Semiotic Analysis of Corporate Financial Reporting

The assignment involves analyzing corporate financial and environmental reporting using a semiotic approach. It also includes benchmarking deep reinforcement learning for continuous control and references various management accounting books and articles.

Management Accounting

Table of Contents
INTRODUCTION................................................................................................................................3
MAIN BODY.......................................................................................................................................3
LO 1......................................................................................................................................................3
P 1. Explaining management accounting system and its essential requirements.................................3
P 2. Analysing different methods for management accounting reporting...................................6
M 1. & D 1. Benefits of management accounting system along with their application in
organisation.................................................................................................................................7
LO 2......................................................................................................................................................7
P 3. Calculation of Marginal and Absorption Cost of Excite Entertainment Ltd........................7
M 2. & D 2. Management accounting techniques for producing financial reporting documents.8
LO 3......................................................................................................................................................8
M 3. Analysing use of planning tools in budget forecasting and preparation...........................11
LO 4....................................................................................................................................................12
P 5. Explaining the adaptation of the management accounting systems in resolving the financial
problems....................................................................................................................................12
M 4. & D 3. Financial problem resolution and its impact on organisation success..................13
CONCLUSION..................................................................................................................................14
REFERENCES...................................................................................................................................15

INTRODUCTION
Management Accounting is defined as a process of preparation of business reports, statements,
accounts with the help of available business, statistical as well as financial information. It is a
mechanism of analysing all the business operations so as to prepare internal report which aids the
management in decision making process. The present report is based on Excite Entertainment Ltd
which is conducting its business operations in UK related to leisure and entertainment industry. The
report will discuss the concept of management accounting and how it differs from financial
accounting. It will define the different management accounting system and methods used for
making of management accounting report. Also, it will assess the Absorption as well as Marginal
costing for Excite Entertainment Ltd along with its interpretation. This report will define different
types of the budgetary planning tools with its advantages and disadvantages. At last, the report will
disclose that how management accounting system can assist company in solving its financial
problems.
MAIN BODY
LO 1
P 1. Explaining management accounting system and its essential requirements.
Management Accounting is defined as the process of monitoring, identifying, evaluating,
measuring, interpreting, and communicating all the business and financial information to the
managers of the company for successful attainment of business organization goals and objectives. It
is considered as a mechanism of preparing internal reports, records and statements on the basis of
statistical and financial information of the company (Kaplan and Atkinson, 2015). Management
Accounting assist the manager or the management of the company in making crucial business
decision related to the expansion, investment etc. It also helps the company in formulation of
business plans and strategies which supports the goals and objectives of the company.
Difference between Management Accounting and Financial Accounting
Basis Management Accounting Financial Accounting
Meaning The term management accounting is a
system which provides all the necessary
as well as relevant information about
the company's business operations to
Financial Accounting is defined as a
one of the accounting system which
provides focus on the preparation of
financial as well as income statement of

the managers for formulation of
business plans and strategies for smooth
functioning of the business in a cost
effective manner (Maskell, Baggaley
and Grasso, 2016).
the business organization to provide all
the crucial financial information to its
end users for making investment related
decision.
Objective The main objective is to provide
assistance in the planning and decision
making process of the management of
the company by providing detailed
business as well as financial
information.
Financial accounting provides
information related to the financial
transaction of the company to the
investors and other stakeholders (Pratt,
2016).
Reports It includes preparation of the internal
managerial report of the company.
It prepares the financial report of the
whole company which depicts about the
financial position of the company.
Users Internal as well as external users.
Internal users includes the management
of company whereas external comprises
investors, suppliers, creditors,
government, customers and other
stakeholders as well.
Consist of only internal users i.e. The
management of company.
Different types of management accounting system available to Excite Entertainment Ltd are as
follows:
1. Cost Accounting System – The cost accounting method of management accounting system
is defined as a framework or mechanism which can assist Excite Entertainment Ltd or any
other business firm in making estimation of cost factor or cost associated in carrying on
business operations including production or manufacturing of its products. This method
helps company in analysing the profitability level as well as cost expenditure, inventory
valuation and its management. It also assists in controlling the cost expenses to be incurred
in carrying on productions or other business operations (Klychova and et.al., 2015). Excite
Ltd can make rough estimation about the cost of producing a product will yield profitable
situation or not. Cost Accounting system can be of two types:

