Tài liệu Improving the cost management accounting in the plastic corporations listed on vietnam stock market

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1 CHAPTER 1 INTRODUCTION TO THE RESEARCH OF THE THESIS 1.1. Introduction to the study and research purposes The thesis is built to meet the following objectives: - Systemize a theoretical basis for management accounting in general and cost management accounting in particular in enterprises. - Study and investigate the current status of cost management accounting in Vietnam plastic corporation, in which the study focuses on companies listed on the Vietnam stock exchange due to their more advanced management than peers and the availability of accurate and transparent information. - Analyse and assess the status of cost management accounting in Vietnam plastic corporations in relation to the information needs of the corporate governance. - Propose solutions and conditions to complete cost management accounting in Vietnam plastic companies to match the operational characteristics of these companies and meet the information needs of the managers in the current conditions. 1.2. Research overview A number of scholars have conducted surveys and research on cost management accounting techniques which are applicable in countries around the world and focus on the manufacturing enterprises for the fact that they are where the concept of management accounting, cost accounting and cost management accounting emerge. 1.2.1. In developed countries In the UK, research by Drury et al in 1993 [71] about the manufacturing firms in general shows that the methods of determining cost as the method based on labor is often used by the manufacturing enterprise, while the method based on activities costs (ABC) is appreciated but not widely applied. The cost norms construction techniques, payback analysis, profit targets are also applied widely. In the US, a survey by audit firm Ernst & Young in 2003 on 2,000 CFO, vice president in charge of finance, cost control manager shows that the majority of managers in the US are still favour the application of traditional tools. The application of modern methods is still uncommon and in the testing phase. 2 In Australia and Japan, 1999, Wijeywardena and Zoysa [102] conduct a study on 217 Japanese firms and 231 Australia firms. Research shows that Australian manufacturing enterprises focus on cost control tools such as estimation, cost norms construction and variation analysis in production, while companies in Japan focus on planning tools and cutting costs, such as cost objectives construction in the planning and designing phase of products. ABC method is applied in Australia more than in Japan. In New Zealand, Adler, Everett and Waldron in 2000 [57] survey and interview the management accounting experts in enterprises. The results show that traditional methods are widely used and more popular than modern techniques of management accounting. In addition, the companies, whose headquarters are in Australia, apply ABC and the other techniques of cost control better than local companies. 1.2.2. In developing countries In Arab countries, the study of McLellan and Moustafa 2010 [93] in the manufacturing enterprises in Arab countries shows that the cost management accounting techniques most applied are planning tools and traditional control as estimation, traditional methods of determining the cost as based on labor or based on norms together with the variation analysis. The modern method of cost management accounting as ABC and cost targets are not used by many firms. In China, in 2007, Xiao et al [105, p.32-37] conducts research on the status of the application of management accounting techniques. The results indicate that overall, the use and awareness of the techniques of cost management accounting are increasing in China, large companies and manufacturing companies tend to apply the cost management accounting methods more than others. In India, the study by Anderson and Lanen [59, p.379-412] 1999 show that Indian firms focus on benchmarking techniques and costs related data collection. The study also shows an improvement in the planning and estimation in India firms. In Malaysia, Isa and Thye [84] 2006 study the actual use of the standards of management accounting in manufacturing enterprises. The results show no support for the judgement that companies with complex manufacturing process typically use modern techniques of management accounting. The use of the modern tools of cost management accounting in manufacturing enterprises are not necessarily correlated with the increasing level of competition in the market, and when the 3 4 perception of the competitiveness increases, enterprises tend to use many traditional tools of management accounting and not the modern tools. It can be seen that, in general, accounting management have been studied by many scholars under many different angles, from the overall study of management accounting to the specific research in each issues in management accounting. However, these works only study management accounting in accordance with traditional methods and not the modern methods. Besides, most of the studies (except for the work of Mr. Pham Ngoc Toan) use very limited survey data from enterprises, so the research judgment is largely subjective to the authors . Recently, the application of management accounting in specific sectors has been studied by a number of authors. Results of these studies show that, for different industries, firms using different accounting management methods to serve the specific purpose of management of the business. In Singapore, Ghosh et al [65] 1997 conducts a study and classifies the level of use of management accounting techniques in 109 manufacturing enterprises. The results show that the estimation tool is most popular applied, followed by longterm planning, cash estimating, periodically income reporting, building cost norms, determining costs according to operation, managing comprehensive quality, breakeven analysis, construction budgeting ... In the Philippines, the study of Manolo in 2001 [92, p.429-465] at 500 companies in the postal sector shows that only 16% of them use the method of determining costs according to operation, 55% still applies traditional methods and 142 companies did not respond about what methods are applied. 