Organizing the cost management accounting information system in Garment Enterprises in Vietnam

Vietnam garment industry has many opportunities for development as well as faced many challenges in the process of international economic integration, especially ever since Vietnam joined the WTO (2007). Well controlled cost is a vital solution for Vietnam garment enterprises to survive and develop sustainably. The organization of cost management accounting information system is perceived as an essential tool to help managers at all levels in garment enterprises to control costs and make decisions. For the purpose of objectives set out, the thesis had executed the following contents: - Carried out the synchronous study on three important issues of cost management accounting information system and the thesis pointed out that there was an intimate relationship of cost control information between the past (executed costs), present (cost analysis) and future (cost estimates) information. Besides, the thesis also had studied the experience in organizing the cost management accounting information system in a number of foreign countries and drawn useful lessons for Vietnam enterprises. Thence, the thesis drew the necessary foundation for the organization of the cost management accounting information system in garment enterprises in Vietnam.

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ll-scale garment enterprises are accounting for less than 20% of garment enterprises in Vietnam and the cost management accounting information system is also very difficult to implement in small enterprises due to the demand of financial investment and human resources. Therefore, the scope of research is conducted in the large and medium size garment enterprises. 5. The contributions of the Thesis and recommendations for the further researches The thesis has made both theoretical and actual contribution. Theoretically, based on the theory of enterprise management information system, the thesis has studied synchronously three contents of cost control accounting information system which are cost estimating information system, executed cost information system and cost control information system in order to provide an intimate relationship of the past, present and future information in controlling costs. Thence, confirming the role of cost control accounting information system in making decision by managers to answer the question whether the relationship between the cost management accounting information system and the efficiency of the enterprise management exists or not? The research was carried out in Vietnamese garment enterprises but it was completely applied to other manufacturing industries as tobacco, cement, beer etc. Practically, the thesis pointed out a number of issues faced by Garment enterprises which was how to achieve the objectives of controlling cost, reducing product price and improving the competitive force during the integration. The thesis contributed to clarify the necessity that garment enterprise had to know how to calculate and classify business costs accurately and the cost information is required not only at the scope of entire enterprise but at each stage, department and individuals participating in the production process so that the costs could be controlled. The thesis pointed out that in order to well organize the cost control accounting information system; the solutions for enterprises should be uniform and consistent 4 throughout the solution for estimate information system to cost control information system and making business decisions. Then, the solutions for cost control accounting information system should be proposed specifically so that Garment enterprises could apply them into the practice of controlling costs. 6. The structure of thesis In addition to the foreword and conclusion, the Thesis is structured into four chapters: Chapter 1: An overview of the research situation and research methodology Chapter 2: Literature review on the cost management accounting information system in manufacturing enterprises Chapter 3: The reality of organizing the cost management accounting information system in Garment enterprises in Vietnam. Chapter 4: Solutions to organizing the cost management accounting information system in Garment enterprises in Vietnam. CHAPTER 1 AN OVERVIEW OF THE RESEARCH SITUATION AND RESEARCH METHODOLOGY 1.1. An overview of international researches The thesis presents the researches by different authors involved in organizing the cost control accounting information system. According to Laudon JP (2003), Accounting information system are defined as a whole consisting people, equipment (hardware), computer programs (software), stored data and methods of data organization, network connection and the process of setting up information on the human resource allocation and use, business situation to users. Chang (2001) confirmed that the accounting information system decided the efficiency of organizing the enterprise management, particularly in the global competitive environment. The research of "The role of accounting information in the decision-making processes in the dairy enterprises in Germany" by Eva, Heidhues & Chris Patel (2008) suggested that the development of the cost management theory with the support of information technology would be the best tool for the enterprise management. The research showed that enterprise managers needed to be convinced about the effect of cost accounting information 5 system in decision-making process. However, the research has not clarified the relationship between the demand of enterprise managers