Organizing the cost management accounting information system in garment enterprise in Vietnam

In this context, the demand for accounting management information is great, especially for the execution of strategic objectives of enterprises; it includes the provision and analysis of

PERMEABLE

1 Background

Textile and garment is considered as one of the main industries in

Vietnam in the period of accelerated industrialization and modernization

when textile and garment enterprises play the main role According to the

Vietnam Association of Textile and Garment, the export turnover of textile

and garment and fibers of all kinds in 2012 reached over 17.2 billion USD

increased by 8.5% in comparison with 2011 and up to 2015, the export

turnover is aimed at reaching 19 billion USD over 2,500,000 workers and up

to 2020 reaching 25-27 billion USD With the important and considerable

role of textile and garment industry for the national economy, it is very

essential to ensure the sustainable growth for the textile and garment industry

in the changing context of international economy, especially when the world

is falling into crisis and economic downturn as currently

Garment enterprises in Vietnam still mainly produce according to

specifications and designs provided by customers and use materials specified

by the purchasers in many cases In despite of great export turnover, the

actual revenue from these activities is very low, even negative profit in some

enterprise Besides, ever since joining the WTO, the textile and garment

industry has been facing significant challenges and competing on par with the

powerful export countries such as China, India (competing for prices) and

South Korea, Japan (competing for designs and patterns) This competitive

pressure is forcing Vietnamese garment enterprises to set up the development

strategy and good management of cost in order to reduce the production costs

and invest in machines to improve the the product quality and business

efficiency In this context, the demand for accounting management

information is great, especially for the execution of strategic objectives of

enterprises; it includes the provision and analysis of cost information so that

managers can make the investment decision and the provision of information

assisting the production at low cost, ensuring the product quality and timely

delivery of goods However, the cost accounting system in enterprises in

general and garment enterprises in particular only focuses on establishing the

financial and accounting information to serve the preparation of the financial

statements and pays less attention to provide information for the enterprise

management

Currently, the organization of the accounting information system for cost

control in garment enterprise is encountering a lot of difficulties; the

coordination between departments and systems in enterprise to collect the

input data, process and provide the cost information is limited With a cost control accounting information system as currently, garment enterprises are unlikely to stand firmly in the competitive environment in the region and the world The organization of cost control accounting information system which serves the demand of enterprise management in the best manner is always the complicated job requiring the efforts such as the need for cost control and accounting information, the coordination between departments in enterprises, the organization of accounting apparatus and allocation of cost control accounting work to serve best the demand of cost information for the enterprise management at all level in enterprises

Therefore, the study of the characteristics and contents of the cost management accounting information system in order to organize it in Vietnamese garment enterprises are very urgent in the current stage Originated from the reasons stated above, the research thesis entitled

"Organizing the cost management accounting information system in Garment Enterprises in Vietnam"

2 The research objectives

Cost control accounting information system is a useful tool to help enterprise managers to control costs The research objective of the thesis is to study the status that how has the cost management accounting information system been organized in Garment Enterprises in Vietnam? Thence the proposal of solutions to organizing the cost control accounting system in enterprises will be made in order to exploit the benefits of this system for the enterprise management

3 Research Questions

To achieve the research objectives of the Thesis, Thesis needs to analyze the issues relating to accounting information system in garment enterprise in order to answer the following questions:

1 What is the demand for management accounting information in general and the manager’s demand for cost control accounting information in Vietnamese Garment Enterprise and their satisfaction level with cost accounting information provided currently like?

2 What are the factors that affect this system in garment enterprises?

3 What level is the organization of cost control accounting information system executed?

4 From the results of assessing the reality of organizing the cost management accounting information system in garment enterprises, what solutions are given to organize the system in garment enterprise in order to

exploit the benefits of information system in respect of the enterprise

management?