1.2.3. In Vietnam The study of management accounting in Vietnam can be briefed through the following diagram (Figure 1.2): Management accounting introduced to Vietnam, a brief study of management accounting - Nguyen Viet (1995) - Pham Van Duoc (1997) Study specific issues in management accounting - Pham Quang (2002) - Tran Van Dung (2002) - Le Duc Toan (2002) - Giang Thi Xuyen (2002) - Huynh Loi (2008) - Pham Ngoc Toan (2010) The study of management accounting systems in enterprises within a specific sectors -Pham Thi Kim Van (2002) -Nguyen Van Bao (2002) -Luu Thi Hang Nga (2004) -Duong Thi Mai Ha Tram (2004) -Nguyen Thanh Qui (2004) -Pham Thi Thuy (2007) -Tran Van Hoi (2007) -Van Thi Thai Thu (2008) -Hoang Van Tuong (2010) -Nguyen Quoc Thang (2011) -Nguyen Hoan (2012) -Vu Thi Kim Anh (2012) -Nguyen Thi Ngọc Lan (2012) - Nguyen Thi Minh Phuong (2013) Figure 1.2: The studies of general management accounting and cost management accounting in Vietnam in particular In the studies of management accounting in specific industries, there are only eight studies about cost management accounting. Most authors have noted that the cost management accounting in Vietnam enterprises have not been taken seriously and invested properly. Businesses mainly use the available financial accounting system, rather than building a specified system of management accounting, to provide information for management decisions of the business. The allocation of indirect production costs are usually conducted in the subjective criterion of the firm, management accounting reports are prepared primarily to serve the shortterm decisions rather than serving the strategic decisions of the enterprise. This shows that Vietnam still experiencs a huge gap to other countries in Southeast Asia in the formation of cost management accounting systems in enterprises. Several limitation of these studies are: - Very few studies have addressed the theoretical overview and, if only to stop at an overview of the works in the country, no overview of the works in the world. - The reasons why businesses are not investing in cost management accounting systems have not been deeply researched, so the solutions are still general, not specific to the characteristics of the businesses and sectors. - There is no study conducted on cost management accounting in the plastics companies, while these companies' retain the unique characteristics of manufacturing enterprises, and addition to that is the specific characteristics of the sector. Moreover, improvement of the efficiency of accounting systems, especially cost management accounting, is very important for manufacturing companies in plastics sector, especially in the context of today's stiff competition. This is the "gap" that the author will deeply research in this thesis. 5 6 1.3. Research questions 2.1.1.2 History and development of cost management accounting Research objectives of the thesis are specified by the following research questions: Cost management accounting is growing and constantly changing according to the context of history. Although cost management accounting appear primitively in 13th, 14th century in Britain and America, but not until the 19th century, the cost management accounting witness an outstanding development with a series of invention in the field. - Research Question 1: What rationale for accounting management in general and and cost management accounting in particular has been growing in the world and Vietnam? - Research Question 2: What is the status of cost management accounting of the plastic joint stock company listed on the Vietnam stock market now? - Research Question 3: What is the reason of the application or non-application of cost management accounting at the plastic joint stock company listed on the Vietnam stock market Vietnam? - Research Question 4: What should be the solution to cost management accounting at the plastic joint stock company of Vietnam to built or complete in accordance with the operational characteristics of the companies and meet information needs of managers in its current condition? 1.4. Research methods The thesis will be implemented on the basis of application of quantitative combined with qualitative methods to analyse the application of cost management accounting systems in the listed plastic joint stock companies. The collected quantitative data will be processed using the statistical metrics measurement and synthesis. The qualitative data gathered from the interviews will be handled by analyzing the content. CHAPTER 2 LITERATURE REVIEW ON COST MANAGEMENT ACCOUNTING IN CORPORATION 2.1. The nature and role of cost management accounting in corporation 2.1.1. The nature of cost management accounting 2.1.1.1. The concept of cost management accounting According to the authors, cost management accounting could be defined as the cost accounting department in the accounting management system to provide information on the cost for the need of corporate governance. In the 20th century, progress in the theory of management accounting in general and cost management accounting in particular happens quite slow, although the business environment and production in this period is more volatile. However this period observes a number of reviews and evaluation of different methods of cost management accounting adopted. From which, studies have shown the inadequacies of the traditional cost management accounting methods and a variety of modern accounting methods was born. This period also saw the US and the UK are no longer two nations "dominance" in providing the theories and practices for most of the cost management accounting for the world. When Japan introduced two important innovations which are the method of determining the target cost and the Kaizen method. 21st century, although the corporate governance system develop but management accounting has not changed from the last century. 2.1.2. The role of management accounting in business costs The purpose of accounting is to serve the managers, therefore, the role of cost management accounting is always associated with the role of managers in the organization. In the process of pursuing the objectives of an organization, managers must make basic operational decisions such as planning, guiding, promoting and controlling staff. In fact, the information of cost management accounting plays an essential role for the managers to make decisions in the planning process, guiding, promoting and controlling. 