchandise on Amazon, since it will be more
cost-effective for the firm.
PART A
Monthly control report
Particulars Original
budget Actual Variance
Units 100 000.00 80 000.00 20 000.00
Price (Selling) £ 25.00 £ 20.00 £ 5.00
Costs (Variable)
Materials £ 250 000.00 £ 280 000.00 -£ 30 000.00
Labour £ 400 000.00 £ 440 000.00 -£ 40 000.00
OH £ 150 000.00 £ 120 000.00 £ 30 000.00
Contribution £ 1 700 000.00 £ 760 000.00 £ 940 000.00
Fixed OH
Rent (Warehouse) £ 200 000.00 £ 170 000.00 £ 30 000.00
Insurance £ 100 000.00 £ 100 000.00 £ -
Salary (Fulltime warehouse supervisor) £ 50 000.00 £ 35 000.00 £ 15 000.00

On the grounds of the preceding data, this has been determined that perhaps the table
contains the 3 major budgetary components. The initial budgeting, real expenditures, and
deviations for Amana Ltd were all documented in the framework of this current spending plan
sheet. The initial budgeting is a strategy that is developed by a company in order to determine its
financial commitments. In other terms, the initial budgets could also be defined as the predicted
fiscal summary generated by corporations in attempt to decide the corporation's total
expenditures (Chiwamit, Modell and Yang, 2014). With regard to the initial budgets, this could
be noted that this is a predicted report (monetary) which assists a company in preserving the
working capital and also the income and deficit summary. Whenever a flexibility budgets is
considered, however, it is discovered that this is a strategy which adjusts to a variety of
adjustments in terms of quantity or activity. Once contrasted to a fixed strategy, this method of
forecasting is proven to be much more complicated and effective. It has been discovered that a
fixed budgeting is one in which the planned sum does not vary. The above figures were
discovered to be identical when compared to the figures mentioned when creating and accepting
a fixed budgeting. The size of the flexibility budgets is likewise observed to be fluctuating
because it incorporates fluctuating expenses. Besides that, it has been discovered that a flexibility
budgeting is among the most useful tools which an enterprise may utilise to evaluate its
operational productivity. Aside from such types of budgeting, it has been shown that this debate
also includes deviations. The gap among the initial plan and the sum reported in the real budgets
is known as deviation. It is also revealed that perhaps the variations are of 2 forms, notably,
positive variation and also the negative variation. In terms of beneficial deviation, it could be
defined as a differential (positive) among the initial projected quantities and real expenditures.
Whenever the real cost is determined to be higher than the initial planned estimate, however, it is
referred to as a non-favourable variation.
Amana’s performance during 2020
In the case of Amana Ltd, this one has been discovered that this company mostly operates
in the tourism business. It has been discovered that the COVID-19 epidemic has had a serious
detrimental effect on organisational, particularly those in the tourism sector (Fleischman,
Johnson and Walker, 2017). In the case of Amana Ltd, it has already been discovered that the
firm's productivity has suffered as a result of the outbreak. The anticipated and also the total

quantity of expenditures were brought into account in addition to evaluate the success of this
precise organisation in the year 2020.
The positive as well as negative variations have indeed been brought into account in effort
to conduct out such a talk effectively. The variation has been examined in the initial section of
the statement based on the stated expenditure. It was discovered that the firm has had both
positive and negative deviations depending on the variations. According to the management
assessment, the corporation decided that it will offer £100,000 pieces at a price of 25 pounds.
The real numbers, though, were calculated to be £ 80 000 at a cost of 20 pounds. In this situation,
it could be stated that the corporation failed to deliver the expected quantity of items at the
expected price. Additionally, whenever fluctuating costs are considered, it is discovered that the
organisation has a variety of parameters. When such goods are considered in this perspective, it
is discovered that now the items will charge the firm £ 250 000, while the supplies costs the
enterprise £ 280 000. In this case, it was discovered that the corporate firm was subjected to an
adverse variability. Furthermore, while considering personnel, it is discovered that the
organisation has had an adverse variation in this area too. The corporation planned £ 400 000 for
manpower, but the real expense of workers was £ 440 000. Whenever costs is factored in, the
business has a £30,000 profit. In this regard, it was discovered that the corporation had planned
for £ 150 000 in overhead expenses, while the real expenditure was documented as £ 120 000.
Moreover, it was discovered that the corporation had planned £ 1 700 000 for contributions, but
the actual rate of contributions were £ 760 000. As a result, it was discovered that the corporation
had a positive variability of £ 940 000 in this scenario (Hemmer and Labro, 2017).
While static overheads are brought into account, the firm's variation is shown to be
positive. When the storage rental is put into account, it is discovered that the corporation had
anticipated £ 200 000 for rent, although the real expenditures were £ 170 000. As a result, in this
situation, the variation is not adverse, with such a beneficial variation of £ 30 000. Yet, whenever
the security is brought into account, it is discovered that the business had anticipated £ 100 000
and that the real expenditure was also £ 100 000. As a result, there were no positive or negative
differences in this circumstance. Aside from just that, whenever the compensation of a store
manager is considered, it is discovered that the corporation has documented £ 50 000 as the
initial expenditure (anticipated). The real expense, though, was reported as £ 35 000. As a result,