4 The research objects and research scope:

4.1 The research objects:

The Thesis studies on the cost management accounting information

system in garment enterprises in Vietnam

4.2 The research scope:

Currently, the small-scale garment enterprises are accounting for less

than 20% of garment enterprises in Vietnam and the cost management

accounting information system is also very difficult to implement in small

enterprises due to the demand of financial investment and human resources

Therefore, the scope of research is conducted in the large and medium size

garment enterprises

5 The contributions of the Thesis and recommendations for the further

researches

The thesis has made both theoretical and actual contribution

Theoretically, based on the theory of enterprise management information

system, the thesis has studied synchronously three contents of cost control

accounting information system which are cost estimating information system,

executed cost information system and cost control information system in

order to provide an intimate relationship of the past, present and future

information in controlling costs Thence, confirming the role of cost control

accounting information system in making decision by managers to answer the

question whether the relationship between the cost management accounting

information system and the efficiency of the enterprise management exists or

not? The research was carried out in Vietnamese garment enterprises but it

was completely applied to other manufacturing industries as tobacco, cement,

beer etc

Practically, the thesis pointed out a number of issues faced by Garment

enterprises which was how to achieve the objectives of controlling cost,

reducing product price and improving the competitive force during the

integration The thesis contributed to clarify the necessity that garment

enterprise had to know how to calculate and classify business costs

accurately and the cost information is required not only at the scope of entire

enterprise but at each stage, department and individuals participating in the

production process so that the costs could be controlled The thesis pointed

out that in order to well organize the cost control accounting information

system; the solutions for enterprises should be uniform and consistent

throughout the solution for estimate information system to cost control information system and making business decisions Then, the solutions for cost control accounting information system should be proposed specifically

so that Garment enterprises could apply them into the practice of controlling costs

6 The structure of thesis

In addition to the foreword and conclusion, the Thesis is structured into four chapters:

Chapter 1: An overview of the research situation and research methodology

Chapter 2: Literature review on the cost management accounting information system in manufacturing enterprises

Chapter 3: The reality of organizing the cost management accounting information system in Garment enterprises in Vietnam

Chapter 4: Solutions to organizing the cost management accounting information system in Garment enterprises in Vietnam

CHAPTER 1

AN OVERVIEW OF THE RESEARCH SITUATION AND

RESEARCH METHODOLOGY

1.1 An overview of international researches

The thesis presents the researches by different authors involved in organizing the cost control accounting information system According to Laudon JP (2003), Accounting information system are defined as a whole consisting people, equipment (hardware), computer programs (software), stored data and methods of data organization, network connection and the process of setting up information on the human resource allocation and use, business situation to users Chang (2001) confirmed that the accounting information system decided the efficiency of organizing the enterprise management, particularly in the global competitive environment The research of "The role of accounting information in the decision-making processes in the dairy enterprises in Germany" by Eva, Heidhues & Chris Patel (2008) suggested that the development of the cost management theory with the support of information technology would be the best tool for the enterprise management The research showed that enterprise managers needed to be convinced about the effect of cost accounting information