2.2. Contents of cost management accounting In order to monitor and control the cost of an organization, it is necessary to know the contents of cost management accounting within the organization. In this thesis, to assist the study and assessment of cost management accounting in the plastic joint stock company listed in Chapter 3, in this chapter the author will summarize the contents of management accounting by five major components: (1) the classification of costs and how they are used; (2) Construct norms and estimating 7 costs for monitoring and controlling expenses incurred on the basis of the classified costs to meet the requirements of managers; (3) Determine the cost for each subject in order to calculate the exact costs of each specific subject; And on that basis (4) analyse the variation of cost to control cost, and (5) analyse the cost information to serve the needs of decision making of managers. 2.3. Status of the application of cost management accounting in enterprises in several countries around the world and lessons for Vietnam Status of the application of management accounting in general and cost management accounting in particular in several countries around the world have been presented in detail in Chapter 1. In the opinion of the author, the learning and applying the cost management accounting systems from other countries also need time and routine, and taking advantage of the follower, Vietnam also need to study the techniques of cost management accounting to find a shortcut and catch up. Initially, when the cost management accounting system are relatively simple, Vietnam should learn the experience of cost management accounting from the UK, USA and Japan. These are countries where the cost management accounting develop both theoretical and practical, at the same time, learning from the countries in the region whose characteristics quite similar to Vietnam. From the experience of other countries, the development of cost management accounting in manufacturing enterprises in Vietnam should aim to be flexible, efficient and ensure maximum autonomy within the enterprise. Foremost, enterprises need to recognize that an efficient system of cost management accounting is crucial for sustainable development and competitive business in the current turbulent environment, not only to meet the regulations. CHAPTER 3 STATUS OF COST MANAGEMENT ACCOUNTING IN LISTED PLASTICS CORPORATION IN VIETNAM STOCK MARKET 3.1. The basic characteristics of Vietnam's plastic industry 3.2. Current status of cost management accounting in the plastic joint stock company listed on the Vietnam stock market In the summary of the survey (Appendix 01C), we can see the current status of cost management accounting in the plastic listed joint stock companies as follows: 8 3.2.1. Classification of costs According to the survey, currently 100% of the listed plastic companies conduct clasification of business costs base on economic content and on purpose, usage of the cost. Beside the two costs classifications above, the company does not use any other classification, especially the classifications to serve the needs of corporate governance. 3.2.2. Cost norms and cost estimation 3.2.2.1. Constructing costs norm • Direct materials costs Because direct materials costs (plastic resin) accounted for a large proportion of the total production cost of the company, 100% listed plastic companies construct consumption norms based on technical norms of direct materials for each product and control these norms strictly. Consumption norms of direct materials (plastic resin kg / kg of plastic finished products) are built by technical department base on world standards of plastic products. The review of direct materials consumption norms is done quite often for each machine. Listed plastic corporations also encourage material savings by specifying materials savings bonus for each workshop. Most companies have not developed material price norms. Only Rang Dong Plastic Company undertook construction of the unit price for materials based on raw material prices for 3 consecutive months (Appendix 01C, 04). • Direct labor cost Most listed plastic companies conduct labor costs norms per 1 kilogram / tonne of finished plastic (33.33% of the companies apply) or the quantity of finished plastic products (55.56%), in fact this is the contracted cost of labor for factories, production workshops. • General production cost For the materials cost and tools and supplies used in common for factory, companies mainly contract the quantity for the workshop. For the electricity cost, 66.67% of the companies construct power consumption norms according to the machine design. Other costs, such as depreciation expense of machinery and buildings, wage costs and water costs for production do not have norms constructed (Annex 01C, 02). • Selling, general and administrative expenses 9 10 Except for the gasoline cost which is built according to the consumption norms of car design, other costs such as tools and supplies used for sales and administration, cost of electricity, water, telephone, advertising costs, marketing expenses and per diem are contracted to each department. Other costs related to sales and administration do not have norms constructed. accounting and cost calculation is the product groups in each workshop, production cost and price are determined per ton or kilogram of plastic products in the same ranges in each workshops. The prodcution costs are aggregated on account 621, 622, 627 details for each workshop, then transferred to account 154 at the end of period to calculate the cost of completed products/product groups. 3.2.2.2. Costs estimation For evaluation of work on progress, with characteristics of plastic products are "asphalted"product, so all companies determine the value of work in progress by the cost of direct materials. Up to 71.43% of the respondents say that the large difference of work on progress between periods is depending on the demand and orders in each period. Survey results of the listed plastics companies show the current production schedule of the company is quite passive and depend on the orders of customers, most companies are not proactive in production planning. As many as 66.67% of companies do not conduct production planning while the production planning is the basis for the construction of the production costs. Besides the plastics company only built the cost norms for a few basic expenses, thus the cost estimation is virtually undone. Companies producing massive products such as Tien Phong Plastic, Dong A Plastic, do not conduct complete cost estimation, but only stop at estimating the volume of direct