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Method of determining costs based on activities at some manufacturing enterprises of Viglacera Corporation - JSC - 32


STT


Activities


Total contract costs incurred during the period (VND)


Number of arising contracts (times/batch)

Cost/unit contract


Cost trigger


Amount (VND)

Proportion (of each cost item in each contract)

1

2

3

4

5

6

7


Activity 1


Sand washing and scooping


95,938,044


180


532,989


100.0%



1.1


Depreciation


43,709,363


180


242,830


45.6%




Sand washing tank


30,721,998


180


170,678


32.0%

Number of sand washing batches



Excavator S1


12,987,365


180


72,152


13.5%

Number of wash batches

sand


1.2

Raw materials and consumables


6,398,883


180


35,549


6.7%




Waste water


6,398,883


180


35,549


6.7%

Number of sand washing batches


1.3

Fuel, energy


45,829,798


180


254,610


47.8%




Diesel oil


17,720,106


180


98,445


18.5%

Number of wash batches

sand



Electricity


28,109,691


180


156,165


29.3%

Number of sand washing batches


Activity 2

Mill

plaster


162,279,909


180


901,555


100.0%



2.1

Depreciation expense


54,436,941


180


302,427


33.5%



Crusher

A1


54,436,941


180


302,427


33.5%

Batch number

mill


2.2

Raw materials and consumables


15,080,987


180


83,783


9.3%




Grinding ball


15,080,987


180


83,783


9.3%

Number of grinding batches


2.3

Fuel,

energy


92,761,981


180


515,344


57.2%


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Method of determining costs based on activities at some manufacturing enterprises of Viglacera Corporation - JSC - 32


Table 24.15: Detailed report of operating costs by cost element combination (June 2020)



STT


Activities


Total contract costs incurred during the period (VND)


Number of arising contracts (times/batch)

Cost/unit contract


Cost trigger


Amount (VND)

Proportion (of each cost item in each contract)

1

2

3

4

5

6

7



Electricity


92,761,981


180


515,344


57.2%

Number of grinding batches


Activity 3

Sand+Agar gradation, mixing and silo

high + water


212,364,663


780


272,262


100.0%



3.1

Depreciation expense


25,294,999


780


32,429


11.9%



Silo S1 (sand, jelly)

high, water)


25,294,999


780


32,429


11.9%

Batch number and

silo


3.2

Raw materials and consumables


155,094,890


780


198,840


73.0%




Clean water


155,094,890


780


198,840


73.0%

Batch number and

silo


3.3

Fuel, energy


31,974,774


780


40,993


15.1%




Electricity


31,974,774


780


40,993


15.1%

Number of batches and silos


HD...


…








…







Total

4,095,936,383

-

-

-


Source: Author's calculation based on accounting data for June 2020 at Viglacera Aerated Concrete Joint Stock Company and calculation results using the ABC method

Results of applying ABC method

The implementation of the ABC method according to the ABC model using the EAD matrix at Viglacera Aerated Concrete Joint Stock Company brought the following results:


(i) Product cost is calculated more accurately than the traditional method: The Company's product manufacturing cost in June 2020 according to two cost determination methods is summarized and compared in the table below:

Table 24.16: Comparison table of product costs according to traditional costing method and ABC method

(June 2020)



STT


Content

Product costing by costing method

traditional


Product cost by ABC method (VND)


Difference


Brick


Panel


Brick


Panel

Brick

Panel

Amount (VND)

Rate (%)

Amount (VND)

Rate (%)


1

Direct material costs


315,865


789,981


315,865


789,981


-


-


-


-


2

Direct NC costs


58,210


76,080


58,210


76,080


-


-


-


-

3

Production cost

320,386

702,344

390,149

610,153

69,763

22%

( 92,191)

(13%)


Price/m3


694,461


1,568,405


764,224


1,476,214


69,763


10%


(92,191)


(6%)

Source: Author's calculation based on accounting data for June 2020 at Viglacera Aerated Concrete Joint Stock Company

Comparative data on the results of calculating production costs according to two cost determination methods show a huge difference in production costs allocated to cost determination objects, specifically: production costs allocated to a unit of brick product volume increased by 69,673 VND, equivalent to an increase of 22% compared to the traditional method, while production costs allocated to a unit of panel product volume decreased by 92,191 VND, equivalent to a decrease of 13% compared to the traditional method, leading to a 10% increase in brick product cost and a 6% decrease in panel product cost.

The calculation results show that the ABC method has provided managers with information about product costs and prices much more accurately than the traditional method, thereby also proving that the traditional method that the enterprise is applying

242

The application has revealed great limitations in the accuracy and reliability of information on product costs and prices.

(ii) Determine the cost of the company's unfinished products scientifically and accurately: The unfinished products at which stage or activity will be specifically determined for that stage or activity, so the cost of unfinished products at Viglacera Aerated Concrete Joint Stock Company is determined accurately for each activity.

(iii) As a fundamental tool for enterprises to apply the ABM activity-based cost management method: Through analyzing activities, understanding the origin of costs to determine resource cost allocation criteria and determining activity allocation criteria, the ABC method will provide managers with information about the origin and method of cost generation in the enterprise, on that basis, managers will measure the cost of each activity, identify value-added activities and non-value-added activities, as a basis for cost reduction, improving operations, thereby having measures to optimize resource use, improve product quality and enhance operational efficiency.

The model of applying the ABC model using the EAD matrix at the Aerated Concrete Joint Stock Company is considered easy to deploy, simple, easy to apply, the Company's data is available to serve the system deployment, the enterprise almost does not need to invest more resources but can still deploy. According to the author, with the great support of computer science today, with only accounting excel spreadsheets, this model can be easily deployed at the enterprise.

The illustration of the ABC method application model at Viglacera Aerated Concrete Joint Stock Company has clarified the ABC model using the EAD matrix that the author proposed to apply to a number of enterprises under Viglacera Corporation, facilitating the promotion of the ABC method application at this group of enterprises. Due to the high similarity of the product characteristics and production process of construction materials at a number of enterprises under Viglacera Corporation, the application of the proposed model to the remaining enterprises within the scope of the study is recommended to be applied similarly to the ABC method at Viglacera Aerated Concrete Joint Stock Company.

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