and cost management accounting information. This issue needs to be studied further because it is the basis for setting up the cost management accounting information system. The authors Barfield, Raiborn & Kinney (1998) in Cost Accounting document: Traditions and Innovations believed that the cost management accounting information system would be in favor of providing information for internal management. The function of cost accounting was to analyze the cost situation and profitability of projects, process or product in order to improve the business performance. Accordingly, cost management accounting information system includes two steps: Step 1: collecting information on costs through the classification based on the cost nature such as costs of raw materials and labor costs etc. Step 2: Trace costs back to their sources and reallocate costs into one or several objects such as activities, departments, customers or products. Through these two steps managers can be informed fully and grasp accurately the object of costs and know specifically what department and stage makes profit or loss. However, the research did not mention the aspect of organizing the cost management accounting information system, for example how to set up a database, what the methods of establishing information and the system of reports to provide the cost information are. The research by Monden, Y. and Hamada, K. (1991) in Japanese companies showed that cost management accounting was increasingly applied effectively and modernly. Many methods of cost management accounting were born in order to determine more accurately the cost for the charged objects, for example, the method of target cost, the method of continual improved cost which was applied effectively in Japanese companies. This research was suitable with the large sized manufacturing enterprises which had advance production process such as applying the ISO management standards. The application of modern cost management methods into Vietnamese enterprises is an issue requiring further researches in the context that Vietnamese enterprises are gradually being standardized and stepping in the stage of international integration. The cost management accounting information system is not only studied theoretically but also in some specific sectors such as construction, hotel, hospital and bank. Laudon, JP (2003) suggested that the design of cost management accounting information system depended on the specific characteristics of each business and individual requirements of each part in 6 the system. Omar AAJawabreh’s Research (2012), "The role of accounting information system in the process of planning, controlling and making decision in Jodhpur hotels" showed the relationship between accounting information system with the process of making decisions in the hotel management. The research had shown the difficulties of hotels in Jodhpur, India when applying the cost management accounting information system. The costs of the system operation was so high; the facilities for the system application had not been met such as computer software and especially, the managers had not really been convinced of cost management accounting methods. Thus, the management accounting in general and cost management accounting information system in particular is a very effective management tool and has been studied at different angles by several authors. Based on the researches in the world, the thesis inherited arguments about the nature of cost accounting, cost management accounting information system and its relationship with the structure of an organization, thence inherited and developed a cost management accounting information system in accordance with the specific conditions in Vietnam. To build up a cost management accounting information system which can be applied effectively into enterprises in specific fields, it is necessary to make further researches on the features of production organization of each unit, the demand for cost management accounting information in each specific field and the ability to apply the management accounting methods of enterprises. Thus, it is essential to study and build up a cost management accounting information system in Vietnamese garment enterprises. This is the space that the author finds in the researches on the cost management accounting information system in the world. 1.2. An overview of domestic researches Cost management accounting in general and cost management accounting information system in particular was only mentioned in researches in Vietnam since 1995. It could be said that the domestic researches from 1995 showed that the authors had studied the basic issues of cost accounting, cost management accounting and cost management accounting information system. Researches confirmed the importance of cost management accounting, cost management accounting and cost management accounting information system in the enterprises. The author Pham Van Duoc (1997) had shown the difference between Financial accounting and Management accounting, on that basis, offered solutions of building Management accounting contents such as cost 7 classification, estimates, building the CPV relationship, analysis of cost fluctuations and the direction of applying these contents in Vietnamese enterprises. The Author Pham Van Duoc, Huynh Loi (2009) in the research "Model and mechanism of operating the management accounting" contributed to clarify on the cognitive aspects of a transformation of the strong integration of Vietnam accounting sector with international accounting. The accounting system now no longer has only the department