000069267 IMPACT OF ACCOUNTING INFORMATION ON MANAGEMENT'S DECISION MAKING PROCESS - A CASE STUDY ON BIBICA CORPORATION TÁC ĐỘNG CỦA THÔNG TIN KẾ TOÁN ĐẾN QUÁ TRÌNH RA QUYẾT ĐỊNH CỦA BAN QUẢN LÝ - NGHIÊN CỨU TRƯỜNG HỢP VỀ TẬP ĐOÀN BIBICA
INTRODUCTION
Overview
Decision-making is a central function of management and a defining trait of effective leadership: a manager must decide, and a free-minded professional should be willing to decide The courage to decide underpins planning and control, driving an organization toward its pre‑established objectives While definitions of decision‑making vary, the Oxford Dictionary describes it as the act of carrying out or putting a decision into effect, whereas scholars like Trewartha & Newport (1982) offer alternative viewpoints on what decision‑making entails.
Decision-making is the process of selecting a course of action from two or more alternatives to solve a defined problem Put simply, it is consciously choosing an action from a set of options to achieve a desired outcome As the first and central function of management, decision-making underpins every managerial activity and remains an indispensable part of the management process.
Management decisions have a profound impact on the well-being of an organization, shaping both managerial actions and overall organizational performance The effectiveness of management depends on the quality of decision-making, and sound decisions are essential for the organization’s survival and development As Peter Drucker noted, good decisions drive success by aligning strategy, operations, and leadership to the organization’s goals.
(1998), it is the top m anagem ent w hich is responsible for all strategic decisions such as the objectives o f the business, capital expenditure decisions as well as such operating decisions as training o f m a n p o w e r and so on Without such decisions, no action can take place and naturally the resources w ould remain idle and unproductive H ow ever, the w ro n g ones can affect the com p any in a very negative way and may som etim es also lead to its bankruptcy, especially in such a dynam ic environm ent, w hen the outcom e o f a decision cannot be predicted w ith certainty, m anagem ent often faces the risk o f choosing the wrongs ones The m anagerial decisions should be correct to the m axim um extent possible For this, scientific decision-m aking is essential.
M anagem ent and de cisio n -m ak in g are often regarded as belonging together, and the prosperity as well as the survival o f an organization depends on the effectiveness o f m an agem ent w h ic h is affected by the quality o f decision making Therefore, in order to choose the right decision, decision-m akers need some guidance, which is partially provided by inform ation gathered my m anagem ent accounting M anagem ent accounting is a key source o f in form ation for decision m aking, im provem ent, and control in organizations Effective m a n ag e m e n t accounting system can create considerable value to to d a y 's organizations by pro v id in g timely and accurate information about the activities required for their success (A tkinson, A et al, 2003, p 4) M anagem ent accounting in fact has a long and significant history o f direct contribution to the planning and control o f organizational operations A rguably it has historically been a broadly focused function w orking h an d -in -g lo v e w ith m a n ag e m e n t decision-m aking, having a major im pact upon organizational strategy and outcom es The role o f m anagem ent accounting information is interw oven and integrated in the w hole decision course In the definition o f m an agem en t accounting by the Institute o f M anagem ent Accounting, it identifies the role o f m anagem ent accounting information as supporting strategic (planning), operational (operating), and control (perform ance evaluation) m anagem ent decision making In short, it is pervasive and purposeful-it is intended to m eet specific decision-m aking needs at all levels in the organization.
Significant
Management accounting has not received the attention it deserves relative to its pivotal role in corporate governance, a realization that motivated this study Today the profession's role has evolved from merely collecting and compiling information and producing standard reports to interpreting and analyzing data and actively contributing to decision making Management accountants are increasingly acting as internal consultants—advising managers about what information is useful, what information is available, and how to obtain it—while also assisting in data interpretation and providing tools for forecasting and evaluating the impact of today’s decisions on costs now and in the future In some countries like Canada and the United States, management accounting has become a profession with established standards; in Vietnam, the term "management accounting" is relatively new and was officially recognized in the Accounting Law adopted on June 17, 2003 Many entrepreneurs remain unfamiliar with management accounting, often confusing it with cost accounting, and they tend to base decisions on intuition rather than rational analysis.
This article deepens understanding of the role of management accounting in guiding organizational management, development, and sustainable success It provides an insightful examination of cost classification and cost-object allocation, and it analyzes how financial statements and accounting information support production planning, pricing decisions, and process control to drive effective decision-making and operational efficiency.
Scope
This paper focuses on the impact o f accounting information on the M A N A G E M E N T ’S decisions O N L Y It docs not cover the impacts on the decisions o f investors, creditors or customers and so on.
