Report costs incurred such as ordering costs, transportation costs, purchase prices of the raw material purchasing department, and storage costs incurred at the raw material warehouse department. Therefore, it is difficult to control input material costs.
In addition, the collection and tracking of damage costs due to errors arising in production and business such as repair costs, rework of damaged products, costs associated with excess inventory, costs associated with production stoppage due to equipment failure are all included in the production cost of the product, contract penalty costs are tracked in other operating costs for the entire enterprise. No garment enterprise makes a report on how much these costs arise, in which department, leading to the inability to manage these error costs.
Current production costs are controlled by enterprises through the actual cost index of a finished product unit according to the items of direct material costs, direct labor costs and general production costs, compared with the standard cost of the product. However, the comparison only stops at calculating the difference level, and no enterprise has yet determined the factors affecting and the level of influence of the factors on the cost difference.
Table 3.7 Production cost variance report
Code QD&G27
Item
Unit | CP NVLTT | CPNCTT | CPSXC | Total | |
1. Estimate | copper | 310,716,000 | 1,995,000,000 | 373,990,000 | 2,679,706,000 |
2. Reality | copper | 329,900,000 | 2,050,735,000 | 426.103.062 | 2,806,738,062 |
3. Difference | copper | 19,184,000 | 55,735,000 | 52,113,062 | 127,032,062 |
4. Difference ratio | % | 5.81 | 2.71 | 13.93 | 4.74 |
Maybe you are interested!
-
Perfecting the Organization of Applying the Production Cost Accounting Method to Serve Cost Management Accounting -
Organization of cost management accounting in Vietnamese confectionery manufacturing enterprises - 13 -
Organization of cost management accounting in Vietnamese confectionery manufacturing enterprises - 21 -
Organization of cost and product pricing management accounting in enterprises in the Vietnamese plant seed industry - 16 -
![Organization of Cost Management Accounting Department in Enterprises [14]](https://tailieuthamkhao.com/en/uploads/2025/02/08/organization-of-cost-management-accounting-department-in-enterprises-14-120x90.jpg)
Organization of Cost Management Accounting Department in Enterprises [14]
(Source: Hoang Thi Loan Textile Joint Stock Company)
Information on current non-manufacturing costs does not meet the requirements for cost control. The new reports only provide figures on total costs incurred in a period (month, quarter, year) across the entire enterprise and the proportion of non-manufacturing costs compared to total business costs incurred in the period.
3.2.6.2. Organizing the information system to make business decisions
Decision making is one of the important functions of a manager. Making the right decision can bring profit to the business and vice versa can lead to bankruptcy. Decisions mainly revolve around the issue of realizing the goal of maximizing the business's profit such as the decision to expand or reduce production, the decision to self-produce or outsource the processing of details, etc. All of these decisions are basically based on the assessment of the performance of departments and product lines.
Currently, in Vietnamese garment enterprises, the implementation of the cost management accounting information system has not met the requirements of economic analysis. Because no departmental reports are prepared, no enterprise evaluates the performance of departments and product lines. The review of business results only stops at summarizing the sales revenue of each product or each order. Therefore, up to 10/20 (50%) of managers surveyed said that the cost accounting information provided is not timely, 11/20 (55%) of managers assessed that the cost management accounting information provided does not satisfy the information needs for business management.
The main reason for this problem is that there is still no connection between the information needs of managers and the cost management accounting information system. The mentality of managers is still to make decisions without needing information from cost management accounting and vice versa, the cost management accounting information system in enterprises, if it exists, does not perform its function properly.
3.3. Evaluation of the organization of cost management accounting information system in current garment enterprises
Through the actual survey at Vietnamese garment enterprises through direct interviews as well as sending information survey forms to administrators (Board of Directors, Board of Directors) and those directly performing accounting work (Chief Accountant, cost accountant), the author has collected and processed the collected information presented in Appendix 01E. Thereby, the author evaluates the implementation
The current status of cost management accounting information system organization in garment enterprises is as follows:
3.3.1. Achievements
The production organization characteristics of garment enterprises are clearly reflected through three production methods: processing (CMT), production with own equipment (OEM/FOB) or production according to original design (ODM). In the current Vietnamese garment industry, the form of production according to original design (ODM) is only implemented in a few large-scale enterprises. These are enterprises with large investments in machinery and equipment, focusing on researching new products, initially applying advanced technology to meet the strict requirements on product quality of export markets while investing in research to exploit the domestic market. The remaining enterprises almost only organize production for CMT or OEM/FOB orders.