of financial accounting but also includes department of financial accounting and department of management accounting. Some problems of organizing the management accounting applications in enterprises had also been clarified in the researches. Dr. Ho Tien Dung (2009) in the research "Organizing the systems of enterprise management information" had focused on the method of organization, design and use of information system to achieve business objectives. The research results helped clarify the basis and methods for building information system in service of enterprise management. This is an important foundation for further researches on the separate aspects of information management system such as accounting information systems, production management information system, personnel management information system etc. In addition, there are many articles on the journals as " Cost management in accordance with profit objectives and the ability to apply in Vietnam" by Assoc.Prof.Dr Nguyen Ba Thanh and Dr. Nguyen Cong Phuong (2009); "Organization of accounting information system in the economic group" by Ninh Hoang Van (2010) proposed the solutions to applying and organizing the cost management accounting information system in Vietnamese enterprise today. In summary, through a review of researches related to accounting management and cost management accounting information system at home and abroad, the author recognized the importance and value of cost management accounting information system for Vietnamese enterprises in general and garment enterprises in particular. On the basis of these researches, the authors systematized the theory of cost management accounting information system and focused on studying the relationship between cost management accounting information system and the characteristics of production organization and specific cost norm in the garment industry. Since then, the thesis will propose solutions to the organization of cost management accounting information system in garment 8 enterprises in accordance with the following contents: Organizing cost estimating information system; organizing cost execution information system; organizing cost information control. These are the contents that previous researches have not mentioned. 1.3. The research methodology Stemming from the research objectives and research questions of the thesis, the author used qualitative methods including descriptive statistics, synthesis, comparison, investigation and survey etc in studying the theoretical and practical issues. 1.3.1. Methods of collecting information The methods of collecting information are in-depth interviews, phone calls, surveys in the enterprises. The author had conducted in-depth interviews with two enterprises, sent questionnaires to 50 companies, received about 40 valid responses. The survey questionnaire form was designed for two interviewed objectives. The form in Appendix 01B was for enterprise managers (members of the Director Board, Board of Management). Form in Appendix 01C for was objects such as chief accountants and cost accountants. 1.3.2. The methods of data synthesis and analysis The information obtained from direct observation, interviews and questionnaires would be encoded according to the content groups, factors affecting the organization of cost management accounting information system. Then, it would be analyzed and synthesized with results as in Appendix 01E. CONCLUSIONS OF CHAPTER 1 Cost management accounting in general and cost management accounting information system in particular is a very effective tool of controlling costs and has been studies by the domestic and foreign authors under many different angles. Through the research overview, the thesis inherited the theories of cost accounting, cost management accounting and cost management accounting information system. At the same time, the qualitative method used in the thesis was aimed at studying the garment enterprise managers’ demand for the cost management accounting information system, reality of cost management accounting information system organization in the garment enterprises from which the solutions to the cost management accounting information system organization in Vietnam garment enterprises were proposed. 9 CHAPTER 2 LITERATURE REVIEW ON ORGANIZING THE COST MANAGEMENT ACCOUNTING INFORMATION SYSTEM IN PRODUCTION ENTERPRISES 2.1. An overview of organizing the cost management accounting information system in production enterprises. 2.1.1. The concept of cost, cost management and organizing the cost management accounting information system in production enterprises. The concepts presented in this section are the basis for clear understanding and implementation of organizing the cost management accounting information system in enterprise throughout the next contents of the thesis. 2.1.1.1. Costs The thesis studied several concepts of cost in different range and from different angles. However, in despite of any concept, costs must have three compulsory characteristics: (1) cost is the waste of resources, (2) the waste of resources must be tied to the results of enterprise operation, and (3) the wasted resources must be evaluated. 