In this thesis, Bibica C orporation is selected for the case study, so the impact o f accounting information on m a n ag e m e n t’s decision is analyzed in Bibica C orporation
O N LY - a m anufacturing com pany, not a trading or service company This means that my paper is narrow ed in the m anufacturing com pany only.
With so many accounting tools on the market, only a subset will be investigated here Some of these tools are designed to examine the relationship between accounting information and decision making, a connection that becomes clearer later in the discussion Therefore, the analysis concentrates on the selected tools that best illustrate how accounting data informs and guides decision making.
Rationale
This article investigates the usefulness and importance of management accounting in general management and specifically in managers’ decision making, explaining how accounting information can support managers in making decisions, identifying the types of accounting information they need, and describing how managers use this information to inform their choices To achieve this goal, it focuses on two core questions: what categories of accounting information are most relevant to managers, and how do managers apply this information to the decision-making process The following sections aim to answer these questions and map the path from accounting data to actionable managerial decisions, highlighting implications for designing effective information systems, reports, and decision-support tools.
• H ow im portant o f accounting inform ation is to m a n a g e m e n t’s decisio n m aking p ro cess?
• H ow m anagers in Bibica C orporation use accounting inform ation as a su p portin g too l to m ake so u n d decisions?
Structure o f the paper
The design o f the research includes five chapters W e begin by providing an overview o f the topic, the significant as well as the scope o f this paper and research questions in the chapter 1.
Chapter 2 delves into the decision‑making process and the role of accounting information in guiding management’s choices, illustrating how financial data, reports, and analyses inform strategic and day‑to‑day decisions It then introduces the essential accounting tools that support decision making, showing how these tools convert information into actionable insights for planning, budgeting, control, and performance evaluation.
The methodology chapter outlines the research design and procedures used in this study, providing readers with a clear description of how the investigation was conducted It explains the approach for collecting secondary data from diverse sources and the systematic process used to gather, verify, and organize information, culminating in the Bibica Corporation case study.
After th e data is collected, in the chapter 4, w e will discuss and make analysis o f how m an ag ers in Bibica Confectionary C orporation use accounting information in their decision m aking process.
Finally, in the last chapter, w e will sum m arize the main ideals o f the research and m ake an overall conclusion and recom m endations for further studies
LITERATURE REVIEW
Decision making p rocess
Management accounting information must be evaluated in light of its ultimate effect on decision outcomes, making an understanding of the decision-making process essential Figure 2.1 illustrates a decision-making model where the first five stages represent planning—the process of setting goals and selecting strategies to achieve them, i.e., making choices between alternatives The final two stages form the control process, which involves measuring actual performance and correcting deviations to ensure that the chosen alternatives are implemented and the plans for executing them are carried out.
2001, 2006) Let us now examine each o f the items listed in Figure 2.1
Figure 2.1 The decision making process(Source: Adapted from Drury C (2001), p.6)
Effective decision making starts with a guiding objective that helps evaluate alternatives and judge their desirability The first step is to specify the organization’s goals, making sure they are ambitious yet realistic, attainable, and measurable so progress can be tracked and outcomes optimized Economists debate the exact objectives a firm should pursue—ranging from profit maximization to balancing stakeholder interests—but the dominant economic view identifies the primary aim as maximizing owners’ profits and increasing shareholders’ wealth.
During the search for alternative courses of action, managers understand that there are multiple paths to a single objective, and this stage likewise involves exploring options After objectives are specified, managers evaluate a wide range of possible actions that could help achieve the goals identified in the previous stage In this phase, decision-makers must sift through a large pool of options to select the most viable path for the next stage For example, to maximize profit, a firm can pursue cost reduction or revenue enhancement strategies.
Gather data on each alternative to support a data-driven decision Because uncontrollable factors can influence outcomes, collect information on metrics such as potential growth rates, areas of activity, projected market share gains, and expected cash flows for every option This information provides the foundation for evaluating alternatives and helps managers determine which option is the best choice.
After collecting sufficient information on each alternative, decision makers analyze the data to determine which course of action best satisfies the organization’s objectives When profit maximization is the primary goal, all options are evaluated and listed by their profitability differences, and the choice that delivers the greatest profit while aligning with the firm’s goals is selected as the preferred course.
Once alternative courses of action are selected, the next step—and the final stage—of the planning process is implementation Implementation means putting the chosen course of action into operation and putting it into practice, turning the decision into real-world action and moving the plan from theory to execution.
Control is a feedback-based system that monitors both the actions taken to implement planning decisions and the performance evaluation of operations To ensure that work aligns with the original plan or intention, a control process is necessary This process consists of two steps: first, comparing actual outcomes with planned outcomes, and second, responding to divergences from the plan.