raw material purchased base on the reserve policy of raw material inventory at the average demand of plastic for three months. At companies, which produce accord to orders as Rang Dong Plastic Company, Tan Tien Plastic, Tan Phu Plastic, Vinh Packaging, Saigon Plastic, have conducted the estimation for each order to quote prices for customers and to monitor the production process. Besides, Rang Dong Plastic Company also conducted to estimate for overall year. General estimate is made for the whole company to compare actual data and the estimates for the year. 3.2.3. Determine cost for each group 3.2.3.1. Determining costs for product/product group Plastic corporations record each kind of production costs, then consolidate production costs, evaluate works in progress from that pricing completed products/product groups. At the plastic companies, each workshop usually produce different product/product group. At Tien Phong Plastic and Binh Minh Plastic, u.PVC tube products with various diameter and size are produced on the same production line with closed loop system forming the finished product. In each resize time, workers only need to replace the mould in the production line, similar to the process of production of HDPE and PP-R plastic pipe. For supplementary products such as flange pipe, the production consists of two phases: (1) Plastic embryonic stage through a closed technology chain technology and (2) drill and screw on through the lathe. With these features, the object of cost For the calculation of price, in the Tien Phong and Binh Minh Plastic and others plastic firms, the pricing objects are group of finished product (u.PVC pipe, HDPE plastic pipe. ..different size), these product groups are measured by kilograms or tons for pricing, then based on the technical specifications of each product to calculate the price for each product . Costing method is the actual cost method. After evaluating cost for each product category, the companies will perform an aggregate list of price of all finished products. 3.2.3.2. Identify cost for other objects All costs unrelated to the production process are gathered to the selling and administration expenses. The determination of cost for other objects have not been made. 3.2.4. Cost variation analysis for cost control At the workshops, with regard to the volatility of direct raw materials consumption, due to the significancy of direct raw material cost in the total cost of the company, the workshops monitor and report fairly regular the consumption of material in reality versus technical norms. Because labor costs are constructed as norms per kg of plastic finished products to pay for the employees of each workshop production, there is no difference between the labor costs actually incurred versus expected. At each workshop, timesheet to track the working time of individual workers is used, but only for calculating salary for each individual, and has not been used to analyze labor productivity fluctuations and labor costs variations in the period. There is norms for the cost of electricity and water used for production, but essentially the utility costs are contracted for each workshop. In fact companies are gathering utility costs actually incurred during the period to the cost of the company, rather than using the actual level compare to norms to 11 12 analyze fluctuations in period. In addition, listed plastic corporations are divided to functional departments. Although each year, departments are required to report to the managers on assigned tasks and the implementation of these tasks, the cost to evaluate management responsibilities is the direct costs incurred at the department under their control. expenses are variable in nature, such as commissions, phone costs are set in proportion to the revenue or in the form of contracting while these costs are from different sources. 3.2.5. Cost information analysis for business decisions Survey results show that the listed plastic corporations have never used data from the accounting system to analyze and determine breakeven points, or plan revenue and profits growth in the event of shareholders' meeting. The plan of revenue and profits growth are made through estimates from the experience of the manager. Also the listed plastic companies have never used the information from the accounting system to consider between to self-produce or purchase, to accept or refuse an order, to invest in a new production line, all these decisions are largely base on the needs of growth and development strategy of the company. In each plastic firm, there is usually an electro-mechanical workshop. Managers agreed that most of the factories do not reach its full capacity and not really effective, but these plastic firms did not use the cost information to make decisions of maintain or remove, or change the management method to enhance the performance of the electro-mechanical workshop. Large firms, such as Tien Phong and Binh Minh Plastic, sometime receive orders for special products (in term of size, degree of difficulty) which can not be produced massively as conventional products, but require a separate manufacturing process. However, the companies still apply the normal method to calculate the price (plastic resin cost plus about 17 million/tonne of finished plastic). 3.3. Evaluate the actual status of costs management accounting in the plastic companies listed on stock market Besides the advantages gained, cost management accounting in listed plastics companies exists some limitations: The current classification of cost does not support the cost administration of the enterprise and mainly benefits the pricing of completed product. In addition, the identification of sources of cost in accordance with each type of expense should be paid enough attention, because this work is the basis for the formation of norms and reasonable cost estimation. It also helps companies determine the exact cost charged for each object. As for selling and administration expenses, some Construction of norms and estimation of manufaturing factors cost in the plastic firms has not been done comprehensively and effectively: The cost norms has only been established for the cost of direct materials and based on technical norms. Although the technical norms for material cost has been constructed, most companies have not yet estimated direct material cost. Other costs have not been established norms and estimates. The determination of cost for charged objects is inaccurate and