system in decision-making process However, the research has not clarified

the relationship between the demand of enterprise managers and cost

management accounting information This issue needs to be studied further

because it is the basis for setting up the cost management accounting

information system

The authors Barfield, Raiborn & Kinney (1998) in Cost Accounting

document: Traditions and Innovations believed that the cost management

accounting information system would be in favor of providing information

for internal management The function of cost accounting was to analyze the

cost situation and profitability of projects, process or product in order to

improve the business performance Accordingly, cost management

accounting information system includes two steps: Step 1: collecting

information on costs through the classification based on the cost nature such

as costs of raw materials and labor costs etc Step 2: Trace costs back to their

sources and reallocate costs into one or several objects such as activities,

departments, customers or products Through these two steps managers can

be informed fully and grasp accurately the object of costs and know

specifically what department and stage makes profit or loss However, the

research did not mention the aspect of organizing the cost management

accounting information system, for example how to set up a database, what

the methods of establishing information and the system of reports to provide

the cost information are

The research by Monden, Y and Hamada, K (1991) in Japanese

companies showed that cost management accounting was increasingly

applied effectively and modernly Many methods of cost management

accounting were born in order to determine more accurately the cost for the

charged objects, for example, the method of target cost, the method of

continual improved cost which was applied effectively in Japanese

companies This research was suitable with the large sized manufacturing

enterprises which had advance production process such as applying the ISO

management standards The application of modern cost management methods

into Vietnamese enterprises is an issue requiring further researches in the

context that Vietnamese enterprises are gradually being standardized and

stepping in the stage of international integration

The cost management accounting information system is not only studied

theoretically but also in some specific sectors such as construction, hotel,

hospital and bank Laudon, JP (2003) suggested that the design of cost

management accounting information system depended on the specific

characteristics of each business and individual requirements of each part in

the system Omar AAJawabreh’s Research (2012), "The role of accounting information system in the process of planning, controlling and making decision in Jodhpur hotels" showed the relationship between accounting

information system with the process of making decisions in the hotel management The research had shown the difficulties of hotels in Jodhpur, India when applying the cost management accounting information system The costs of the system operation was so high; the facilities for the system application had not been met such as computer software and especially, the managers had not really been convinced of cost management accounting methods

Thus, the management accounting in general and cost management accounting information system in particular is a very effective management tool and has been studied at different angles by several authors Based on the researches in the world, the thesis inherited arguments about the nature of cost accounting, cost management accounting information system and its relationship with the structure of an organization, thence inherited and developed a cost management accounting information system in accordance with the specific conditions in Vietnam To build up a cost management accounting information system which can be applied effectively into enterprises in specific fields, it is necessary to make further researches on the features of production organization of each unit, the demand for cost management accounting information in each specific field and the ability to apply the management accounting methods of enterprises Thus, it is essential

to study and build up a cost management accounting information system in Vietnamese garment enterprises This is the space that the author finds in the researches on the cost management accounting information system in the world

1.2 An overview of domestic researches

Cost management accounting in general and cost management accounting information system in particular was only mentioned in researches in Vietnam since 1995 It could be said that the domestic researches from 1995 showed that the authors had studied the basic issues of cost accounting, cost management accounting and cost management accounting information system Researches confirmed the importance of cost management accounting, cost management accounting and cost management accounting information system in the enterprises

The author Pham Van Duoc (1997) had shown the difference between Financial accounting and Management accounting, on that basis, offered solutions of building Management accounting contents such as cost

classification, estimates, building the CPV relationship, analysis of cost

fluctuations and the direction of applying these contents in Vietnamese

enterprises

The Author Pham Van Duoc, Huynh Loi (2009) in the research "Model

and mechanism of operating the management accounting" contributed to

clarify on the cognitive aspects of a transformation of the strong integration

of Vietnam accounting sector with international accounting The accounting

system now no longer has only the department of financial accounting but

also includes department of financial accounting and department of

management accounting Some problems of organizing the management

accounting applications in enterprises had also been clarified in the

researches

Dr Ho Tien Dung (2009) in the research "Organizing the systems of

enterprise management information" had focused on the method of

organization, design and use of information system to achieve business

objectives The research results helped clarify the basis and methods for

building information system in service of enterprise management This is an

important foundation for further researches on the separate aspects of

information management system such as accounting information systems,

production management information system, personnel management

information system etc

In addition, there are many articles on the journals as " Cost management

in accordance with profit objectives and the ability to apply in Vietnam" by

Assoc.Prof.Dr Nguyen Ba Thanh and Dr Nguyen Cong Phuong (2009);

"Organization of accounting information system in the economic group" by

Ninh Hoang Van (2010) proposed the solutions to applying and organizing

the cost management accounting information system in Vietnamese

enterprise today

In summary, through a review of researches related to accounting

management and cost management accounting information system at home

and abroad, the author recognized the importance and value of cost

management accounting information system for Vietnamese enterprises in

general and garment enterprises in particular On the basis of these

researches, the authors systematized the theory of cost management

accounting information system and focused on studying the relationship

between cost management accounting information system and the

characteristics of production organization and specific cost norm in the

garment industry Since then, the thesis will propose solutions to the

organization of cost management accounting information system in garment

enterprises in accordance with the following contents: Organizing cost estimating information system; organizing cost execution information system; organizing cost information control These are the contents that previous researches have not mentioned