 Direct Cost – The direct cost is defined as a cost price which is directly associated with
a particular cost object. A portion of overhead cost can also be a part of direct cost. Thus,
a direct cost is price that is totally attributable to specific goods or services production
function for example Direct material, Direct labour etc. are part of direct cost.
 Standard Costing – The Standard costing is defined as an accounting system which
assist the manufacturers of Excite Entertainment Ltd in identifying the differences or
variances factor between the actual costs of the goods produced and the cost incurred for
producing these actual goods. Example - A cost analyst on historical data determines that
for producing one widget it requires 1 pound of raw material which will cost $2 dollars
and 1 hour of labour having cost $20 dollars which are known as standard amounts and
costs for these raw material and labour.
 Activity based costing – It is a method of costing in which cost are first assigned to all
the overhead activities of the company and then, these cost are allocated to the final
products produced. With the help of this costing method, Excite Entertainment Ltd can
determines all the overhead activities and assigns cost associated with each activity to all
the products and services as per actual consumption made by each. For example – the
salary of management and office staff are difficult to assign to a product of company.
2. Inventory Management System – It is the most important type of management accounting
system which focuses on the proper and effective management of the company's inventory
and stock. Inventory Management system is associated with the functioning of inventory
valuation, reordering and maintenance of availability of stock in form of raw materials, work
in progress or finished goods with the business organisation (Muller, 2019). It helps Excite
in monitoring of inventory level and its reorder on time so that business doesn't have to
suffer stock out situation. Inventory Management System can be done with:\
1. LIFO Method – This method of inventory management stands for Last in, first out in which last
inventory item purchased by Excite is on first priority for selling.
2. FIFO Method – In this method, goods which are purchased first are available for sale first by the
company. It stands for First in, first out method.
3. EOQ Method– Economic Order Quantity is defined as the optimum quantity of goods which are
required to be purchased at one time so as to minimize the annual total costs of ordering and
carrying or holding items in inventory.
3. Job costing system – This method of management accounting system helps Excite in
determining the manufacturing cost of producing each product. It helps the management of

the company in tracking all the expenses associated with manufacturing and production
function. This method is useful when the company is not producing identical or similar
products. It helps in making proper allocation of cost of each product, improving its cost by
controlling it and thereby assisting in maximization of profitability situation for the
company.
P 2. Analysing different methods for management accounting reporting.
Managerial Accounting reporting is a process of preparing report, accounts or statements by
taking into consideration all the business, statistical as well as financial information. This report
emphasizes on the internal information received with the help of the financial accounting of the
company which assist the management of the company in making crucial decision. Managerial
accounting report can help Excite Entertainment Ltd in making business plans & strategies, decision
making, evaluating the business performance level.
Different types of management accounting reporting available for Excite Entertainment Ltd are:
1. Performance Report – The performance report of Excite Entertainment Ltd. can help the
company in making assessment about the success journey of the company's business
projects. With the help of this report, company can analyse or compare the actual outcome of
business project with the budgeted one (Crowther, 2018). Performance reports helps in
reviewing the performance level of the company as a whole as well as of each individual
employee. Managers can make use of this report in making key strategic decisions about the
future business operations by providing deep insight about the working of a company.
2. Cost Accounting Report – This report helps the management of Excite in assessing the cost
associated in manufacturing of a particular product. The cost report of the company offers a
detailed summary of all of information related to the cost incurred in carrying on
manufacturing as well as production functions. Thus, with the help of this report, the
managers of Excite can make assessment of the cost prices of different items in comparison
with their selling prices. Profit margins can thus be estimated and monitored through these
reports.
3. Job costing Report – This report can help Excite Entertainment Ltd in providing a deep
insight about the total cost expenses incurred in undertaking of manufacturing as well as
production functions of a particular product or group of unit. The actual cost of production is
compared with the estimated revenues so as to evaluate the job performance level and its
profitability. The job cost reports helps in evaluating those business areas providing high
earnings to the business and provides additional efforts to increase its profitability. It assists
company in saving time and business resources from getting wasted on jobs with low profits