do not meet the requirements of corporate governance. Plastic corporations only determine the cost of completed products / product groups through the determination of cost of production and apply the cost valuation methods in accordance with the actual cost, in which overhead production costs is mainly allocated according to the cost of direct materials or cost of key raw materials while each element of overhead production costs has different sources of costs and need a different allocating criteria. According to the author, the use of only one allocation criteria like that is quite simple and unreasonable. In addition, when determine the value of endingperiod work-in-progress, all companies use the cost of the key raw materials or the cost of direct material, though work-in-progress of the companies includes, in addition to the cost of the key raw materials, auxiliary materials, labor costs and other expenses incurred in the workshop, these costs account for over 10% of the value of work-in-progress. Besides, for the purpose of corporate governance, in the author’s opinion, the plastic companies only determine cost for its products is not enough. The determination of the cost for other charged objects as for each order, each customer or individual departments in order to have an accurate assessment for each charged objects have not been implemented by them. Most of the costs variation has not been analyzed for control costs purpose: In addition to the analysis of the variation of materials cost is conducted quite often to control the materials cost, other costs incur in companies such as direct labor costs, overhead costs of production, sales and administration cost has not been tracked and analyzed their fluctuations during the period. In each department of the company, although the works reports is done periodically but they are superficial. The evaluation criteria are incomplete according to jobs delegated to the employees. Assignment of responsibility for cost control and evaluate the 13 implementation of cost control costs through variation analysis of each department in the plastic companies has not been performed. Managers at all levels in the listed plastic companies virtually have not used cost analysis to make decisions: It can be seen that if the listed plastic companies do not estimate costs in a complete and accurate manner and specify costs for each contract, each customer, ... they can not closely control for costs for each object, and also can not assess the profitability of each object. For mechanic-electric workshops, an ineffective operation, the plastic companies also do not use cost information to decide to restructure this department. It can be seen that the cost analysis in the listed plastic companies have not been made to serve the short-term decisions of the companies. For long-term decisions of the administrators, such as a new asset investment, manufacturing expansion, assets hire/ purchase ... the cost analysis has not been used to make decisions, and managers make investment decisions primarily base on the size of the business development, customer orders, current financial ability of the business or take advantage of state incentives for investment. CHAPTER 4 ORIENTATION AND SOLUTIONS TO IMPROVE THE COST MANAGEMENT ACCOUNTING IN PLASTICS CORPORATION LISTED ON THE VIETNAM STOCK MARKET 4.1. The need for information and the principles to complete cost management accounting in the plastic corporation listed on the Vietnam stock market • In accordance with the characteristics of production and business activities • Able to provide diverse information about the cost to the decision making process of the managemers • Designed on the basis of the benefits – costs analysis 4.2. The solutions to complete the cost management accounting in plastic companies listed on the Vietnam stock market 4.2.1. Classification of costs The author proposes the classification of costs according to the relationship with the activity level and the inductive ability to the charged object. 14 Classification of costs according to the relationship with the activity level, the costs of the listed plastic companies will be classified as variable cost, fixed cost, and mixed cost based on multiple sources of the cost. • • Classification according to inductive ability of the charged objects The classification of costs into direct costs and indirect costs for those who bear the costs such as products line, orders, customers, factories or branches, stores, can help the managers evaluate the performance of each object of interest, then to make the decision accordingly. 4.2.2. Norms construction and cost estimation 4.2.2.1. Norms construction For the norms of direct materials cost, in addition to the quantity norms, it is necessary to set the price norms of raw materials. However, as the unit prices of materials fluctuate continuously and depend heavily on the volatility of world market prices for plastic resins, so the listed plastic companies may not be able to set the unit price of materials, as a basis to determine the cost norms of materials. With this feature, the listed plastic companies can determine the input material prices if the company uses hedging instruments. On this basis, the authors propose that expected unit price for raw materials purchased for use in production can be determined by limiting the risk of input materials costs through the use of derivative instruments. Based on the experience of the international plastic companies in controlling the volatile input costs, the authors expects that the listed plastic companies, foremost, the companies with large market share in industries such as Tien Phong Plastics, Binh Minh Plastics, Tan Tien Plastic can examine the purchase of matertials under futures contracts. For the overhead production cost norms, sales and administration cost will be established based on historical costs incurred from the previous periods and the expected to occur in this period, calculated by the departments in the company and the board of executives. Based on the cost classification into variable and fixed costs, these costs will be set up for each sources of cost such as products, manufacturing workshops, manufacturing areas, orders, customers or departments within the company. 