1.3 The research methodology

Stemming from the research objectives and research questions of the thesis, the author used qualitative methods including descriptive statistics, synthesis, comparison, investigation and survey etc in studying the theoretical and practical issues

1.3.1 Methods of collecting information

The methods of collecting information are in-depth interviews, phone calls, surveys in the enterprises The author had conducted in-depth interviews with two enterprises, sent questionnaires to 50 companies, received about 40 valid responses

The survey questionnaire form was designed for two interviewed objectives The form in Appendix 01B was for enterprise managers (members of the Director Board, Board of Management) Form in Appendix 01C for was objects such as chief accountants and cost accountants

1.3.2 The methods of data synthesis and analysis

The information obtained from direct observation, interviews and questionnaires would be encoded according to the content groups, factors affecting the organization of cost management accounting information system Then, it would be analyzed and synthesized with results as in Appendix 01E

CONCLUSIONS OF CHAPTER 1

Cost management accounting in general and cost management accounting information system in particular is a very effective tool of controlling costs and has been studies by the domestic and foreign authors under many different angles

Through the research overview, the thesis inherited the theories of cost accounting, cost management accounting and cost management accounting information system At the same time, the qualitative method used in the thesis was aimed at studying the garment enterprise managers’ demand for the cost management accounting information system, reality of cost management accounting information system organization in the garment enterprises from which the solutions to the cost management accounting information system organization in Vietnam garment enterprises were proposed

CHAPTER 2 LITERATURE REVIEW ON ORGANIZING THE COST

MANAGEMENT ACCOUNTING INFORMATION SYSTEM IN

PRODUCTION ENTERPRISES

2.1 An overview of organizing the cost management accounting

information system in production enterprises

2.1.1 The concept of cost, cost management and organizing the cost

management accounting information system in production enterprises

The concepts presented in this section are the basis for clear

understanding and implementation of organizing the cost management

accounting information system in enterprise throughout the next contents of

the thesis

2.1.1.1 Costs

The thesis studied several concepts of cost in different range and from

different angles However, in despite of any concept, costs must have three

compulsory characteristics: (1) cost is the waste of resources, (2) the waste of

resources must be tied to the results of enterprise operation, and (3) the

wasted resources must be evaluated

2.1.1.2 Cost management

On the basis of concepts in the economic dictionaries or by the author

Haberstock in "Cost Accounting 1", it can be defined: Cost management is to

gather, calculate and control the cost incurred in the course of production

and business in order to provide the necessary information for the enterprise

management tasks The cost managers do not simply recode the cost

information but also play an important role in the development of

management decisions in order to provide customers with the best products

and services with the lowest cost

2.1.1.3 Organizing the cost management accounting information system in

enterprises

Cost management accounting information system is a category in the

accounting information system With the analysis of cost accounting,

accounting information system, the authors introduced the concept of cost

management accounting information system as the collection of cost data and

processing this data in an order so that the cost information could be provided

in order to build cost plans, cost control, thereby evaluating the operation and

management decisions

Organizing cost management accounting information system is the process of arranging and distributing resources to collect and process the cost data in a certain sequence in order to provide information for the enterprise management requirements

2.1.2 The role and factors affecting the organization of cost management accounting information system in enterprises

2.1.2.1 The role of the organization of cost management accounting information system in enterprises

The cost management accounting information system creates a useful management channel for managers in the increasingly rapid changing business environment It is an information system of material - responsibility relationship, a transparent information system on internal responsibility of enterprises in enterprise operation and management

2.1.2.2 Factors affecting the organization of cost management accounting information system in enterprises

The organization of the cost management accounting information system will not achieve the objectives and structural orientation of information if the designers do fully pay attention to the factors of essence which control the operation of the system These are factors (1) Objectives and strategies of the enterprises and demand for cost management accounting information, (2) the characteristics of production organization, (3) the level of machinery and equipment and the qualification of accounting personnel