margins.
M 1. & D 1. Benefits of management accounting system along with their application in
organisation.
1. Cost Accounting System - With the help of this management accounting system, Excite
Entertainment Ltd can assess the cost expenses incurred in carrying on business
manufacturing as well as production operations. It can determine the actual cost of goods
sold by the company.
2. Inventory Management System - The Inventory management system of Excite can help in
monitoring and tracking of inventory level and its correct valuation (Maas, Schaltegger and
Crutzen, 2016). It identifies the level or quantity of stock available with company for
meeting the demand of customer and market by making sales and delivery on time.
3. Job Costing System – This method helps in tracking the performance as well as
profitability level of Excite business. With the help of this system company can make
improvement in its operational efficiency, productivity, controlling cost expenses.
LO 2
P 3. Calculation of Marginal and Absorption Cost of Excite Entertainment Ltd.
Absorption costing
Particulars Amount (in
£)
Per unit cost (in
£) Net figure (in £)
Sales 8000 15 120000
Opening stock 500 10 5000
production 10000 10
10000
0
Closing stock 2500 10 25000
Cost of goods sold
(Opening stock + purchase –
closing stock) 80000
Net profit 40000
Marginal costing
Particulars Amount (in
£)
Per unit cost (in
£)
Net figure (in
£)

Sales 8000 15 120000
Opening stock 500 6 3000
production 10000 6 60000
Closing stock 2500 6 15000
48000
Contribution
(Sales – variable cost) 72000
Less: fixed production overhead 40000
Net profit 32000
M 2. & D 2. Management accounting techniques for producing financial reporting documents.
Different management accounting techniques are available to Excite Entertainment Ltd for
producing the financial reporting documents which provides improvements in the business
operations thereby increasing the operational efficiency and performance. Following are
management accounting techniques:
1. Inventory management with performance report – With the help of performance report,
Excite Entertainment Ltd can assess the performance level of company business as well as
its individual employees as a well. The performance report provides a deep insight about the
various business operations and its management. Inventory management is also monitored
by performance report of the company. Proper valuation of inventory, its reordering plan and
controlling the cost of producing further inventory.
2. Cost accounting with cost report – Cost accounting system provides details related to the
cost associated with products and its manufacturing as well as production department. It
helps in making comparison of the current data with the estimated data. Also, cost report
offers a summarise report of the actual cost of producing a product (Parker and Fleischman,
2017). Cost accounting considers cost reports for making decisions related to minimizing the
cost expense of unproductive areas.
3. Ratio analysis with job costing report – Job costing report provides Excite Entertainment
Ltd an estimation of revenue amount and cost expenditure of each individual job. It depicts a
clear picture to the management of the company that which job is earning more profit and
which is not. With the help of financial ratio analysis, the company can make estimate or
forecast of revenue and expense, business planning and strategies formulation etc. With the
help of study of different financial ratios like profitability, liquidity ratio company can
evaluate its financial as well as solvency position and makes better decisions for future
business growth.

LO 3
P 4. Evaluating the advantages and disadvantages of the various planning tools of budgeting
Budget -It is a financial plan with the help of which a company can formulates different
business plans and strategies for mitigating the future risk. Budget helps the company in estimating
future cost expenditure as well as revenue from carrying on a particular business operations in the
future time period.
Budget variance – It is considered as the difference between the estimated budgeted amount of
expense or revenue and the actual amount. Budget variance is favourable in case when the actual
revenue earned form the business is higher than the forecasted one or actual expense is lower than
the budgeted one.
Significance of budget variance- It helps Excite in mitigating the risk of business loss by making
projection about future sales revenue and cost expenditure incurred for undertaking such sales
operations. With the help of budget variance, Excite can improves its business performance and
increase its profitability as well.
(Source: Budget Variance, 2019)