4.2.2.2. Cost estimation Pursuant to calculate the estimated cost of production is the production estimates of plastics companies. Production estimates are made based on information provided by the sales department, business department within the company 15 16 providing forecasting domestic and foreign markets, production figures of the previous periods, the product storage in this period and the expected consumption of products, thereby determining the number of products to be manufactured in the coming period. the supplementary component of salary of sales staff, the cost of electricity, water, stationery costs, depreciation of fixed assets is considered a fixed cost of sales department in the listed plastic companies. - Direct materials cost estimate: Used to determine the type of materials to purchase in the period to ensure the production plan of the company. Direct materials cost estimate is built on the following basis: Based on the number of products to be manufactured in the period, provided by the sales department base on information of plastic market and statistics on plastic products consumption in the previous periods, the consumption norms of raw materials for the production of each product provided by the technical department, the materials storage norm at the end of the period providing by the sales department and the price of each type of materials provided by the sales department. - Direct labor cost estimate: Constructed by the listed plastic companies base on the demands of prodution to ensure the stability of the company's manufacturing operation. Estimates of direct labor costs are established on the basis of: Norms of labor hours and unit price of each type of labor, supplied by the technical department. Administration cost estimate: is mainly fixed costs except for the customer relationship cost is based on the number of contracts, the cost of fuel for cars is determined according to the distance travel and telephone charges with source is the number of calls. 4.2.3. Determining the cost for charged objects 4.2.3.1. For the charged object is the product a) For the products that the plastic companies is considering to put into production and sales  Apply the method of determining costs following a target for the companies those are characterized as price accepted firm and in the research for new products.  Apply the method of determining costs following the life cycle of products for Nano Molecular plastic pipe of Tien Phong Plastic. - Overhead production cost estimate: As stated in the classification of costs section, overhead production costs in the company common stock plastic covers the cost of electricity, water used to operate the production lines of plastic will change according to the number of hours of operation of the machine, the cost of restarting production lines vary with the number of times the boot chain when changing the size / type of product produced. Other costs incurred for shared production (in may have the utility costs for lighting, fan, air conditioning or water) are considered fixed costs. Estimates of production costs generally are established for each type of product, every production workshops. Currently all companies determine charged object as manufactued product and calculate the cost of finished products. However, the calculation of products’ costs is inaccurate. Therefore, the company should consider to apply methods of determining operating costs (ABC) to calculate the exact cost of mold, cost of restart the line for the lines of product that actually incurred these costs. Specifically: Selling cost estimation of plastic companies often includes: per diem varies together with order quantity, cost of sample offered is based on execution time of samples, marketing costs is determined as per number of orders, shipping costs is calculated on distance transport, commission is calculated as percentage on sales consumption, telephone and internet cost is based on the number of orders, salaries for receiving orders staff and sales staff is calculated on sales, salaries of customer care staff is based on the number of followed contracts (variable component of salary). Other costs incurr in the sales department are basic component of salary, - After the costs of mold and the cost of restart production lines have been defined for each product type, accountant will calculate the cost for each type of manufactured product. b) For the product that the plastic companies have been producing and selling - The cost of mold, the cost of restart production lines are defined as operating at the level of product type, which is related to each line of product and regardless of the number of produced products. The source of this cost is the number of of manufactured product types. 17 18 4.2.3.2. For the charged object is each order, each customer, each functional departments in the plastic companies number of executed orders is determined base on sales of the orders. Transportation costs includes fuel cost and vehicle depreciation. Fuel costs is calculated on shipping distance of the orders. Depreciation transportation company currently calculated by straight line method at Rang Dong Plastic, and thus determined as an organization maintenance cost. Brokerage commissions is according to the sales of the orders. The cost of telephone and internet is calculated on the number of orders. In the opinion of the author, the listed plastic companies should recognize the charged object is not only the product / group of products but also any object that the companies would like to learn about its cost. On this basis, the authors propose applying the method of activities based on costing (ABC) to determine costs for each type of expense. Specifically:  Charged object is order The costs incurred in the manufacturing process of the order: are the costs comprise the cost of good sold determined directly for each order. These costs will be determined by the current calculation of the company. • (2) After-sales service: product warranty costs per sales orders. The remaining costs incurred in sales and administration is defined as organization maintenance cost.  