and abroad, Vietnamese enterprises are constantly investing in more modern machinery, equipment, and office workshops, gradually replacing manual production with many direct laborers with construction production using modern machinery and equipment. General production cost items in enterprises account for a significant proportion, greatly affecting product cost indicators. The flexible application of direct labor cost criteria, direct material cost or by machine hours served, or by revenue of enterprises and production lines to allocate general production costs currently in enterprises is unreasonable. In particular, there are enterprises that calculate general production costs for enterprises and production lines depending on the profit and loss of each enterprise and production line and to deal with inspections by authorities.
In the production and business process at enterprises, there are many production costs related to many cost aggregation objects, such as costs for interpreters, costs for the office department (office staff salaries, stationery, office equipment depreciation, etc.). For the cost of interpreters, it can be tracked separately for each project according to the actual working hours, so the criterion for allocating this cost is the number of hours the interpreter serves each project (formula 3.1).
Interpretation staff costs allocated to each =
project
Total cost of interpreter staff
Total hours of interpretation X
Number of interpretation hours for each CT, HMCT
(3.1)
For general production costs incurred at the office of construction teams, including many different contents, to allocate to cost-bearing objects reasonably and accurately. Enterprises need to build a system of criteria for allocating cost contents, not allocating all general production cost contents according to a unified criterion as at present.
According to the author, general production costs incurred need to be collected according to activities and allocated according to appropriate criteria for each specific activity. For example, production costs
In general, the period includes 5 basic activities and serves the production of 2 types of products (Table 3.3).
Table 3.3. Criteria for allocating general production costs
STT
Work | Allocation criteria | Note | |
1 | Start the machine | Number of occurrences per product | |
2 | Quality control | Number of occurrences per product | |
3 | Production order delivery | Number of occurrences per product | |
4 | Machine operation | Number of occurrences per product | |
5 | Refueling | Number of occurrences per product | |
...... |
Maybe you are interested!
-
Perfecting fixed asset accounting to enhance fixed asset management in Vietnamese construction enterprises - 8 -
Experience in Organizing Management Accounting of Some Developed Countries in the World and Lessons Learned for Application to Vietnamese Enterprises -
Organizing fixed asset accounting with issues of management and improving the efficiency of using fixed assets at Southeast Asia Tourism and Trade Joint Stock Company - 1 -
Perfecting fixed asset accounting to enhance fixed asset management in Vietnamese construction enterprises - 18 -
Perfecting fixed asset accounting to enhance fixed asset management in Vietnamese construction enterprises - 13
To implement the above content, the recording and monitoring work at the enterprises must be carried out in detail and accurately. The contents of general production costs should be separated into fixed general production costs and variable general production costs.
- Complete content of CVP relationship analysis
CVP relationship analysis is the main axis in the organization of international economics. Currently, enterprises are still not interested in analyzing CVP relationship to make business decisions. Information from the results of CVP analysis will be very helpful for managers in making appropriate construction decisions. The level of construction break-even and expected profit,... are important indicators that business managers need to grasp.
Analyzing the relationship between cost-output-profit aims to provide tools for managers in exploiting the potential capabilities of the enterprise, as a basis for making decisions on selection or decisions on adjusting production and business such as selling price, cost, output,... to maximize profits.
profit
CVP relationship analysis includes the following basic contents:
- Break-even analysis;
- Analyze the output level needed to achieve the desired profit;
- Determine product selling price with desired output, cost and profit;
- Analyze the impact of selling price on profit based on expected changes in variable and fixed costs.
To implement the above contents, it is necessary to apply synchronous measures such as classifying all production costs and non-production costs into variable and fixed costs with explainable accuracy; building a business budgeting system; applying methods to determine production costs and product prices according to appropriate models,... (these contents have been presented in the above section).