Cash budget- It is the budget which states the anticipation of the cash inflows and the
outflows for Excite entertainment over a particular time period (Maas, Schaltegger and Crutzen,
2016). It is used to analyze the availability of adequate cash resources for functioning the operations
smoothly.
Advantages Disadvantages
Cash budget provides for avoiding the debt as
it facilitates the information to Excite
entertainment relating to their spending. This
helps them in keeping effective control over
the expenditure.
Under this budget the appropriations are based
on the cash and efficiently defines the limits
for the payments and the annual commitment.
It helps the firm in evaluating its cash position
with adequate management of the cash
resources for meeting the future needs.
Cash budget highly relies on the assumptions
of the future sales and the future collections
that will be received on the sales (Qian,
Hörisch and Schaltegger, 2018). This leads to
affect the effectiveness of Excite entertainment
budget as correct evaluation cannot be made.
This budget lacks the flexibility as once the
manager commits relating to the financing of
the budget then it cannot be changed. This
results in loss for the firm if the actual need of
financing is less than budgeted.
Flexible budget- The budget that adjust for the changes in the level of activity and other
resources. It is considered as the more useful budget because it provides for the actual evaluation
and the recent changes in the budget.
Advantages Disadvantages
Flexible budget helps Excite entertainment in
availing the benefits of the opportunities. It
provides for adoption of more and more staff
for meeting the increased demand.
It helps in adjusting the changing cost and the
profit margins of the firm by determining the
variance (Matambele and van der Poll, 2017).
By this Excite entertainment can effectively
perform its controlling function.
Flexible budget is the time-consuming task as
it involves the preparation of the budget at
regular intervals.
It creates difficulty for the firm in forecasting
the flexible expenses as the changes in the cost
cannot be estimated adequately.
Zero based budget- It is the method where all the expenses are justified for each period. It

starts from the scratch or the Zero base and every function within Excite entertainment is being
assessed for its cost and the needs.
Advantages Disadvantages
It facilitates the optimum utilization of the
resources as the allocation of the resources is
based in terms of the cost benefit.
It forces the executives of the management for
participating actively in the process of
budgeting.
It enables Excite entertainment in enhancing
the operational efficiency as it re-evaluates and
re-examine all the activities.
Zero based budgeting consumes lot of time as
each and every activity has to be evaluated
(Nishimura, 2019). This results the firm in lack
of its focus on the other essential aspects.
It may involve personal bias in ranking the of
the decision packages.
By applying this budgeting method, the
managers and employees resist for new ideas,
thoughts, processes and changes in the work
culture.
M 3. Analysing use of planning tools in budget forecasting and preparation.
Budgeting is a defined as a financial plan with the help of which company can make use of
available limited budgeted resources and amount for carrying on any new business operations or for
business expansion. Budgeting helps Excite Entertainment Ltd in making sales and revenue
projections, estimation about cost and other expenditure which are associated with the business
operations going to be incurred in the future time period. The budgetary planning tools used by
Excite Entertainment Ltd is as follows:
1. Cash Budgeting – The cash budgeting is a process of making forecast or estimation about cash
requirements of the business in carrying on any business operations. With the help of cash budgets
Excite can easily identify cash flow of the business (Sperfeld and et.al., 2016). It also helps
company in determining the amount of cash, funds required for meeting immediate or short-term
obligations of business without making overdraft or crossing the line of credit.
2. Flexible Budget – Excite Entertainment Ltd with the help of flexible budgeting method can
makes adjustment on continuous basis in the amount of revenue and expenditure as per the current
or existing market conditions or fluctuating trends. The managers of Excite with flexible budget can
constantly update all the projections related to sales, revenue as well as cost expenses. Cost
expenses can also be controlled by company with the help of current information.
3. Zero Based Budget – This budgetary planning tool can provide company a better estimation that
which department will earn more profit for business (Barr and et.al., 2016). It helps Excite

