Organization of Cost Management Accounting Department in Enterprises [14]

Conclusion: With the above subjective and objective factors, when organizing cost management accounting, it is necessary to pay attention to those factors to accurately determine the information that cost management accounting will provide to ensure completeness and timeliness while still ensuring information efficiency for the business.

1.2. Contents of cost management accounting organization in enterprises

1.2.1. Organization of cost management accounting apparatus in enterprises [14]

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Organizing a cost management accounting system of an enterprise is the organization of building a cost management accounting model combined with equipment and means used to record, calculate and process cost information to meet the information needs of managers at all levels. Therefore, organizing a cost management accounting system must be based on the scale, characteristics of production and management organization as well as on the management requirements of the enterprise. In addition, it is also necessary to consider the management level of both leaders and implementers to achieve high efficiency in providing information for business management.

In terms of organizational structure, cost management accounting staff is a component of the management accounting apparatus. Therefore, organizing the cost management accounting apparatus is also organizing the management accounting apparatus in the enterprise. Enterprises, based on their specific conditions, organize the management accounting apparatus according to one of the following models:

1.2.1.1. Model of organization of management accounting apparatus combined with financial accounting

According to the combined model, financial accounting and management accounting are performed in the same accounting department. In terms of organization, the accounting department under this model is not divided into separate financial accounting and management accounting departments, but only divided into accounting departments that perform each part of the accounting work according to assigned tasks. Accounting staff takes charge of each department, simultaneously performing both financial accounting and management accounting work.

This model has the advantage of being convenient, easy to operate, and compact. This model is often applied to small and medium-sized enterprises with a small number of employees.

Short-term and long-term budgeting and standards

Business management decision consulting department

Information receiving department

Synthesis and analysis department

There are not many arising business transactions. Financial accounting of each department is combined with management accounting of that department. However, this organization requires the person organizing the assignment of work to understand the specific qualifications and capabilities of the accounting staff and to clearly define the work of financial accounting and management accounting in each department. Conversely, it also requires the accounting staff to clearly understand the work of financial accounting and management accounting. The disadvantage of this model is that it is very difficult to specialize in each field, sometimes people doing financial accounting work often confuse it with the work of management accounting. [14, p28]

Chief Accountant

Financial Accounting

Management accounting

Diagram 1.2: Combined financial accounting and management accounting organizational model

1.2.1.2. Model of organizing the administrative apparatus independent of financial accounting

This is a separate organizational model between financial accounting and management accounting in the company. The enterprise will design and build a management accounting information system that is completely independent of the financial accounting system, and the arrangement of personnel as well as operating regulations are completely independent of financial accounting. This model is often applied to large-scale enterprises.

The accounting system in a business under this model will consist of two main departments: financial accounting and management accounting. These two departments can be located in

in the same room and can also be divided into two functional rooms. Regardless of the form, the work is divided specifically as follows:

- For the Financial Accounting department: Has the function of reflecting and recording the economic transactions arising in the unit into the general accounts and recording financial reports according to the current regulations.

Short-term and long-term budgeting and standards

Business management decision consulting department

Department of collection, synthesis and analysis

- For the Management Accounting Department: Has the function of collecting, processing and providing information from initial documents to meet the needs of management at all levels. Prepare detailed estimates, organize analysis, process information and prepare management accounting reports according to the requirements of managers. Provide information to serve the production and business planning of the unit and help managers make business decisions accurately and promptly. [14, p29]

Chief Accountant

Financial Accounting

Management accounting

Bookkeeping and financial statements

Diagram 1.3: Organizational model of independent financial accounting and management accounting

This model has the advantage of clearly defining work boundaries, high specialization, helping each department to improve their professional expertise. However, this model is only suitable for large-scale enterprises with many operations because organizing two independent systems will be costly and synthesizing information from two independent departments requires a team of experienced and highly qualified staff.

1.2.1.3. Mixed model of financial accounting and management accounting organization

Synthesis and analysis department

Short-term and long-term budgeting and standards

Bookkeeping and financial statements

Management accounting

Financial Accounting

It is a combination of the organizational methods of the combined model and the independent model. According to this model, some management accounting departments are organized independently of financial accounting, while others are organized in combination. Specifically, when organizing management accounting according to this model, the cost management accounting department will be organized independently of financial accounting. This model has the advantage of being a stepping stone for companies that want to move straight to the independent accounting model but the management level and scale are not enough to immediately organize an independent management accounting department. [14, p. 29]

Chief Accountant

Business management decision consulting department

Diagram 1.4: Mixed model of financial accounting and management accounting organization

Conclusion: At present, Vietnamese enterprises still mainly apply a mixed model of financial accounting and management accounting because this system is quite suitable for the scale and management requirements of the enterprise. In addition, the accounting level of Vietnamese enterprises is still low, working habits are not professional as well as the need to save costs, making the mixed model the most suitable model.