Illustrated through the Lac Dao Cultural House project - Hung Yen by Thang Long Construction Joint Stock Company under Vietnam Industrial Construction Corporation, the cost data collected by the accountant is as follows: (unit: VND)
1. Total direct material cost: 3,583,999,781
2. Total direct labor cost: 815,290,000
3. Total general manufacturing costs: 409,204,130
- Variable costs: 105,000,130
- Fixed cost: 304,204,000
4. Total cost of using construction machinery: 93,214,909
- Variable costs: 93,214,909
- Fixed cost: 0
5. Total business management costs: 65,950,000
- Variable costs: 35,450,000
- Fixed cost: 30,500,000
6. Completed construction volume m2: 866,487
7. Average selling price per square meter of construction excluding VAT: 6,500,000 (Calculated for the entire project)
From the above data, we can aggregate project costs according to variable costs and fixed costs as follows;
- Total variable costs: 3,899,193,820, variable costs per 1m2 of construction: 4,500,002.
- Total fixed costs: 334,704,000
Thus, we can determine the number of square meters of construction that the construction company achieves the break-even point, and the net profit when carrying out construction projects as planned.
Break-even output
=
( Construction area )
334,704,000
=
6,500,000- 4,500,002
167,352 (m 2 )
(3.2)
Break-even revenue
=
capital
334,704,000
=
0.308
1,086,701,298
(copper)
(3.3)
Business performance report based on the company's cost behavior for each project (Appendix 14)
According to the business results report, we see that the net profit margin of the Lac Dao Cultural House project - Hung Yen compared to revenue is quite high at 24.8%, the margin ratio is 30.08%. Thus, we see that the construction costs of enterprises today are mainly variable costs, accounting for 69.2% of revenue and 92.1% of total costs of enterprises. This proves that the business efficiency of enterprises when investing in projects is quite high, which is the reason why the construction market is quite high.
construction is developing strongly in the current period. Completing the C-V-P analysis content is an important basis for managers to make business decisions.
3.2.4. Perfecting the organization of responsibility accounting
Responsibility accounting is the basic content of international accounting. Responsibility accounting plays an increasingly important role and position in management in enterprises around the world, considered a weapon of large companies, helping to maximize resources in the enterprise, thereby enhancing competitiveness, but is still quite new to Vietnamese enterprises. Vietnamese enterprises are large-scale companies and corporations, long-standing operations, rapid growth, wide scope of operations, organizational structures associated with the responsibilities of many units and individuals, so the research and organization of the application of responsibility accounting is an urgent requirement.
Responsibility accounting is a system that recognizes that each department (person) in an organization has the right to direct and be responsible for separate operations within their scope of management. They have the right and responsibility to identify, evaluate and report to higher levels in the organization. Through this, higher levels of management use this information to evaluate the performance of departments in the organization. Thus, responsibility accounting includes two aspects: information and responsibility. In which, the information aspect means the collection, reporting, and evaluation of internal information about the production and business activities of the enterprise from lower management levels to higher management levels. The responsibility aspect means assigning responsibility for financial events that occur. Depending on the use of these two aspects, it affects the attitude of the manager and the effectiveness of decentralization of responsibility in the unit.
The goal of the solution is to establish an organization that decentralizes specific responsibilities for each department, division, team, etc., associated with appropriate reward and punishment mechanisms, which will create an important driving force in the process of organizing highly effective activities.
Specific measures:
Based on the characteristics of production and business activities at current enterprises,
In accordance with the conditions of responsibility accounting organization, the solution for responsibility accounting organization at DNXL includes:
* Organizing responsibility centers
Based on the current organizational structure of the enterprises, the responsibility centers can be organized into: Cost centers, profit centers and investment centers. The responsibility centers are organized into the following responsibility centers:
- Investment center: is the highest level in the entire enterprise. The Board of Directors and the General Director are responsible for all aspects of the enterprise's operations. The investment center's goal is to ensure that investment in the enterprise's business sectors and lines is effective; the investment return rate is high, and the return on equity is high. To achieve that goal, the investment center is responsible for evaluating the investment efficiency of each business sector; implementing measures to improve the investment return rate; and evaluating the achievements of the units in achieving the common goal.