2.1.1.2. Cost management. On the basis of concepts in the economic dictionaries or by the author Haberstock in "Cost Accounting 1", it can be defined: Cost management is to gather, calculate and control the cost incurred in the course of production and business in order to provide the necessary information for the enterprise management tasks. The cost managers do not simply recode the cost information but also play an important role in the development of management decisions in order to provide customers with the best products and services with the lowest cost. 2.1.1.3. Organizing the cost management accounting information system in enterprises Cost management accounting information system is a category in the accounting information system. With the analysis of cost accounting, accounting information system, the authors introduced the concept of cost management accounting information system as the collection of cost data and processing this data in an order so that the cost information could be provided in order to build cost plans, cost control, thereby evaluating the operation and management decisions. 10 Organizing cost management accounting information system is the process of arranging and distributing resources to collect and process the cost data in a certain sequence in order to provide information for the enterprise management requirements. 2.1.2. The role and factors affecting the organization of cost management accounting information system in enterprises 2.1.2.1. The role of the organization of cost management accounting information system in enterprises The cost management accounting information system creates a useful management channel for managers in the increasingly rapid changing business environment. It is an information system of material - responsibility relationship, a transparent information system on internal responsibility of enterprises in enterprise operation and management. 2.1.2.2. Factors affecting the organization of cost management accounting information system in enterprises The organization of the cost management accounting information system will not achieve the objectives and structural orientation of information if the designers do fully pay attention to the factors of essence which control the operation of the system. These are factors (1) Objectives and strategies of the enterprises and demand for cost management accounting information, (2) the characteristics of production organization, (3) the level of machinery and equipment and the qualification of accounting personnel. 2.1.2.3. The relationship between the enterprise departments in organizing the cost management accounting information system Organizing the cost management accounting information system costs cannot be separated from the database of enterprise activities such as strategy development, production, marketing, sales, human resource management etc. In order to obtain this database, it is necessary to determine the level of responsibility and the relationship between communication objects such as workshops, departments and accounting department. 2.2. The contents of organizing the cost management accounting information system. The thesis presents three contents of organizing the cost management accounting information system which are (1) Organizing cost estimating information system, (2) Organizing the executed cost information system, (3) Organizing the cost control and decision making information system. 2.2.1. Organizing cost estimating information system 2.2.1.1. The cost norm system 11  The method of establishing the cost norm The process of establishing the cost norm can apply one of two methods which are historical data analysis and task analysis. The method of historical data analysis The method of task analysis 2.2.1.2. The system of cost estimates  Methods for establishing the cost estimates Enterprises can use the method of experience statistics or method of ratio to establish the cost estimates. The method of experience statistics The method of ratio  Organize the database system for estimating costs  Organize the system of cost estimate reports 2.2.2. Organizing the executed cost information system Executed cost information (also known as past information) is the sources of cost information obtained from the economic events happening in the business and production activities of enterprises. To receive, process and reflect the executed information system, cost management accounting applies the accounting methods such as vouchers, account methods, synthesis and balance method through organizing the voucher systems, account system and the cost circulation according to the characteristics of the production organization of enterprises and executed cost report system. 2.2.2.1. Organize the cost accounting voucher system 2.2.2.2. Organize the production cost information system The producing enterprises often require information about the production costs in two types: Job Costing information system and Process Costing information system.  Job costing information system  Process costing information system 2.2.2.3. Determine costs for charged objects according to the traditional methods  The method of actual costs  The method of actual costs combines the estimated costs: In order to apply this method, enterprises need to develop general cost estimates for each 12 department, unit (workshops, manufacturing department) and estimate the total criteria allocated to that department from the beginning of the year. In the end of fiscal year, after gathering the general actual production costs, process the difference.  The method of cost norm executes the evaluation of product price based on the cost norms for three items of costs as designed. 2.2.2.4. Organize to determine the costs for charged objects according to the modern cost management model  The method of determining the costs according to the activities  The method of target costs according to the product life cycle 2.2.2.5. Organizing the executed cost report system Providing information on executed costs to the department managers and senior executives is kinds of cost reports.  