Managers continually compare actual outcomes with forecasted figures to monitor performance, using variance analysis to identify activities that deviate from the plan and to drive timely modifications and corrective actions Accountants prepare performance reports that provide feedback by comparing results with plans, and managers rely on both budgets and performance reports to assess progress Through this process, accounting helps managers by highlighting problem areas and by measuring the effectiveness of actions taken.
❖ R e s p o n d to diverg en ces fr o n t p la n : W hen the com parison indicates the deviations from the planned outcomes, necessary adjustments or corrective actions must be taken by the managers.
Drury's model has several limitations First, it assumes that the right decisions are easily and unambiguously identifiable Second, it overlooks factors such as emotions, imagination, memories, culture, and the decision-makers' mindset Finally, it rests on the idea that each step can be clearly separated from the others, which does not always reflect the reality of decision making (Langley, 261–265).
Tools for decision-m aking
Accounting serves as the backbone of any business, enabling owners to make informed decisions through careful analysis of financial information related to current operations and potential growth opportunities By calculating, recording, and analyzing accounting data, a company gains a clear picture of its current fiscal position, while providing senior management with the insights needed to guide short- and long-term decisions that affect operations and the bottom line (Vitez & Henderson).
Managers have a range of accounting tools at their disposal to analyze and gauge the strength of their company’s operations and support decision making Common options include financial statements, financial ratios, forecasting, investment analysis, inventory accounting, and management accounting This article focuses on the pivotal roles of cost accounting systems, pricing and competition analysis, financial statements, profitability assessment, and financial ratios in guiding business decisions.
2.2.1 Cost accou n tin g sy stem
A cost accounting system is a framework for accumulating and allocating costs to cost objects in order to determine the unit cost of a product or service This section defines key cost terms and explains how costs are classified and allocated to cost objects, providing an insightful understanding of cost accounting.
Cost accounting systems are part of an enterprise’s information system, providing internal cost tracking and allocation to monitor costs and expenditures An effective cost accounting system supports management in planning, controlling operations, and analyzing product profitability Common business challenges include setting product prices, reducing product costs, and increasing overall profitability, all of which rely on accurate cost data To make informed decisions, managers depend on the accounting department’s cost-management techniques, such as cost sheets, statements of material and labor utilization, and budgets, which can be used to compare against standard costs With these tools, a business can determine the best price for its products and identify opportunities to improve profitability.
Cost accounting furnishes essential information for business decision making By determining the production level where total cost equals total revenue—the breakeven point—we know how much to produce to avoid losses Producing up to this level helps secure the business from losses, making cost accounting one of management's most important decision-making tools.
A well-defined costing system delivers key benefits for an organization by generating decision-ready information, supporting internal control, and enabling detailed cost analysis A robust cost accounting system makes it possible to compute cost of sales, value inventories accurately, and assist in the control and management of the business, while also providing data that informs pricing and policy decisions.
Within the scope of this thesis, we cannot cover all aspects of the cost accounting system Instead, the focus is on two core issues: cost gathering by classifying costs into categories and the assignment or allocation of costs to cost objects These two elements significantly influence managers’ decisions in profit determination, performance evaluation, inventory valuation, and cost control Therefore, understanding what cost means and how costs are classified and assigned for different purposes is essential for effective cost management.
In managerial accounting, cost is defined as a resource sacrificed or forgone to achieve a specific objective and is typically measured as the monetary amount paid to acquire goods or services (Horngren et al., 2002, p 133) To understand cost classification, readers should be familiar with terms such as cost object, cost driver, allocation base, and unit cost Drury (2006) and Horngren (2008) describe a cost object as “anything for which a measurement of costs is desired,” meaning a cost object is simply something for which a cost is computed; examples include products, activities, processes, and customers A cost driver is a variable—such as the level of activity or volume—that causally affects costs over a given time span, and an allocation base (or unit cost) is used to assign or allocate those costs to cost objects.
A cost allocation base is a factor that links indirect costs to a cost object in a systematic way, enabling accurate assignment of overhead The unit cost, also called the average cost, is calculated by dividing the total cost by the number of units.
Costs should be classified to extract relevant information and to allocate them to cost centers or cost units according to management needs They can be categorized in several ways: by direct versus indirect tracing, by fixed versus variable behavior, by manufacturing versus non-manufacturing origin, and by product versus period relevance Direct costs are those that can be traced to a cost object in an economically feasible way (for example, direct materials), while indirect costs cannot be traced readily (such as plant administration) Based on cost behavior, costs are fixed (unchanged in total over a given period) or variable (change in total with activity level) Manufacturing costs include direct labor, direct material, and manufacturing overhead, with direct labor and direct material traceable to products and manufacturing overhead comprising other manufacturing costs; non-manufacturing costs cover selling and administrative activities Product costs include all costs involved in acquiring or making a product, such as direct material and direct labor, while period costs are expensed in the period incurred and not included in product costs Finally, relevant costs are those future costs that differ among decisions, whereas irrelevant costs do not change with the chosen course of action.