Charged object is each customer The costs incurred outside of the manufacturing process to service the order: Currently, these costs in the plastic packaging company can be divided into two groups: sales expenses and administrative expenses. Therefore, it is necessary to identify each cost element incurred with an appropriate resources to determine cost for each order according to the ABC method. Specifically: - Plastic companies need to determine the cost of service for each customer to assess the economic effects that each client brings to the company, and from that make reasonable customer care policies. With the costs incurred in sales and administration, the plastic corporations should determine these costs at the level of customer, are made for each customer, specifically: - The costs in sales and administration cost are defined as operating at the level of product batch: to be done at each time an order is processed regardless of the order’s size. - Customer relationship cost accounts for a sizeable portion of the out-ofproduction cost in the listed plastic companies. Customer relationship cost should be calculated for each customer according to the number of executed contracts. Based on the order fulfillment process at Rang Dong Plastic, th out-of-production cost will be classified into activity group as (1) receiving orders, (2) order execution, (3) after-sales service. - Cost of customer care personnel: Includes fixed salaries and wages based on the number of responsible contracts. Fixed salary is accounted as organization maintenance cost. Receiving orders: staff costs is applicable for employees receiving the orders, and include fixed monthly salaries and wages paid according to the number of executed orders. Fixed salary is accounted as organization maintenance cost. Wages paid according to the number of executed orders is determined as a percentge on of sales of the orders. Per diem is calculated on the number of executed orders. Sample cost is the cost incurred when performing product test by sending it to customers. Because of the complexity of samples, this cost should be calculated according to the execution time of the samples. Marketing costs is according to the quantity of the orders.  • (1) Order execution: Staff cost, assigned for the transporters, includes fixed monthly salaries and wages paid according to the volume of work done. Fixed salary is accounted as organization maintenance cost. Wages paid according to the Charged object is functional department Currently, the plastic corporations determine the cost for the manufacturing workshops only and not for other departments. Thus, the sales and administration costs should be determined at level departments level, specified to each office. To determine the performance of each department, the company should (1) identify the direct costs incurred in the department, then (2) reporting the cost of departments. (1) Determine cost for each department: labour cost, depreciation and amortization in each department will be determined directly for each department; Depreciation and amortization share by departments (car) is determined for each department under the registered schedule to use the car / vehicle; The cost of tools 19 20 and supplies, internet, electricity and water for each department determined by the norms and expense budget set for each department. - Direct labor cost: causes of differences are analyzed according to two factors as fluctuations in labor rates and fluctuations in labor efficiency. Based on these reasons, the company will make the necessary adjustments. (2) After determining the cost, departments report its monthly cost statement. Thus, the application of ABC helps listed plastic companies determine the cost accurately for each charged subject in accordance with specific production and administration of each company. With regard to the organization of the accounting system, the author propose that the listed plastic companies in Vietnam should apply the method of determining costs follow operation in line with the accounting system of the company. To avoid disturbance to the formulation and publication of financial statements, the current accounting system should still be used in parallel with cost management accounting systems to provide information for managers. 4.2.3.3. Applying the method of estimating the equivalent output of which use the first in - first out to determine the value of work-in-progress Only with the first in - first out method, the company can identify the cost of each period to control costs. According to this method, the cost of direct materials / key raw materials are accounted 100% for the value of work-in-progress just as the current methods applied in plastic packaging companies, but this cost is split to cost incurred in prior period and cost incurred in this period, which will help companies clearly assess the control of direct raw materials cost in each period in the workshop manufaturing packing. For processing expenses, the company will rely on the technical and economic norms of the manufacturing process of plastic packaging with a two-stage of film grafting and forming bag, to estimate the degree of completion of work-in-progress . The processing costs is also splitted to parts that have arisen in the previous period and incurred during this period. From which, the companies producing plastic packaging can report production costs for packaging workshops to review the situation of production costs incurred in workshops in each month. 4.2.4. Cost variance analysis for costs control - Direct materials cost: causes of differences (fluctuating costs) are analyzed according to two factors as fluctuations in the price of raw materials and fluctuations in raw material consumption. After analyzing the exact causes, reasonable adjustment measures can be determined. - Overhead production costs: in order to serve the cost variance analysis to better control the cost of the listed plastic companies listed, the authors propose these companies consider a flexible estimate for production costs of the company. - Sales and administration cost: Similar to the overhead production costs, cost of sales and administration also need a flexible estimate to do the analysis, evaluation and cost control. 4. 2.5. Analyze cost information for business decisions In terms of theory, analysis of cost information is to serve the needs of decisionmaking in business as purchased or produced products, refuse or accept the order, remove a product or a business unit. Practices as describe and analyse in Section 3.2.5, Chapter 3, there are business units in companies operated inefficiently, but remained in in the companies’strucutre. Cost management accounting enables managers to make decisions in order to reorient the operating direction of these ineffective parts. As in Tien Phong Plastic, the mechanic-electric factory is operating with low efficiency, so the authors propose to restructure mechanicelectric factory in two directions: remove the mechanic-electric factory or convert to decentralize management of the mechanic-electric factory from cost center into profit center. 