2.1.2.3 The relationship between the enterprise departments in organizing the cost management accounting information system

Organizing the cost management accounting information system costs cannot be separated from the database of enterprise activities such as strategy development, production, marketing, sales, human resource management etc

In order to obtain this database, it is necessary to determine the level of responsibility and the relationship between communication objects such as workshops, departments and accounting department

2.2 The contents of organizing the cost management accounting information system

The thesis presents three contents of organizing the cost management accounting information system which are (1) Organizing cost estimating information system, (2) Organizing the executed cost information system, (3) Organizing the cost control and decision making information system

2.2.1 Organizing cost estimating information system

2.2.1.1 The cost norm system

The method of establishing the cost norm

The process of establishing the cost norm can apply one of two methods

which are historical data analysis and task analysis

The method of historical data analysis

The method of task analysis

2.2.1.2 The system of cost estimates

Methods for establishing the cost estimates

Enterprises can use the method of experience statistics or method of ratio

to establish the cost estimates

The method of experience statistics

The method of ratio

Organize the database system for estimating costs

Organize the system of cost estimate reports

2.2.2 Organizing the executed cost information system

Executed cost information (also known as past information) is the

sources of cost information obtained from the economic events happening in

the business and production activities of enterprises

To receive, process and reflect the executed information system, cost

management accounting applies the accounting methods such as vouchers,

account methods, synthesis and balance method through organizing the

voucher systems, account system and the cost circulation according to the

characteristics of the production organization of enterprises and executed cost

report system

2.2.2.1 Organize the cost accounting voucher system

2.2.2.2 Organize the production cost information system

The producing enterprises often require information about the

production costs in two types: Job Costing information system and Process

Costing information system

Job costing information system

Process costing information system

2.2.2.3 Determine costs for charged objects according to the traditional

methods

The method of actual costs

The method of actual costs combines the estimated costs: In order to

apply this method, enterprises need to develop general cost estimates for each

department, unit (workshops, manufacturing department) and estimate the total criteria allocated to that department from the beginning of the year In the end of fiscal year, after gathering the general actual production costs, process the difference

The method of cost norm executes the evaluation of product price based on the cost norms for three items of costs as designed

2.2.2.4 Organize to determine the costs for charged objects according to the modern cost management model

The method of determining the costs according to the activities

The method of target costs according to the product life cycle 2.2.2.5 Organizing the executed cost report system

Providing information on executed costs to the department managers and senior executives is kinds of cost reports

 For order-based cost management system by orders, the report of executed costs is the Order-based cost notes

 For the process-based cost management, the report of executed costs

is Workshop production report

 The report synthesizes sale costs, management costs according to factors and behaviors of costs as the basis for the analysis of consumption cost structure and evaluates costs by each factor and its effects on the business results

 To provide the detailed information of revenue, costs of each department, each activities of enterprise, accountants establish the Department Report

2.2.3 Organizing the cost control information system and analyze costs for making decision

2.2.3.1 Organizing the cost control information system

Organize the database system

The method system for cost analysis

 The method of differential cost analysis

 The method of cost control through the cost management centers 2.2.3.2 Organize the cost analysis for making short-term decisions