Different uses of cost data require different classifications and definitions of cost When managers make strategic decisions about which products to produce, they must understand how revenues and costs vary with changes in output To do this, they need to distinguish fixed costs from variable costs Furthermore, understanding the meaning of different types of cost leads to appropriate cost classification, which affects how costs are accumulated to cost objects Under different costing systems, different amounts of cost are assigned to cost objects, shaping profitability assessments and informed decision making.
Cost allocation is essential for valuing inventory, measuring profit, and assessing performance, because it assigns design, production, and distribution costs to products and services Under different costing systems, costs are accumulated in different ways, leading to variations in product costs, inventory values, cost of goods sold, and, consequently, profitability and pricing decisions A large portion of total product cost typically comes from overhead, and the amount allocated to a product can vary widely depending on the costing method used, since overhead is allocated differently across systems The main costing approaches are Job Costing, Process Costing, Activity-Based Costing (ABC), Variable Costing, Absorption Costing, and CVP analysis; this research examines Job Costing, Process Costing, ABC costing, and CVP analysis A Job Costing system treats a job as the cost object—a unit or set of identical units of a distinct product or service—and generally follows a structured approach to identify and accumulate the costs associated with that job.
(2) the direct-cost categories, (3) the cost-allocation base, (4) the indirect-cost categories,
Job costing allocates cost allocation rates to each individual job and captures the total direct and indirect costs for that job, including allocated indirect costs, whereas process costing targets masses of identical units, so unit costs are computed by dividing total costs by the number of units produced In a process costing system, costs are categorized by when they are introduced into the production process The five steps of process costing are: summarize the flow of physical units, compute output in terms of equivalent units, summarize total costs to account for, compute cost per equivalent unit, and assign total costs to units completed and to ending work in process The key difference between job costing and process costing is the extent of averaging used to determine unit costs; job costing applies when individual jobs use different quantities of production resources, making a single average cost per unit inappropriate.
Figure 2.2 The two-stage allocation process for traditional and ABC system
Process costing applies when identical or highly similar units are mass-produced rather than manufactured as individual jobs In such settings, costs are averaged across all units produced to determine the cost per unit, since each unit undergoes the same production processes This method is ideal for continuous, high-volume manufacturing of homogeneous products, allowing managers to compute total production costs by dividing total manufacturing costs by the total number of units produced (Horngren et al., 2008).
Activity-based costing (ABC) is a costing approach that treats individual activities as the fundamental cost objects and uses the costs of these activities as the basis for assigning costs to products or services ABC systems are most commonly applied in technology-driven environments, where productivity advances have significantly reduced direct costs of labor and materials, while indirect costs have risen For example, automation lowers labor costs, but depreciation—a key indirect cost—has increased Signs that an ABC system is likely to provide the most benefits include allocating large amounts of indirect costs using only one or two cost pools, identifying most indirect costs as output-unit level costs, and recognizing that products demand diverse resources due to differences in volume, process steps, batch size, or complexity (Horngren et al., 2008, p 156).
Accounting information and its roles in decision making process
2.3.1 T ypes o f accou n tin g in form ation
Accounting has long been the primary source of information about day-to-day operations and future planning within organizations, and accountants have advanced far beyond their traditional role of preparing financial and non-financial statements Today, accountants are members of management themselves, actively participating in decision-making processes that shape organizational strategy (Kimmel et al., 2007).
The primary objective of accounting is to provide information that is useful for decision making Because accounting describes all types of business activity, it is often referred to as the language of business Costs, prices, sales volume, profits, and return on investment are fundamental accounting measurements that help evaluate performance and guide strategic choices.
Accounting information comes in many forms, just as there are many types of economic decisions In business contexts, financial accounting and management accounting are the two main terms used to describe the kinds of accounting information that are widely used across the business community.
Financial accounting is an information-processing system that generates general-purpose reports on an organization's financial operations and financial position, including the income statement, the statement of cash flows, and the balance sheet These reports provide a comprehensive view of performance, liquidity, and resources, helping stakeholders understand profitability and financial health As described by Hartgraves and Morse, this framework converts routine transactions into standardized statements that support decision-making and accountability.