For order-based cost management system by orders, the report of executed costs is the Order-based cost notes.  For the process-based cost management, the report of executed costs is Workshop production report.  The report synthesizes sale costs, management costs according to factors and behaviors of costs as the basis for the analysis of consumption cost structure and evaluates costs by each factor and its effects on the business results.  To provide the detailed information of revenue, costs of each department, each activities of enterprise, accountants establish the Department Report. 2.2.3. Organizing the cost control information system and analyze costs for making decision 2.2.3.1. Organizing the cost control information system  Organize the database system  The method system for cost analysis  The method of differential cost analysis  The method of cost control through the cost management centers. 2.2.3.2. Organize the cost analysis for making short-term decisions  Organize the database system  The method system for cost analysis for making short-term decisions  The method of analyzing Cost - Output - Profit 13  The suitable method of information analysis.  Organize the system of cost report for making short-term business decisions To serve the purposes of the internal use of managers in the CVP analysis, enterprises prepare the Business result report based on the behavior of costs. This report must show the three main criteria which are Revenue, Profit on variable costs and Net profit. To analyze suitable information, enterprises must identify correctly and fully the satisfactory information and establish the Table of suitable information analysis for comparative alternatives. 2.2.4. Organizing the cost management accounting apparatus 2.2.4.1. The apparatus and methods of cost accounting management The combined model: This type of model combines the cost management accounting system with accounting system by each components of accounting: production cost accounting and pricing, sales accounting etc. Separate model: is the model of separate cost management accounting system with the financial accounting system in the Accounting department. Mixed model: this model combines two above models in which the organization of price cost management accounting department is separate and other contents follows the combined model. According to the author, the mixed model is flexible and able to provide information but requires a great investment for the organization and operation of apparatus and accounting work implementation. 2.2.4.2. Organize facilities to perform the cost management works 2.2.5. The characteristics of organizing the cost management accounting information system in garment enterprises 2.2.5.1. The characteristics of cost management in garment enterprises 2.2.5.2. The characteristics of contents of cost management accounting information system in garment enterprises. - First, identify and classify costs in the garment enterprises at the request of management accounting. - Second, organize the cost estimating information system. - Third, organize the provision of executed cost information - Fourth, organize the cost control. 14 2.2.6. Experiences in organizing the cost management accounting information system in a number of foreign countries and lessons for Vietnam enterprises 2.2.6.1. In the U.S. 2.2.6.2. In Germany 2.2.6.2. In China 2.2.6.4. Lessons for Vietnamese enterprises - With economic conditions and the level of Vietnam enterprises today, we will conduct the organization of Management accounting information system on the basis of flexible application of traditional management accounting theories which suit with the business characteristics of each company. Besides, gradually receive the modern tools of cost management costs from countries with developed management accounting and apply into Vietnam. - In large enterprises with high competitiveness, the demand for Cost management accounting is clearer. Therefore, organizing the Cost management accounting information system in the large scaled enterprises will be more feasible than in small businesses. - To determine the responsibility of departments in implementing and controlling the costs, it is required that the Cost management accounting information system must be organized according to the responsible centre. The responsible centers should be consistent with the organizational structure of enterprises so that the center managers are capable of planning, adjusting and testing production and business costs arising in the course of organizing the activities within the scope of center. CONCLUSIONS OF CHAPTER 2 In this chapter, the author analyzed the main contents of the cost management accounting information system including: business and production cost estimating information system, the executed cost information system and cost control information system. On that basis, the thesis confirmed the existence of the relationship between the cost management accounting information system and the efficiency of enterprise management. Chapter 2 had studied the factors affecting the cost management accounting information system and proved that the enterprise’s objectives and strategy and the enterprise manager’s demand for the cost management accounting information are the most important factors in establishing the cost 15 management accounting information system in enterprises. Besides, the author argued that the organization of the cost management accounting information system depended on practical conditions as well as the organizational