The work of building norms has been of interest to garment enterprises with 100% of garment enterprises building standard norms on materials and technical waste, including norms on consumption of main materials, raw materials, labor consumption norms (including technological labor, management labor, service labor), norms on fuel, electricity, water usage, and norms on machine running hours.
The survey results show that all garment enterprises apply the enterprise accounting regime issued under Decision No. 15/2006/QD-BTC. Accordingly, the system of vouchers and accounts used has been applied relatively fully by enterprises according to the accounting regime. The system of cost vouchers as well as the process of organizing the collection and circulation of vouchers at garment enterprises today basically allows for the full recording of expenses incurred during the period. The classification of costs into production cost items, sales costs, business management costs, and detailed cost items by element has met the information requirements of KTTC on the indicators of cost of goods sold, sales costs, and business management costs on financial statements. Regarding the organization of cost collection, the process of recording cost information into detailed accounts as well as the fact that garment enterprises have opened detailed cost books
According to orders, according to each production workshop and setting up cost information on cost reports has also met the requirements of providing cost information to serve the work of preparing financial reports according to prescribed periods.
The accounting department at garment enterprises is organized according to a functional line structure. According to this structure, the Chief Accountant is the head of the accounting department, holding the right to make decisions within the scope of his organization and directly directing the accounting departments. Accounting staff are arranged in specialized departments. This is a reasonable structure that enhances personal responsibility, avoids the situation where the executor has to carry out many different orders from many people in charge, and at the same time increases work specialization, minimizes the arrangement of duplicate employees, and increases work efficiency.
3.3.2. Existing aspects and causes
3.3.2.1. On the cost information needs of managers
Research on cost information needs of managers shows that there are clear differences in the viewpoints as well as the reality of organizing cost management accounting information systems in large-scale garment enterprises and small and medium-sized garment enterprises. The information needs of small and medium-sized enterprise managers mostly stop at information on actual costs, while in large enterprises, managers have recognized the effects of cost estimates as well as the need to determine the responsibilities of departments related to costs. However, through analysis of the current situation and the development strategy of the garment industry, it shows the need to organize a cost management accounting information system for both large and small-sized enterprises. Managers have tended to pay attention to and use cost management accounting information in the decision-making process, but the current cost management accounting information system is still organized in a fragmented, unsynchronized manner, and has not yet effectively promoted information in the decision-making process.
The cause of this problem was discovered during the research that although May business administrators have had a significant change in perception,
about the need for cost management accounting information for the decision-making process, but in reality, in our country's current business environment, the performance of enterprises still depends mainly on the state's macro decisions and policies, and less on the specific management level of each enterprise. Only when the economic performance of each enterprise depends mainly on the production and business decisions of the management accounting apparatus itself, will managers clearly see the true value of the information provided by cost management accounting as a basis for their decisions.
In addition, the biggest difficulty for businesses today in organizing a cost management accounting information system is the financial issue. 100% of surveyed businesses are concerned about the cost of setting up a cost management accounting information system. Having to spend a large amount of money to invest in organizing a cost management accounting information system while the competitive environment is not really healthy for garment business managers to be able to confidently make business decisions based on their own potential with the support of a cost management accounting information system is really a big obstacle in garment businesses.
3.3.2.2. Organization of cost estimate information system
It can be said that the foundation of the cost estimation information system is the cost norm work that has been implemented relatively well by garment enterprises. However, the adjustment of norms has not been timely and there are still many cost factors in production that have not been established norms such as product quality inspection costs, workshop management telephone calls, production losses, and damage due to damaged products. Moreover, the use and promotion of the effectiveness of the norm system has not been thorough. Enterprises only use norms to calculate the standard cost in each specific case and is one of the bases for deciding to accept orders. However, in reality, surveys at small and medium-sized garment enterprises show that managers believe that the decision to accept orders depends a lot on the market. There are times when there are few orders, so losses must be accepted to maintain production.