Financial accounting focuses on recording an organization’s assets, obligations, and cash flows—the inflows and outflows of cash Managers rely on income statements and balance sheets to assess performance and guide strategic planning By performing comparative analyses with competing firms, they gain valuable insights that inform improvements in efficiency and competitive positioning Corporate goals are often expressed in financial terms, using metrics such as net income, return on investment, and earnings per share to measure progress and support decision making.
Management accounting involves developing and interpreting accounting information to help management operate the business Traditionally grounded in financial data expressed in currencies such as dollars, pounds, or euros, it now also includes operational and non-financial metrics—quality, process time, and measures like customer satisfaction and new product performance It provides a blend of financial and non-financial information to support decision-making about everyday operations By drawing on financial accounting and adding quantitative and qualitative data, management accounting delivers insights for planning, performance evaluation of departments and individuals, and decisions about launching new product lines, enabling virtually all types of managerial choices.
2.3.2 R oles o f accou ntin g in form ation in m a n a g em en t’s d e c isio n m aking p ro cess.
M anagers can use different types o f accounting information for different purposes Som etim es, they can use financial accounting information to assess the firm ’s financial position or they can use cost information to make pricing decision In this section, w e will discuss how m anagers use accounting information in planning and control activities More specifically, this is put under the context o f a m anufacturing environment The roles o f accou ntin g inform ation are analyzed based upon the value chain or the sequences o f business functions from production, sale and finance activities.
U n d e r p lanning process, m anagers have to com e up with decisions related to production, sales and financing activities A ccounting information becom es an im portant input for them to m ake better decisions For exam ple, cost sheet is very helpful to find the cost o f each unit By co m p arin g it w ith previous year or previous month's cost sheet, m anag er can take the decision regarding reducing the cost o f product If our costs are increasing w hich has been show n in cost sheet, then m anager can identify the place o f production or sales where co m pany is w asting its money After this, m anager has to reduce the w astage by using quality product techniques, to drop useless production processes and also standardization o f raw material D ecision-m akers utilize different costing methods for allocating cost to cost objects so that it is suitable for their intended purposes also Different costing methods will result in different product cost figures which lead to difference in pricing decisions By looking at the cost information, especially, the unit cost, the m anagers set up the reasonable selling prices to ensure that they can recoup all the product costs but still make profit Or they can employ the breakeven or Cost V o lu m e Prolit (C V P) analysis for the production purpose to decide a suitable output level to produce for secu ring our business from losses Furtherm ore, financial ratios also m ay be used to m ake tactical decisions about credit term s or the safety level o f stock F o r example, by calculating accounts receivable and inventory turnover, if these figures are relative small, it implies that the m anagers should have some credit policies to encou rage the custom ers to pay the debt They can m ake use o f debt ratios and other financial ratios to analyze the capital structure and liquidity to have necessary adjustm ents with the com p onen ts o f the balance sheet.
Effective performance management involves measuring actual results, comparing them with budgeted targets, and taking corrective action so that the chosen alternatives are implemented Decision-makers use a range of accounting tools—such as variance analysis, cost–volume–profit (CVP) analysis, and incremental analysis—to identify gaps between actual performance and the budget By diagnosing the reasons for these variances, they can select and execute the best corrective actions to close the gap and achieve the budgeted objectives.
METHODOLOGY
Secondary information collection
To capture the impact of accounting information on management decision making, this study synthesizes relevant theories and textbooks on management accounting and cost accounting, reviews prior research, and leverages guidance documents, technical articles, and analytical methods to produce comprehensive findings.
A significant feature o f this thesis is the use o f many different textbooks as the reference The m ain source o f the secondary data is the textbooks related to accounting and finance
Textbooks borrowed from my university library and e-books from the internet serve as primary sources for this thesis, and the curriculum texts I studied are also employed in the research For instance, when investigating the decision-making process, the Drury Model is used to illustrate key concepts, and Drury’s textbook Management & Cost is cited as a foundational reference.
Accounting and management accounting are valuable sources of information for making business decisions In exploring the definitions of cost terms, I reviewed a variety of textbooks to identify the simplest and most accurate explanations, with management accounting serving as a primary reference This approach helps clarify cost terminology and supports clear communication, budgeting, and strategic decision making in organizations.
Cost accounting, with a managerial emphasis, weaves together theory of accounting tools, pricing strategies, and competitive dynamics to illuminate decision making It compares activity-based costing (ABC), traditional costing, and cost–volume–profit (CVP) analysis to reveal how cost behavior affects pricing, profitability, and strategic choices The analysis draws on both cost accounting and management accounting texts while incorporating finance literature to treat financial ratios as practical tools for evaluating performance Foundational finance texts such as Fundamentals of Corporate Finance, Fundamentals of Financial Management, and Financial Reporting provide the ratios and frameworks that complement cost accounting methods and support integrated financial decision making.