characteristics and production activities of each enterprise in order to promote best the role of a cost management accounting information system. At the same time, in chapter 2, the author also carried out the study on the experiences in organizing the cost management accounting information system in some foreign countries such as United State, Germany and China from which to draw lessons for Vietnamese enterprises now. CHAPTER 3 THE REAL STATUS OF ORGANIZING THE COST MANAGEMENT ACCOUNTING INFORMATION SYSTEM IN GARMENT ENTERPRISES IN VIETNAM NOW 3.1. The basic characteristics of Vietnam garment industry 3.1.1. The formation history and development trend of the Vietnam Garment industry Figure 3.1: The value chain of garment products Vietnam garment enterprises currently is standing in the third stage of the value chain and only sell products for about 25% of the price to the consumer. This is also the stage with the lowest profit rate only accounting for 5-10% but also having the most advantages of Vietnam garment enterprises because of the cheap and abundant source of worker. This position is very important but also easy to be replaced by other manufacturers if the product quality is not good or the price is higher than other manufacturers. 3.1.2. The features of production organization and management organization in garment enterprises. 3.1.2.1. The features of production organization - The CMT outwork: is a form of sub-contracts that the garment enterprises are provided the whole form the design to materials and only execute production; (1) Product design (2) Auxiliary industry (3) Production (outwork) (4) Commercialize 16 - The OEM / FOB mode: is the form concentrating in the production process. However, Vietnam garment enterprises still mainly produce according to specifications and designs provided by customers and in many cases use materials as specified by purchasers. - The mode of production according to the whole OMD original package has been implemented and succeeded in steps in the large garment enterprises such Garment 10, Viettien Garment, Nha Be Garment. 3.1.2.2. The features of management apparatus 3.1.3. The features of accounting apparatus In the garment enterprises, the accounting apparatus is usually held in the centralized manner. The organization of accounting apparatus at units is executed according to the mode of online functions. 3.2. The reality of organizing the cost management accounting system in Vietnam Garment Enterprises 3.2.1. The generality of demand for cost management accounting information from the managers of garment enterprises over periods. 3.2.2. The features of organizing the production cost accounting The survey results in the garment enterprises showed that the garment enterprises organized the production cost accounting in two main forms which are job cost accounting and process cost accounting and no enterprise applied the method of activity cost accounting. 3.2.3. Classification of costs in the garment enterprises. 100% of surveyed enterprises classified costs by the economic contents of costs; classified by production costs and external costs and classified by the cost components in the price. Only 3 of 22 enterprises (large scale enterprises) classified by the fixed and variable costs (accounting for 13%). No enterprises classified by controllable and uncontrollable costs. 3.2.4. Organizing the system of cost estimate information The characteristics of garment industry are that products must comply with the norms of materials and techniques in a coherent way. According to the survey results, 100% of garment enterprises established the standard norms of waste materials and technique in which there were also the norms of main material and accessory consumption and the norm of labor waste. The system of waste norms is primarily used by enterprises for the purpose of calculating the product price. However, the use of waste norms aimed at establishing the estimates is very little in enterprises. The reason is that enterprises cannot build a system of business and production cost estimates. 17 3.2.5. Organizing the executed cost information system 3.2.5.1. Organize to gather the initial information The initial information on the executed costs incurred in garment enterprises through vouchers reflects the waste generated in enterprises. These vouchers must comply with the accounting regulations promulgated under the decision No.15/2006/Qð-BTC 3.2.5.2. Organize the real production cost accounting The collection of actual costs in garment enterprises is implemented quite clearly according to items. The objects to be collected the production costs are the purchase orders or production workshops (for example, garment workshop 1, garment workshop 2 etc.). This is also suitable with two popular modes of production organization in garment enterprises which are purchase order-based production or self-production and self-consumption. No enterprise collected costs according to the product activities. 3.2.5.3. Organizing the sales cost accounting and management cost accounting The sales cost and management cost are now tracked in details on the Detailed Cost Book on the whole enterprise. 3.2.6. Organization information systems cost control and decision-making 3.2.6.1. The cost control information system The cost information fully met the requirements of preparing the financial statements. The production cost reports in garment enterprises provided the cost information according to each product and workshop. The report of external costs provided the cost information according to the elements on the enterprise scope. The current production is controlled by enterprise through the real price criteria of a finished product in comparison with the price norm of that product. Currently, the comparison stops at the level of disparity calculation but no enterprise specifies the affecting factors and level of influence of these factors on the cost disparity. 