Many Vietnamese garment enterprises have been and are building a costing system. However, in the process of implementation, there are some common difficulties in enterprises:
- The capacity to develop standards is still limited, there is a lack of close coordination between functional departments in the process of developing standards. Therefore, enterprises often stop at developing material-technical standards, and have not yet developed a cost standard system (ie have not yet developed price standards). This difficulty was found in 100% of surveyed enterprises.
- Limited financial resources, especially in small and medium enterprises. In fact, the cost of building standards is quite high because garment products are often very diverse in terms of products and types, the production process goes through many stages and requires the coordination of many different production departments in the enterprise.
- Insufficient awareness of the work of standards. Enterprises mainly use standards to calculate the cost of production standards. Therefore, they often ignore the work of building cost standards for non-production activities.
Regarding the organization of cost estimates, the survey results show that currently very few garment enterprises conduct cost estimates for production and business and convert material and technical norms that are being strictly implemented in the unit into cost estimates. This is because only a few enterprises can proactively plan the production plan for the whole year, the rest are almost dependent on orders from outside. In addition, no enterprise has relied on statistical data on its costs to learn about the behavior of costs to the level of production and business activities of the enterprise.
It can be seen that budgeting is not considered important in cost control in garment enterprises. Without cost estimates, the use of estimation methods to determine cost prices cannot be implemented. Enterprises can only apply practical methods to determine cost prices. This affects the timeliness of management decisions, or in other words, information serving management is not met.
3.3.2.3. Work to organize the cost information system
The contents currently available on the vouchers currently used at garment enterprises only meet the requirements of cost aggregation by element and by cost aggregation object. From the perspective of management accounting, the problem of cost identification according to the methods currently applied by garment enterprises does not meet the information requirements of internal cost management. To serve the purpose of cost classification as well as to aggregate costs according to cost management requirements such as controllable and uncontrollable costs, cost reporting by behavior, etc., the elements on the current vouchers are not enough to meet these requirements.
In addition, garment enterprises have established cost norms, although the norm system has not really covered all cost factors; some enterprises have established production cost estimates, but no enterprise uses the estimation method or the norm method to collect production costs and calculate costs. Thus, the superiority of the estimated cost and norm cost methods in providing information for cost management has not been of interest to enterprises. All garment enterprises surveyed determined product costs according to the actual cost determination method. The time to obtain information on product costs is always after the product is completed and the accountant has collected all relevant documents on the costs incurred. This reality stems from the current accounting practice in most Vietnamese enterprises, which is to only try to provide information for financial reporting, not paying attention to the timeliness of accounting information for management and decision making.
The failure to separate general production costs into fixed and variable costs results in no enterprise calculating the cost of manufactured products using the direct cost method. The author believes that the direct cost method will be more useful in assessing the responsibility of managers because the profits reported using this method more accurately reflect the actual business results of the enterprise. Managers will have to be more proactive in finding consumption markets and at the same time must calculate the minimum amount of inventory because the more inventory, the larger the fixed overhead costs in inventory, leading to lower profits.
On the other hand, no garment enterprise applies the operating cost method or the target cost method to determine costs according to the modern cost management model.
Through research at garment enterprises, it is shown that enterprises do not separately monitor sales and business management costs according to fixed and variable costs, leading to many difficulties in preparing departmental reports, difficulties in analyzing CPV, and analyzing break-even points. In fact, no enterprise allocates to each order and product type to determine profits for each department.
This shows that the organization of cost accounting information system for business management has not received due attention from garment enterprises. Cost accounting information mainly serves the preparation of financial statements. In reality, the application of cost management accounting and the role of cost management accounting are still very vague. The analysis, design and evaluation of the process of establishing cost management accounting information system in Vietnamese garment enterprises are still very new. Currently, enterprises are almost only interested in the financial accounting department because on the one hand, enterprises are still heavily involved in dealing with management agencies, always attaching importance to reports in this department. On the other hand, if financial reports are delayed, it will affect the financial assessment or tax determination activities of the enterprise.
3.3.2.4. Organization of cost control and decision making information system
The research results show that this is the weakest area in the organization of cost management accounting information system in Vietnamese garment enterprises. Very few enterprises surveyed have organized cost information analysis to serve business management. Cost analysis in garment enterprises, if any, is only a formality. For example, managers only evaluate according to the expenditures on costs incurred according to the budget or the proportion of costs in the total cost. Cost analysis methods such as CVP analysis and appropriate information analysis are hardly used.