S ta tem ent A nalysis, a n d Valuation: A Strategic P erspective
Valuable support comes from diverse sources, including online resources and other materials For example, articles on the Tap chi Ke Toan website about the development of managerial accounting and its application in Vietnam provide clear insights into how accounting information supports management decisions, while management accounting resources help illuminate the link between accounting and management Additionally, theses from senior students at various universities offer strong references for the structure and formatting of a research paper.
Case Study perform ance
Bibica Corporation is one of Vietnam’s leading confectionery companies, repeatedly recognized for eleven years by local consumers as a manufacturer of Vietnamese high-quality products Its wide product range includes biscuits, cookies, layer cakes, moon cakes, snacks, hard and soft candies, jelly, chocolate, instant cereals, and glucose syrup, as well as nutritional products such as sugar-free confectionery, low-GI instant cereals, sugar-free chocolate, and baby foods Bibica has partnered with the Vietnam Nutrition Institute to produce nutrition products suitable for children and pregnant women, and it is the first Vietnamese manufacturer to offer sugar-free or low-GI confectionery and beverages tailored for diabetics or those on a diet, with these products clinically tested by the Vietnam Nutrition Institute While maintaining a strong domestic market share, Bibica also exports to major markets including the United States, Japan, Singapore, the Philippines, Taiwan, South Africa, and Cambodia, supported by diverse distribution channels that reach customers nationwide.
The precursor to Bien Hoa Confectionery Corporation began as a trio of production lines: a candy line imported from Europe, a biscuit line from Britain, and a starch syrup line from Taiwan The first series of biscuits and candies was produced in 1993 and distributed nationwide.
Driven by positive feedback from the local market, Bibica continued investing in production capacity, launching a cookies assembly line in 1996 and a jelly line in 1998 This expansion helped Bibica become one of Vietnam’s leading confectionery manufacturers, with a product range that at the time included biscuits and cookies, hard and soft candy, jelly, and starch syrup Here are notable milestones in Bibica’s development.
On 16 Jannuary 1999, Bien Hoa Confectionery Corporation w as established Its branch name, the abbreviation o f Bien H o a 's biscuits and candy, is Bibica w ith the c o m p a n y ’s initial chartered capital was 25 billion VND The c o m p a n y 's headquarter is located in Bien H oa Industrial Park I, D o n g Nai Province The main business o f the C om pany is m anufacturing and trading o f products: bread, candy, malt.
In February 2000, Bibica is the first confectionery’ m anufacturer in Viet N am had certificate o f Iso 9001:2000 from BVQI.
* 2000 - 2005: Increase o f the charter cap ital and the estab lish m en t o f the 2 nd factory in H anoi
At the start of 2000, the company rapidly expanded its branch network by opening offices in Hanoi, Da Nang, Ho Chi Minh City, and Can Tho This nationwide expansion was designed to meet the growing consumption needs of customers across the country, delivering closer access to products and services and strengthening the brand’s presence in key urban markets.
February 2000, the C om pany was honored as the first unit in Vietnam confectionery industry certified ISO 9002 standards by B V Q I UK.
M arch 2001 shareholders agreed to increase its charter capital from V N D 25 billion to 35 billion and in July 2001, the C om pany shareholders called for more capital, raising capital to 56 billion.
Septem ber 2001, the investment com pany production line o f cakes and cookies w ith a capacity o f 2 tons / day and total investment o f 5 billion.
On 16 N o vem b er 2001, the company was licensed by State Securities C om m ission to list on the stock m arket and officially transacted in the securities trading center in Ho Chi Minh City since early D ecem ber 2001.
In April 2002, Bien H oa 11 factory was established in the North o f Viet N am ( Sai D ong Industrial Zone Gia Lam, Ha Noi) and in Septem ber 2002, Chocolate assembly line was operated.
In 2005, the company partnered with the Vietnam National Institute of Nutrition to launch a new range of nutritional products, including Mumsure nutritious biscuits for pregnant and breastfeeding moms, GrowSure nutritious cookies for kids, and sugar-free or low-sugar options suitable for diabetics and dieters, such as chocolate, moon cakes, instant cereals, and layer cakes.
* 2006 to present: exp and ing the m an ufacturin g sector (nutrition , beverages), in vestm en t in the 3 rd plant in Binh D uong
In 2006, a new factory was built in Binh Duong Province to boost production of core items, while a high-quality candy line was launched in Bien Hoa City to meet HACCP standards.