3.2.6.2. Organizing the information system for making business decisions Currently, in Vietnamese garment enterprises; the implementation of cost management accounting information system does not meet the requirements of economic analysis. Because of not preparing the Department Report, no enterprise evaluates the performance of the department and industry. The consideration of business outcomes only stops at the summary of revenue of each product or each purchase order. Therefore, up to 10/20 18 (50%) of asked managers believed that the cost accounting information was not supplied timely, 11/20 (50%) of managers evaluated that Cost management accounting information system had not completely met the demand for the information for enterprise management. 3.3. Evaluating the organization of the cost management accounting information system in garment enterprises today 3.3.1. Achievements 3.3.2. Shortcomings and causes 3.3.2.1. The manager’s demand for cost information Although the garment enterprise managers have made changes in awareness of cost management accounting information demand for making decision considerably, in the real business environment, the performance of enterprises still depends largely on the State decisions and macro policies and depends less on the management qualification of each enterprise. That spending a large amount to invest in the organization of cost management accounting information system while the competitive environment is not really healthy so that garment enterprises can confidently make business decisions based on their own resources with the support of the cost management accounting information system is really a major obstacle in the garment enterprises. 3.3.2.2. Organize the cost estimating information system In the process of building the system of cost norms, some common problems are found in the enterprise: - Enterprises are not fully aware of the norm task and often overlook the establishment of waste norms for activities outside production. - The capacity of building norms is limited and the close coordination among the functional units in the process of building norms is lacked. As a result, enterprises often stop at building the norms of materials and technique not the system of cost norms (i.e not built the price norm). - Limited financial resources, especially in small and medium enterprises. - The estimation is not considered important in the cost control in garment enterprises; currently, only few garment enterprises carry out the business and production cost estimation and convert the norms of materials and techniques tightly in the unit into cost estimates. 3.3.2.3. Organizing the executed cost information system 19 - All surveyed garment enterprises identified the product price according to the method of determining the real costs. No enterprise used the estimation method or norm method to collect the production cost and calculate the price. Thus, the advantages of the method of cost estimation and cost norms in providing the information to the cost management have not caught the attention from enterprises. - Not separating the general production cost into fixed costs and variable costs causes no enterprises to calculate the product price by the method of direct costs. - No garment enterprise applied the method of operation costs or target costs to determine the costs according to the modern cost management model. - The garment enterprises do not monitor the separation sales costs from the management costs by fixed costs and variable costs which cause a lot of difficulties in the preparation of Department Report, CPV analysis and breakeven point analysis. 3.3.2.4. Organizing the system of cost control information and making decision.. The research results showed that this was the weakest part in the organization of the cost management accounting information system in the Vietnamese garment enterprises. Very few enterprises organized the analysis of cost information serving the enterprise management tasks. The cost analysis in the garment business is only formalistic if any. This is due to the current way of information organization unsatisfying the requirements of cost analysis. Because of not classifying costs according to the relationship with operation, not establishing the business cost estimation, not applying the methods of calculating the reasonable product prices, the obtained cost information has no value in making business decisions. 3.3.2.5. The facilities and accounting apparatus  Facilities  Accounting apparatus CONCLUSIONS OF CHAPTER 3 Chapter 3 studied and accessed the reality of organizing the Cost management accounting information system in garment enterprises in Vietnam. Currently, the Cost management accounting information system in May now only meets the requirements of financial accounting and virtually has no role in providing information to managers for making business decision in the competitive market. Besides, some of the basic elements for 20 the organization of the Cost management accounting information system such as facility investment, accounting staff capacity improvement have not paid sound attention. CHAPTER 4 SOLUTIONS TO IMPROVING THE ORGANIZATION OF COST MANAGEMENT ACCOUNTING INFORMATION SYSTEM IN GARMENT ENTERPRISES IN VIETNAM 4.1. The necessity of organizing the Cost management accounting information system in garment enterprises in Vietnam. 