Organize the database system

The method system for cost analysis for making short-term decisions

 The method of analyzing Cost - Output - Profit

 The suitable method of information analysis

Organize the system of cost report for making short-term business

decisions

To serve the purposes of the internal use of managers in the CVP

analysis, enterprises prepare the Business result report based on the behavior

of costs This report must show the three main criteria which are Revenue,

Profit on variable costs and Net profit

To analyze suitable information, enterprises must identify correctly and

fully the satisfactory information and establish the Table of suitable

information analysis for comparative alternatives

2.2.4 Organizing the cost management accounting apparatus

2.2.4.1 The apparatus and methods of cost accounting management

The combined model: This type of model combines the cost management

accounting system with accounting system by each components of

accounting: production cost accounting and pricing, sales accounting etc

Separate model: is the model of separate cost management accounting

system with the financial accounting system in the Accounting department

Mixed model: this model combines two above models in which the

organization of price cost management accounting department is separate and

other contents follows the combined model According to the author, the

mixed model is flexible and able to provide information but requires a great

investment for the organization and operation of apparatus and accounting

work implementation

2.2.4.2 Organize facilities to perform the cost management works

2.2.5 The characteristics of organizing the cost management accounting

information system in garment enterprises

2.2.5.1 The characteristics of cost management in garment enterprises

2.2.5.2 The characteristics of contents of cost management accounting

information system in garment enterprises

- First, identify and classify costs in the garment enterprises at the

request of management accounting

- Second, organize the cost estimating information system

- Third, organize the provision of executed cost information

- Fourth, organize the cost control

2.2.6 Experiences in organizing the cost management accounting information system in a number of foreign countries and lessons for Vietnam enterprises

2.2.6.1 In the U.S

2.2.6.2 In Germany 2.2.6.2 In China

2.2.6.4 Lessons for Vietnamese enterprises

- With economic conditions and the level of Vietnam enterprises today,

we will conduct the organization of Management accounting information system on the basis of flexible application of traditional management accounting theories which suit with the business characteristics of each company Besides, gradually receive the modern tools of cost management costs from countries with developed management accounting and apply into Vietnam

- In large enterprises with high competitiveness, the demand for Cost management accounting is clearer Therefore, organizing the Cost management accounting information system in the large scaled enterprises will be more feasible than in small businesses

- To determine the responsibility of departments in implementing and controlling the costs, it is required that the Cost management accounting information system must be organized according to the responsible centre The responsible centers should be consistent with the organizational structure of enterprises so that the center managers are capable of planning, adjusting and testing production and business costs arising in the course of organizing the activities within the scope of center

CONCLUSIONS OF CHAPTER 2

In this chapter, the author analyzed the main contents of the cost management accounting information system including: business and production cost estimating information system, the executed cost information system and cost control information system On that basis, the thesis confirmed the existence of the relationship between the cost management accounting information system and the efficiency of enterprise management Chapter 2 had studied the factors affecting the cost management accounting information system and proved that the enterprise’s objectives and strategy and the enterprise manager’s demand for the cost management accounting information are the most important factors in establishing the cost

management accounting information system in enterprises Besides, the

author argued that the organization of the cost management accounting

information system depended on practical conditions as well as the

organizational characteristics and production activities of each enterprise in

order to promote best the role of a cost management accounting information

system

At the same time, in chapter 2, the author also carried out the study on

the experiences in organizing the cost management accounting information

system in some foreign countries such as United State, Germany and China

from which to draw lessons for Vietnamese enterprises now

CHAPTER 3 THE REAL STATUS OF ORGANIZING THE COST MANAGEMENT

ACCOUNTING INFORMATION SYSTEM IN GARMENT

ENTERPRISES IN VIETNAM NOW 3.1 The basic characteristics of Vietnam garment industry

3.1.1 The formation history and development trend of the Vietnam Garment

industry

Figure 3.1: The value chain of garment products

Vietnam garment enterprises currently is standing in the third stage of

the value chain and only sell products for about 25% of the price to the

consumer This is also the stage with the lowest profit rate only accounting

for 5-10% but also having the most advantages of Vietnam garment

enterprises because of the cheap and abundant source of worker This

position is very important but also easy to be replaced by other manufacturers

if the product quality is not good or the price is higher than other

manufacturers

3.1.2 The features of production organization and management organization

in garment enterprises

3.1.2.1 The features of production organization

- The CMT outwork: is a form of sub-contracts that the garment

enterprises are provided the whole form the design to materials and only

execute production;

(1) Product

design

(2) Auxiliary industry

(3) Production (outwork)

(4) Commercialize

- The OEM / FOB mode: is the form concentrating in the production process However, Vietnam garment enterprises still mainly produce according to specifications and designs provided by customers and in many cases use materials as specified by purchasers

- The mode of production according to the whole OMD original package has been implemented and succeeded in steps in the large garment enterprises such Garment 10, Viettien Garment, Nha Be Garment