- Profit centers : are member construction units. The unit directors are responsible for the operations of these member units. In addition to demonstrating the responsibility of a profit center in terms of membership of the enterprise, these units are also considered as an investment center in terms of independence and autonomy in production and business activities. The profit center is responsible for fully and accurately synthesizing revenue and expenses, determining business results; monitoring and managing the use of assets, preserving and developing invested capital, with the above tasks to achieve the goal of ensuring the rate of profit increase on revenue, ensuring the growth rate of revenue is faster than the growth rate of capital in order to improve the efficiency of capital use and increase profits.
- Cost center : includes management office departments and construction teams. Department heads and construction team leaders are responsible for the departments they manage. The goal of the cost center is to increase self-responsibility.
Responsible for costs. Control all costs incurred by the construction team and the management office. The construction team leader or department head is the person who directly controls costs and is responsible for costs incurred at the center. Ensure that the benefits are greater than the costs incurred and increase efforts to control costs. The cost center is responsible for establishing and implementing construction according to the contracted project estimate, managing quality (ensuring construction is of the right quality and on schedule); closely monitoring and managing materials, labor of the team (both on and off the payroll) and office staff of the unit; saving costs, preparing completion records.
* Build a system of control reports at responsibility centers
The control reporting system is built based on responsibility centers. The reporting system of the responsibility centers forms a system of continuous reports serving the management work from the lowest to the highest level of the enterprise.
- Cost center reporting system
All construction cost estimates must be prepared in accordance with the guidance of Circular No. 04/2005/TT-BXD dated April 1, 2005 with a system of norms for quantity and estimated unit prices and additional documents issued to adjust the estimates. With the current method of contracting, construction enterprises re-contract the project to construction teams after winning the bid. To control costs, managers do not only stop at preparing cost estimates in accordance with Circular No. 04/2005/TT-BXD but also have to classify costs according to the perspective of international economics. With the characteristics of current construction units:
+ Assign to construction teams the volume and unit price assigned according to design standards.
+ Construction teams often hire workers and construction machines when receiving the project.
+ General costs are calculated fixed on labor costs according to regulations on basic construction.
Therefore, the cost of construction products (CT, HMCT) is mainly variable cost. Based on the contracted norms of the works, the construction team leader is responsible for preparing the cost center estimate report. The cost center estimate report is prepared based on the synthesis of all the works that the team undertakes to construct. The estimate report needs to be prepared in detail according to the losses that make up the unit price of each construction item (because the contracted volume of each item often does not change much compared to the design). This is the basis for the construction teams of the construction items to organize the implementation and inspect, supervise the team members and materials used during the construction process. It is necessary to clearly affirm that the responsibility of each individual is closely linked to the assigned work and tasks. The construction team leader is fully responsible for the costs according to the contracted estimate and all costs arising outside the estimate (Appendix 15).
The performance evaluation indicator of the cost center is the difference between the actual cost items compared to the estimated cost established according to the design standards. Periodically (monthly), the construction team leader of the team preliminarily evaluates the implemented volume and compares it with the construction progress plan and design standards. Such close and regular monitoring helps the construction team leader, in addition to managing the costs arising within his/her scope of responsibility, promptly detect and limit errors arising outside the estimate; prevent construction that is not in accordance with the design and must be demolished and redone, delaying the construction progress. When the construction item is completed, the construction team leader coordinates with relevant departments (material supply department, etc.) to synthesize all the actual costs incurred and send a report to the Cost Center (construction team). The cost center will use these reports to prepare a report on the cost implementation status. This report is an important basis for evaluating the performance of the cost center.
From the actual unit price (unit cost) table above, compared with the previously established cost estimate unit price, the construction team (cost center) prepares a status report.