On January 17, 2007, Bien Hoa Confectionery Corporation rebranded to Bibica Corporation to create a more memorable brand name, and the Bibica Building, located at 443 Ly Thuong Kiet Street in Ho Chi Minh City, became the company’s official headquarters in early 2008.
04/10/2007, contract signing cerem ony o f Strategic Cooperation betw een B ibica and Lotte to o k place, und er the cooperation program; Lotte w as transferred to 30% o f the total shares (approxim ately 4.6 million shares)
1 1/2009 the com pany invested and put to use e-office systems M -O ffice to improve m an agem ent efficiency and m inim ize administrative costs and stationery.
In October 2011, Bibica invested 10.5 billion to implement the SAP enterprise management system, a move aimed at boosting overall management efficiency across the business; the SAP system officially went live in February 2012.
So far, Bibica Corporation has been selected by consum ers as V ietnam High Quality
3.2.2 Data co llectio n and a n alysis
This case study demonstrates the impact of accounting information on management decision-making by examining how Bibica's managers use accounting data and tools It focuses on Bibica's cost accounting system and the extent to which accounting information informs planning, controlling, and decisions related to production, sales, profitability, and performance valuation The study will be conducted in line with this approach, engaging with Bibica's accounting department and managers to gather detailed information on cost classifications and cost allocation, as well as precise figures for fixed and variable costs and the official selling price.
Because the essential information needed for the case study is internal and constitutes Bibica’s trade secrets, the ideal case-study design cannot be realized The critical data are beyond the access of a student researcher and are restricted by the company’s confidentiality policies, limiting the depth of analysis and preventing the deep, insightful research originally envisioned for this thesis Consequently, this study faces substantial limitations in examining Bibica’s operations and survival factors through a comprehensive case study.
A practical approach for the case study combines annual reports with supplementary information from Bibica’s website and analyses from securities firms such as Ha Thanh Security Company, Mien Nam Security Company, and Sacombank Using this data, we examine cost categories and cost structure, track changes in revenues, net income, and COGS to understand the profitability decisions made by Bibica’s management For production planning and pricing strategy, we anchor the analysis in the production plan and the projected income statements in the annual report, then develop a what-if analysis to illuminate the rationale behind pricing tactics Additionally, financial ratios are computed from the annual statements to assess liquidity and operational efficiency, providing a comprehensive view of Bibica’s financial health.
FINDINGS
Planning Process
In planning, managers must decide how to classify costs, which costing system to use for accumulating and allocating costs to cost objects, how many kilograms of product to produce to achieve a target net income, and how to price products to cover costs and ensure profitability These decisions shape the development and survival of the organization by determining Bibica's competitive advantage The following section examines, in depth, how accounting information supports decisions related to the production plan, pricing and competition, profitability, liquidity, and operational efficiency.
4.1.1 Cost accou ntin g sy stem
Bibica’s cost accounting system classifies costs into fixed and variable to support pricing decisions and production planning Variable costs include all material and supply costs—raw ingredients such as wheat flour, sugar, eggs, vegetable fat, glucose syrup, corn starch, milk powder, butter, and salt—along with direct labor for workers who operate machines and prepare or package the products; because most Bibica products are produced on production lines, the depreciation of production equipment is also treated as a variable cost Fixed costs encompass facility and equipment expenses, insurance, utility costs, depreciation of buildings, vehicle expenses, and salaries for management For financial reporting, Bibica further categories costs by function into cost of goods sold (COGS), financial expenses, selling expenses, administrative expenses, and income tax expense This cost structure provides clear visibility into cost behavior and supports strategic decisions on selling prices and production volumes.
An examination of Table 4.1 in Bibica’s annual report shows that, over the period analyzed, COGS accounted for the largest share of total costs, consistently more than 70% Selling expenses were the second-largest component, averaging about 17% of total expenses Administrative expenses stayed constant at around 5% of total expenses Financial expenses, other expenses, and current corporate income tax each represented a small fraction, typically 0–1% of total expenses.
W hen it com es to the accum ulation and allocation o f costs, Bibica use P R O C E S S
In a costing system designed for mass-produced goods—such as cookies, cakes, biscuits, and candy—costs are accumulated separately for each stage of the production process, including producing, packaging, and distributing The unit cost is determined by dividing the total costs incurred by the number of units produced, providing a clear measure for pricing and profitability.
4 1 2 The u se of accou ntin g inform ation in m ak ing d e c isio n s related to the prod u ction
Managers must decide the quantity of products to sell to achieve their target profit without incurring losses, using CVP (cost–volume–profit) or breakeven analysis as the supporting tools To arrive at a final decision, they follow five steps in the planning process Each year, Bibica’s managers plan the quantity to be sold for each product category to reach a specified income level First, Bibica’s managers identify the targeted net income of VND 53,912 in 2011 (Appendix B) After defining the goals, they develop various options for the quantity of units to be sold and the variable cost per unit, as illustrated in Table 4.2.