3.1.2.2 The features of management apparatus

3.1.3 The features of accounting apparatus

In the garment enterprises, the accounting apparatus is usually held in the centralized manner The organization of accounting apparatus at units is executed according to the mode of online functions

3.2 The reality of organizing the cost management accounting system in Vietnam Garment Enterprises

3.2.1 The generality of demand for cost management accounting information from the managers of garment enterprises over periods 3.2.2 The features of organizing the production cost accounting

The survey results in the garment enterprises showed that the garment enterprises organized the production cost accounting in two main forms which are job cost accounting and process cost accounting and no enterprise applied the method of activity cost accounting

3.2.3 Classification of costs in the garment enterprises

100% of surveyed enterprises classified costs by the economic contents

of costs; classified by production costs and external costs and classified by the cost components in the price Only 3 of 22 enterprises (large scale enterprises) classified by the fixed and variable costs (accounting for 13%)

No enterprises classified by controllable and uncontrollable costs

3.2.4 Organizing the system of cost estimate information

The characteristics of garment industry are that products must comply with the norms of materials and techniques in a coherent way According to the survey results, 100% of garment enterprises established the standard norms of waste materials and technique in which there were also the norms

of main material and accessory consumption and the norm of labor waste The system of waste norms is primarily used by enterprises for the purpose of calculating the product price However, the use of waste norms aimed at establishing the estimates is very little in enterprises The reason is that enterprises cannot build a system of business and production cost estimates

3.2.5 Organizing the executed cost information system

3.2.5.1 Organize to gather the initial information

The initial information on the executed costs incurred in garment

enterprises through vouchers reflects the waste generated in enterprises

These vouchers must comply with the accounting regulations promulgated

under the decision No.15/2006/Qð-BTC

3.2.5.2 Organize the real production cost accounting

The collection of actual costs in garment enterprises is implemented

quite clearly according to items The objects to be collected the production

costs are the purchase orders or production workshops (for example, garment

workshop 1, garment workshop 2 etc.) This is also suitable with two popular

modes of production organization in garment enterprises which are purchase

order-based production or self-production and self-consumption No

enterprise collected costs according to the product activities

3.2.5.3 Organizing the sales cost accounting and management cost

accounting

The sales cost and management cost are now tracked in details on the

Detailed Cost Book on the whole enterprise

3.2.6 Organization information systems cost control and decision-making

3.2.6.1 The cost control information system

The cost information fully met the requirements of preparing the

financial statements The production cost reports in garment enterprises

provided the cost information according to each product and workshop The

report of external costs provided the cost information according to the

elements on the enterprise scope

The current production is controlled by enterprise through the real price

criteria of a finished product in comparison with the price norm of that

product Currently, the comparison stops at the level of disparity calculation

but no enterprise specifies the affecting factors and level of influence of these

factors on the cost disparity

3.2.6.2 Organizing the information system for making business decisions

Currently, in Vietnamese garment enterprises; the implementation of

cost management accounting information system does not meet the

requirements of economic analysis Because of not preparing the Department

Report, no enterprise evaluates the performance of the department and

industry The consideration of business outcomes only stops at the summary

of revenue of each product or each purchase order Therefore, up to 10/20

(50%) of asked managers believed that the cost accounting information was not supplied timely, 11/20 (50%) of managers evaluated that Cost management accounting information system had not completely met the demand for the information for enterprise management

3.3 Evaluating the organization of the cost management accounting information system in garment enterprises today

3.3.1 Achievements 3.3.2 Shortcomings and causes

3.3.2.1 The manager’s demand for cost information

Although the garment enterprise managers have made changes in awareness of cost management accounting information demand for making decision considerably, in the real business environment, the performance of enterprises still depends largely on the State decisions and macro policies and depends less on the management qualification of each enterprise That spending a large amount to invest in the organization of cost management accounting information system while the competitive environment is not really healthy so that garment enterprises can confidently make business decisions based on their own resources with the support of the cost management accounting information system is really a major obstacle in the garment enterprises