4.3. Conditions of solutions implementation 4.3.1. From the State and authorities The state should increase support companies in personnel training, research, development and implementation of management accounting systems. Besides, the government should encourage and create favorable conditions for companies with maximum autonomy in setting up a system of management accounting costs in accordance with the operational characteristics of the company, should not interfere too deep in the system by regulations, rigid policies. About the Vietnam Accounting Association and Vietnam Plastics Association, these two organizations present virtually no informational connection. Plastic Association open training courses specialized in the manufacture of plastics quite regular but no training in accounting, particularly in cost management accounting for plastic business. Therefore, the two organizations should be associated closely 21 22 to improve the cost management accounting for plastic enterprises, thereby helping these plastic corporation companies aware of the role and effects cost management accounting in corporate governance. • About accounting system, plastic companies need to study for an accounting model to be in accordance with the characteristics of its own business economically and efficiently, ensure to provide appropriate accounting data for the outside parties and providing accounting information for corporate governance needs in a timely manner. For accounting training institutions, these instituitions should update the knowledge of modern cost management accounting, improve educational programs in cost management accounting, promote the combination of theory teaching and practice, build virtual accounting department to familiarize students with the actual situation. Besides, short-term training courses in cost management accounting should also be organized for those who are working in accounting to participate and improve their knowledge in cost management accounting. 4.3.2. From the listed plastic joint stock companies • To build a management accounting system that is effective, consistent with the scale and type of production, the company needed to improve the process and quality management system, to establish the design orientation and cost management accounting model construction appropriate. To implement the solutions of cost management accounting, first the listed plastic company should decentralize its financial management explicitly, empower and delegate the cost control responsibility for managers of each department. The departments should form the cost center, and produce cost reports periodically. Management accounting system currently does not have a general legal regulations regarding the form and contents of the report. So companies need to research and develop a specific system of management accounting criteria to fit with corporate governance objectives. These criteria must ensure comparability between periods, which helps managers assess the accuracy of the actual operation situation of the company. During the integration process, enterprises can refer to the report model, the criteria system of companies, multinational corporations to study and apply for their particular company appropriately. • About information technology, investment in a suitable information technology system will be prequisite to implement an effective system of cost management accounting in the company. Currently many companies have yet to use an unified administration software system, and only apply a specialized software for accounting work. Therefore the data provided are usually only accounting data, there is no cross data from different departments of the companies. This leads to the data provided for managers are not accurate and timely. Therefore, companies need to research and invest in business management software, including integrated cost management accounting software to guarantee to provide appropriate accounting information to managers. • • With regard to the accountant staff, companies need to build a workforce not only professional but also have a solid understanding of the business activities of enterprises to be able to accurately analyse and assess the accounting information provided to managers, determine the exact cost of the charged object, using appropriate criteria for cost allocation, accurately calculate product cost to facilate the determination of selling price. In addition, the accountant should be able to use the tools of the modern cost management accounting to control the costs effective. CONCLUSION In recent years, the general context of global economy difficulties has significantly affected the manufacturing enterprises in Vietnam. For plastics, although identified as one of the strategic sectors by the government and has been approved the development plan until 2020 by the Ministry of Industry and Trade, the plastics companies, in particular is the listed corporations, face fierce competition from domestic and foreign companies in the industry, also to overcome the difficulties that all companies facing in the global crisis. More than ever, the development or strengthening the cost management accounting system is an urgent need for plastic companies, to help companies better control incurred costs and support the managers in making business decisions. Therefore, the thesis research and offer solutions to build a system of cost management accounting to match the characteristics of the operation of listed plastic companies. The thesis studies the basic theoretical framework of cost management accounting, thereby learn and evaluate methods of cost management accounting adopted by international companies, as a basis for research and offer solutions for the listed plastics companies. 23 By using the survey method, sending questionnaires and analyse the content of the interview at the listed plastics companies, the thesis is to assess the current status of cost management accounting in the plastics corporation listed on the Vietnam stock market, from which analyse the limitations in the current accounting system of the companies. On this basis, the thesis proposes solutions to help the listed plastic companies build a system of cost management accounting that are truly effective and consistent with the characteristics of the companies.
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