there is a positive variation of £ 15 000 in this case, as the initial budgeted expense is higher than
that of the real expenditure.
As a result of such costs, this has been determined that the firm has both positive and
negative variations (Karamatova, 2017).
Recommendation for the improvement
Based on Amana Ltd's aforementioned results, it was discovered that the firm was experiencing
serious problems. It was discovered that the corporation experienced certain adverse variations in
this aspect. As a result, a few of the main things have been recommended to assist the
organisation in boosting its entire effectiveness. Initially and most importantly, this has been
proposed that the corporation should make certain that it purchases materials from a vendor who
offers them at a lesser rate. In this respect, it may be claimed that it therefore could assist the
corporation in achieving a positive variation despite a negative variability. Furthermore, the
organisation should make certain that the labourers are engaged from reliable suppliers. Aside
from that, the firm advised hiring experienced labourers because it would assist the firm lower its
employment costs. As a result, they are amongst the most important suggestions which had
previously made to the organisation in efforts to support it improve operational efficiency (King,
2016).
PART B
According to the situation, Mr. Amana had opted to offer his goods through internet
channels. It could provide organisation with a greater possibility to boost total income. With
regard to Mr Amana's choice, it may be claimed that Mr Amana does have another option for
marketing its products digitally. Mr Amana therefore decided to offer his goods on Amazon in
this respect. Amazon is among the most popular marketing (digital) platforms, allowing
businesses and consumers to make huge profits. On the foundation of such prospects, it is
possible to conclude that both are profit-generating possibilities. Therefore, the corporation
should make certain that almost all of the important features of marketing digitally are kept into
account. In this respect, it has been discovered that while a business decides to offer its goods on
its internet, it must examine a number of aspects. Based on the facts provided, it is determined
that perhaps the organisation must establish a distribution system (Maher, Stickney and Weil,
2012). As a result, the corporation will incur a price of £ 150 000 in this situation. Furthermore,

the organisation is discovered to need to modernise its current webpage in addition to verify that
it could manage a large amount of transactions. In this case, it is estimated that somehow this
business will spend £50,000. Furthermore, the corporation is obliged to adopt certain IT costs,
which will charge £ 35 000 in this case. These are a few of the significant costs which the
corporation must incur in terms of selling its goods electronically via its webpage.
Whenever a firm decides to trade its items on Amazon, however, this has been established
that now the corporation will need to invest in certain key operations. In this case, it was
discovered that the business is obligated to reimburse Amazon's delivery charge, which might
charge the firm £ 50,000. Aside from just that, the corporation faces certain risks as a result of
Amazon's refund and replacement policies (Quang-Huy, 2021). Mr Amana has indeed been
advised to choose the latter of the 2 choices presented to him. In terms of the alternative
possibility, it is proposed that Mr. Amana offer his goods on Amazon, as this will benefit the
firm in a variety of aspects. Firstly and most primarily, it has been shown that distributing things
on Amazon can save a corporation money when offering goods electronically. In this respect, it
is possible to conclude that distributing the goods digitally on Amazon would've been cost-
effective for the organisation. Moreover, offering its item on Amazon has indeed been
discovered to assist the firm extend its client network, as Amazon does have a large consumer
ground which might ultimately aid this specific business grow at an annualized rate sales.
Besides from it though, a firm gains the advantages of not having to focus on safety issues.
Internet marketplaces like Amazon and E-bay possess robust cyber security measures in place to
protect sensitive information. As a result, if Amana Ltd does its trade via Amazon, it will benefit
the corporation in regards of reliability. Aside from it now, Amazon has already been identified
as among the most reliable electronic marketing sites, which might aid this firm in increasing its
earnings via internet retail. It is critical for the business to verify that it is conducting up the
appropriate series of marketing efforts in terms of attracting the proper range of targeted
population. This will assist the firm in attaining its objectives effectively. Besides that, this have
already been discovered that by marketing things on Amazon, the business earns from Amazon's
reputation. Those are just a few of the significant advantages that the business could get by
offering its goods on Amazon (Rikhardsson and Yigitbasioglu, 2017).
Yet, whilst the firm chose to offer its goods on Amazon, it moreover bears from Amazon's
bad features. In this case, it was discovered that the corporation must reimburse Amazon the

fulfilment cost. Aside from that, the firm's refund procedure may pose a big risk to the
organisation. Throughout this case, if the consumer is dissatisfied with the item, the client will
typically refund something. It inevitably causes the vendor's company to lose money. As a result,
it could be claimed that if Mr Amana chooses to conduct operations on Amazon, it will be one of
the firm's major disadvantages. Notwithstanding this disadvantage, it is recommended that the
business advertise its goods digitally on Amazon because it will charge the business lesser than
distributing the goods worldwide on its own webpage. Besides that, Amana Ltd is discovered to
have a number of advantages that will assist the firm in getting both monetary and non-
monetary advantages (Vultur, 2018).
CONCLUSION
To summarise, managerial accountancy offers comprehensive financial and capital
circulation statistics so that the organisation can fulfil foreseeable needs and to take timely
analytical decisions based on current facts. The corporation could undertake long-term ways to
measuring its industry norms by isolating the advantages of employing this method from the
defects it finds. Equally significantly, the organisation needs concentrate on delivering
accounting transactions in a trustworthy and precise manner. Based on the foregoing, this could
be stated that Amana Ltd is capable of managing its expenditures. Whenever the firm's finances
are examined, it is discovered that there are both positive and negative deviations. The firm is
determined to be productive in this aspect, as the majority of the deviations are positive. Aside
from that, Mr Amana is also advised to offer its goods on Amazon.

REFERENCES
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