1.2.2. Organizing cost management accounting content

1.2.2.1. Organization of initial collection of cost management accounting information

In order for managers to make quick, timely and highly accurate decisions, in addition to analyzing and making recommendations, collecting and processing information is very important. Initial information is the basis for experts to synthesize and analyze. If the initial information is not accurate and complete, the analysis results will lack reliability. Cost management accounting is also subject to this rule. In order to have information for managers to control costs, the stage of collecting cost management accounting information must be focused on and implemented according to the following contents: organizing the system of documents, organizing the system of norms, estimates and organizing resources to collect and synthesize cost management accounting information. Specifically as follows:

Documents to record initial information of cost management accounting are mainly based on documents of financial accounting such as payment vouchers, warehouse delivery vouchers, value added invoices... However, documents to record cost information of management accounting often aim at the completeness of costs to reflect the loyalty of the cost-bearing object. From there, there is an accurate basis for making optimal decisions.

In addition, the initial information recording system of cost management accounting also has a system of norms and cost estimates for the previous period to analyze and evaluate the cost fluctuations between the current period and the previous period, so that managers can make appropriate decisions.

On the other hand, the initial information system of management accounting is not only quantitative but also qualitative. Qualitative depends on the expertise, thinking, and judgment of accounting experts to make quick and timely decisions to seize business opportunities.

1.2.2.2. Organizing analysis, processing and providing cost management accounting information

Analysis is an activity to better understand the issues that the subject of analysis needs to be concerned with, thereby pointing out the causes and relationships between the issues. Organizing the analysis of cost management accounting information aims to understand and solve cost issues, process and provide cost information for managers to make business decisions. Therefore, before conducting cost analysis, it is necessary to classify costs.

1.2.2.2.1. Cost classification

The production and business process in an enterprise is a continuous cost operation process. Initially, the enterprise uses capital in cash to buy input factors such as raw materials, hire workers, machinery, equipment, factories... with the combination of those input factors will produce products as the initial orientation of the enterprise and then sell the products to consumers, the money earned can be larger or smaller than the initial investment of the enterprise. So, what are the costs in an enterprise and how are they understood? Currently, there are many different views on costs, these views are different not because of different views of a problem, but they are different because they are considered from many different aspects. However, the most common point in these concepts is that they all study the activities of an organization.

From the perspective of financial accounting, costs are considered expenses incurred in connection with production and business activities in an accounting period. According to financial accounting, there are expenses incurred in this period but not included in the expenses of the period to determine the results or vice versa, there are expenses that have not yet occurred in this period but have been included in the expenses of the period to determine.

According to political economists, business costs are the consumption of living labor and materialized labor of an enterprise in a certain period.

From a management perspective, business costs are the expenditures on raw materials, wages, outsourced services and other expenses to produce results.

The result of an organization's activities to satisfy market needs. In a market economy, managers often pay attention to customer needs to produce products and services with high quality and low cost to maximize business profits.

In management accounting, costs are considered as actual expenses associated with production and business plans, products and services. Costs from the perspective of management accounting are always specific in order to consider the efficiency of the departments, which is the basis for making investment decisions and choosing the optimal plan.

Because the nature of management accounting is to provide information to managers to make timely management decisions, the classification of costs in management accounting is different from that in financial accounting. In financial accounting, costs are often classified according to cost elements or cost items. In management accounting, costs are often classified according to the purpose of using information by managers, that is, separating costs that will fluctuate at different levels of activity or arranging them according to the needs of some individual managers who are responsible for those costs and can control them.

Thus, with management accounting, choosing different ways to classify costs will provide managers with different concepts and perspectives on the nature of costs. This diverse classification helps managers to control and identify costs accurately and completely.

a, Classify costs according to cost function

According to this cost classification, production and business costs are divided into two types of costs: production costs and non-production costs.

* Production costs: Are all types of costs directly related to the production process of products and services. Including direct material costs, direct labor costs and general production costs.

Thus, when the product is completed, all these costs are determined as product manufacturing costs, when the product is sold, those costs are called

cost of goods sold, but when the product is not sold yet, it is temporarily called product cost and appears on the balance sheet as inventory.

* Non-production costs: Are expenses that arise outside the production process. These costs do not create products but they arise to promote better product sales, which are sales costs and business management costs. These costs affect the profits of the business, so if this cost is not well controlled, it will greatly affect the business decisions of the business.

b, Classify costs according to their relationship with the level of activity

Based on the behavior of costs according to changes in activity levels, organizational costs are classified into variable costs and fixed costs.

b1. Variable costs: Are costs that often change according to production results or scale of activity. Characteristics of variable costs are: When activity levels change, total variable costs change while unit variable costs remain unchanged. Types of variable costs include:

Proportional variable costs: are variable costs that change directly proportional to the fluctuations in the level of production and business activities of the enterprise.

Proportional variable cost

Level variable cost

Step variable costs: are variable costs that change only when the level of activity changes significantly and clearly. In other words, step variable costs do not change continuously with the level of production and business activities of the enterprise. Activities must reach a certain level to lead to changes in step variable costs.

0 Level 0 Level 0

Graph 1.1: Graph showing variable costs [14]

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