3.3.2.2 Organize the cost estimating information system

In the process of building the system of cost norms, some common problems are found in the enterprise:

- Enterprises are not fully aware of the norm task and often overlook the establishment of waste norms for activities outside production

- The capacity of building norms is limited and the close coordination among the functional units in the process of building norms is lacked As a result, enterprises often stop at building the norms of materials and technique not the system of cost norms (i.e not built the price norm)

- Limited financial resources, especially in small and medium enterprises

- The estimation is not considered important in the cost control in garment enterprises; currently, only few garment enterprises carry out the business and production cost estimation and convert the norms of materials and techniques tightly in the unit into cost estimates

3.3.2.3 Organizing the executed cost information system

- All surveyed garment enterprises identified the product price according

to the method of determining the real costs No enterprise used the estimation

method or norm method to collect the production cost and calculate the

price Thus, the advantages of the method of cost estimation and cost norms

in providing the information to the cost management have not caught the

attention from enterprises

- Not separating the general production cost into fixed costs and variable

costs causes no enterprises to calculate the product price by the method of

direct costs

- No garment enterprise applied the method of operation costs or target

costs to determine the costs according to the modern cost management

model

- The garment enterprises do not monitor the separation sales costs from

the management costs by fixed costs and variable costs which cause a lot of

difficulties in the preparation of Department Report, CPV analysis and

breakeven point analysis

3.3.2.4 Organizing the system of cost control information and making

decision

The research results showed that this was the weakest part in the

organization of the cost management accounting information system in the

Vietnamese garment enterprises Very few enterprises organized the analysis

of cost information serving the enterprise management tasks The cost

analysis in the garment business is only formalistic if any This is due to the

current way of information organization unsatisfying the requirements of cost

analysis Because of not classifying costs according to the relationship with

operation, not establishing the business cost estimation, not applying the

methods of calculating the reasonable product prices, the obtained cost

information has no value in making business decisions

3.3.2.5 The facilities and accounting apparatus

Facilities

Accounting apparatus

CONCLUSIONS OF CHAPTER 3

Chapter 3 studied and accessed the reality of organizing the Cost

management accounting information system in garment enterprises in

Vietnam Currently, the Cost management accounting information system in

May now only meets the requirements of financial accounting and virtually

has no role in providing information to managers for making business

decision in the competitive market Besides, some of the basic elements for

the organization of the Cost management accounting information system such

as facility investment, accounting staff capacity improvement have not paid sound attention

CHAPTER 4 SOLUTIONS TO IMPROVING THE ORGANIZATION OF COST MANAGEMENT ACCOUNTING INFORMATION SYSTEM IN

GARMENT ENTERPRISES IN VIETNAM 4.1 The necessity of organizing the Cost management accounting information system in garment enterprises in Vietnam

4.2 Requirements of organizing the Cost management accounting information system in garment enterprises in Vietnam

4.3 Recommendations and solutions to organizing Cost management accounting information system in garment enterprises in Vietnam

4.3.1 Identify the costs serving the requirement of enterprise management

To provide the management information, the best ways of identifying costs is to classify costs according to the level of operation The cost report based on the operation level is aimed at providing information on the feature

of cost fluctuations during the period In this way, managers will see what would happen, the costs increase or decrease or do not change and if they change, how much they changes when making business plans at the different level of operation

For costs incurred in the garment enterprises, the thesis proposed a way

of indentifying costs which is considered suitable with price cost accounting serving the enterprise management in the current condition (Table 4.1)

4.3.2 The solution to organizing the cost estimating information system

The garment enterprises should establish the cost estimating information system from database source organization to the coordination between the departments during the process of building information

Solution 1: Develop a system of exact cost norms for the enterprise's products

Step 1: Build the waste norms of materials and technique for the direct

cost factors (Appendix 14, 15) For the production costs, the garment products are characterized by consisting of many constituents, so in order to build the waste norms of materials and techniques, enterprise should build each stage of production (cutting, sewing, finishing and packaging)