Entertainment Ltd in the preparation of budget by considering each item or data as the new
economical appraisal. The zero based budget is prepared by taking the base as zero.
LO 4
P 5. Explaining the adaptation of the management accounting systems in resolving the financial
problems.
Various management accounting systems are adapted by Excite entertainment which helps
the form in solving their financial problems.
Bench-marking- Excite entertainment uses this practice for analysing and comparing its
business processes with its competitors that is ABC company for reaching the competitive edge in
the overall market. Measurement is based on different dimensions that includes the quality, cost and
time (Maas, Schaltegger and Crutzen, 2016). Products, services and the strategies of the other
company are also assessed for building the better operational performance of the business. This
technique helps Excite entertainment in overcoming its financial problems in relation to the lack of
resources and in capturing the large market share by meeting the customer specifications. With the
help of bench-marking tool, both the companies can make changes or improvement in the quality of
its service and products as per the standards and quality provided by its competitors for attracting
more customers as well as profit margins. It leads to minimizing cost expense as company by
assessing the quality and standard of its rivalry firms can follows same procedures for conducting its
production functions.
Variance analysis- It is the study which is made by Excite entertainment for assessing the
deviations if present within the actual and the budgeted performance. This enables the firm in taking
appropriate actions timely so that financial problem in terms of the achievement of the goal can be
fulfilled effectively. Variance analysis resolve the problems in terms of the cost reduction and the
cost control. However, ABC limited does not use this method which leads to ineffective controlling.
It provides quantitative investigation for the company by determining the difference between actual
outcomes and planned behaviour. This analysis helps both the company in maintain controlling
business & its operations for example sales budget prepared of $10,000 and actual sales made is
$8,000. The variance analysis yields $2,000, which helps company in improving its operational
efficiency thereby increasing sales and profitability as well.
Balanced scorecard- It is the performance metric that is used by the ABC limited for its
strategic management and to improve the several internal functions of the business and also the
resulting business outcomes. It is used by the firm for measuring and facilitating the feedback to an
entity (Matambele and van der Poll, 2017). However, Excite entertainment uses this approach for
viewing its organization from different perspectives that involves financial, internal process, growth

outcomes and the customers. This helps the enterprise in resolving the availability of the funds and
its requirement in the future. With the help of balance scorecard, Excite Entertainment Ltd as well
as ABC Limited can measure the performance level of its employees as well as of company as a
whole. It helps in monitoring whether the business activities carried on by its employees is working
towards attainment of business goals or not. It also ensures that performance doesn't compromise
with quality and standard of excellence.
Key performance indicator- This technique of management accounting assists Excite
entertainment in evaluating their success for achieving their objectives and in attaining the targets so
that higher sales with higher earning can be gained. It provides a value which can be measured and
thus assist in determining the effectiveness of company is achieving key business objectives and
goals. By using this method, Excite and ABC can evaluates their success journey at different levels
of reaching targets. This also assist company in formulating business strategies and plans for
betterment of business goals.
Break-even analysis and Contribution calculation-
Particulars Formula Figures
Selling price per unit
(SPU) £40
Variable cost per unit
(VCPU) £10
Fixed cost £120000
Contribution per unit SPU - VCPU 30
Break-even point (in
units) Fixed cost / contribution per unit 4000
Break-even point (in £) Break-even point in units * SPU £160000
Business entity wants to
attain profit of 60000
Units need to sell for
earning profit of £60000
(Fixed cost + desired profit) /
(Selling price per unit – variable
cost per unit) 6000
M 4. & D 3. Financial problem resolution and its impact on organisation success.
The management accounting system provides numerous solution for different types of
financial problems prevailing in Excite Entertainment Ltd. One of management accounting
technique is Benchmarking which assist in resolving the financial problem. Benchmarking tool is a
business practice of making comparison of the company's business processes and performance with
the standards or practices adopted by other industry (Duan and et.al., 2016). This comparison of

company's business operations with business practices used by other companies helps Excite in
making improvement in its overall business practices. It allows the company on making assessment
of the best practices by doing detailed comparison & thereby provides information of success factor
of most of the leading companies in the market. It helps the company in improving its service
quality by setting high standards and adopting the best business practices. It helps in cutting down
the cost of labour by eradicating the unproductive business areas. It helps the company in increasing
their profits as well as sales and maintains the cash flow and liquidity position of the company.
CONCLUSION
From the above report it can be concluded that management accounting is a process of
making internal managerial report by taking into consideration all the statistical as well as financial
information. This managerial report helps Excite Entertainment Ltd in decision making process,
formulation of business plans and strategies related to the business operations. Management
accounting report consist of performance report, which depicts the success journey or performance
level of its employee and of company as a whole. The report has discussed that by using absorption
costing method company can earn more profit. Also, benchmarking is considered as the best
management accounting tool for solving the financial problem of the company as it provides a better
comparison of Excite's business processes with the best company processes and standards.

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