Quantity 9.790.000 Variable cost per unit 1 16.496
W hat if analysis table for O perating income
T ab le 4.2 R ela tio n sh ip betw een variable cost per unit, qu antity o f unit sold and op eratin g incom e
Among these alternatives, managers must choose selling prices for cake per kilogram at levels such as VND 9,000,000; 9,500,000; 9,790,000; 10,000,000; or 10,200,000, with variable costs per unit at VND 90,000; 100,000; 116,496; 130,000; or 140,000 To make the final decision, managers collect information on each option and perform analyses to evaluate them The accounting department supports this process by providing data on variable cost per unit, selling price, and fixed costs With these inputs, managers can apply accounting tools to decide, for example, the quantity of cakes to sell in 2011 to reach the target operating income of VND 53.912 million (Bibica Annual Report 2011).
27) made by B ib ic a's m a nag ers; the m anagers may use C V P analysis to com e out with the expected figure The table 4.2 above illustrates the process o f evaluating alternative courses o f action to choose and implement the most suitable ones by the managers in order to decide the quantity o f unit sold and the variable cost per unit
Bibica plans an overall operating income of VND 53.912 million from all products; however, an analysis by Mien Nam Security Company shows that cake sales account for 40% of this total, so the operating income target from cakes must reach VND 21,568,270,000 To achieve this figure, managers must decide how many cake units to produce and sell, determine the costs involved, and set a reasonable selling price As shown in Table 4.2, the company opts to sell 9,790,000 kg of cakes at a cost of VND 116,496; producing cakes at VND 140,000 would generate losses, while producing at only VND 90,000 is difficult due to inflation and rising material costs.
The optimal production quantity is 9,790,000 kg with a unit cost of VNĐ 116,496, which yields an acceptable operating income at this level of variable costs Producing more than 9,790,000 kg could raise operating income, but Bibica's production capacity is limited, preventing higher-volume output.
4.1.3 The use o f accounting inform ation in m ak in g d ecisio n s related to pricing and co m p etitio n
Pricing a product starts with a clear understanding of its cost, because profitability hinges on setting a product price that covers costs, matches your target customers’ willingness to pay, and stays competitive in the market Product cost provides the baseline—the minimum price at which the product can be sold—and it sets the starting point for calculating how many units must be sold to reach the break-even point The break-even point is reached when total revenue equals total costs, resulting in no profit or loss Once you know the product cost, you can further refine the price through customer analysis and competitor analysis to strike the right balance between margins, demand, and competitive positioning.
Like many other decisions, managers must follow a step-by-step approach to reach the final answer First of all, the goal is defined as the target total income of VND 53.912 million With the objective clearly stated, budgeting, forecasting, and performance metrics can be aligned to drive progress toward that income target and enable informed, data-driven decision-making.
In 2011, the company offered several per-kilogram selling prices in Vietnamese dong, including VND 90,000/kg, VND 100,000/kg, VND 130,769/kg, VND 150,000/kg, and VND 160,000/kg Managers then gather data on fixed costs and variable costs to support informed pricing decisions and set competitive product prices.
When determining the selling price, the managers of Bibica use break-even and cost-volume-profit (CVP) analysis to identify the most reasonable price for their products They start with break-even analysis to establish a floor price that ensures all production costs are recovered when selling goods in the market For illustration, they examine the price of cakes; to break even, the selling price must be at least VNĐ 128,566 per kg CVP analysis helps them assess how changes in price, volume, and costs impact profit and set pricing that supports long-term profitability.
SP = - + Variable cost per unit = - + 116,496 = VND
After determining the minimum selling price, managers must weigh several factors to arrive at a reasonable price for their product Key considerations include the price elasticity of demand, the level of competition, and the targeted operating income, all of which shape the pricing strategy and help balance profitability with market acceptance By integrating demand sensitivity, competitive dynamics, and profit goals, organizations can set a price that reflects current market conditions and supports sustainable revenue growth.
Based on Table 4.3 and the prior analysis, Bibica should price its cakes at VND 130,769 per kilogram A price of VND 90,000/kg would incur a loss, while a price as high as VND 160,000/kg exceeds consumers’ willingness to pay and is unviable Therefore, VND 130,769 per kg is the most suitable price, as it lies above the break-even point and remains affordable for customers.
W hat if analysis table for Operating income
T able 4.3 R elation sh ip betw een selling price, qu antity o f unit sold and op erating incom e