4.2. Requirements of organizing the Cost management accounting information system in garment enterprises in Vietnam. 4.3. Recommendations and solutions to organizing Cost management accounting information system in garment enterprises in Vietnam. 4.3.1. Identify the costs serving the requirement of enterprise management. To provide the management information, the best ways of identifying costs is to classify costs according to the level of operation. The cost report based on the operation level is aimed at providing information on the feature of cost fluctuations during the period. In this way, managers will see what would happen, the costs increase or decrease or do not change and if they change, how much they changes when making business plans at the different level of operation. For costs incurred in the garment enterprises, the thesis proposed a way of indentifying costs which is considered suitable with price cost accounting serving the enterprise management in the current condition. (Table 4.1) 4.3.2. The solution to organizing the cost estimating information system The garment enterprises should establish the cost estimating information system from database source organization to the coordination between the departments during the process of building information.  Solution 1: Develop a system of exact cost norms for the enterprise's products. Step 1: Build the waste norms of materials and technique for the direct cost factors (Appendix 14, 15) For the production costs, the garment products are characterized by consisting of many constituents, so in order to build the waste norms of materials and techniques, enterprise should build each stage of production (cutting, sewing, finishing and packaging) 21 Step 2: Build the standards of the price norm for incurred costs factors. Thus, it requires the coordination between departments: business department, engineering department, HR department and Supplies department etc.  Solution 2: Garment enterprises should establish the cost estimating system to serve the cost management. . In the context that garment enterprises are reducing the order of CMT / FOB outwork and increasing the volume of products self-produced and self- consumed in the ODM manufacturing mode, the issue of selecting different output is found in the production process. To meet that requirement, Garment enterprises should establish a flexible estimation. The flexible estimation helps managers compare the actual costs - estimates at various levels of operation. Thereby, it can choose the level of production in accordance with the enterprise's resources. (For example, the analysis in Table 4.1, 4.3 & 4.4)  Solution 3: Building an information relationship in setting up the information of norms and estimation. In this information network, the estimation department is the center to receive, process and communicate. All information related to the the norms of material consumption, the implementation of material and labor norms, the plan of resource reserve are collected this center and will be processed and transferred to those in need. Information provided by the estimation department are the basis for analyzing the cost fluctuation and give out the consultancy for managers at all level in making business decisions.  Solution 4: Apply the targeted cost management methods for garment products The process of implementing the targeted cost management in the garment enterprises Step 1: Identify the targeted costs according to each department of production Step 2: Execute the identified cost targets Step 3: Evaluate the results of cost execution 4.3.3. The solutions to organizing the executed cost information system  Solution 1: It is necessary to use some kinds of vouchers facilitating the provision of cost management information according to the established norms  Solution 2: Building the cost account system convenient for the cost information collection and processing costs according to the cost behaviors in the management works. 22 4.3.4. Solutions to Organizing the cost control information system and making decisions  Solution 1: Set up the Report on analyzing the difference between estimated costs and real costs  Solution 2: Evaluate the profitability of each product / order - For the ODM production organization, it is necessary to set up the information of profitability assessment for each product. - For the CMT / FOB production organization, it is necessary to set up information of profitability assessment for each purchase order 4.3.5. Perfecting the Cost management accounting apparatus 4.4. Conditions for the solution execution 4.4.1. On the side of the State 4.4.2. On the side of Garment enterprises CONCLUSIONS OF CHAPTER 4 Based on the realities in Chapter 3, the authors evaluated on two aspects: the obtained results and the shortcomings and analyzed and drew causes of these shortcomings. On this basis, the authors showed orientation outlooks on organizing the cost management accounting information system in garment enterprises and proposed a number of solutions to well-organized cost management accounting information system including: - Solutions to the organization of cost estimating information system - Solutions to the organization of executed cost information system - Solutions to the organization of cost control information system and decision-making. In this chapter, the author also made recommendations to the State and enterprises to ensure that enterprises would perform the solutions above. 23 CONCLUSIONS Vietnam garment industry has many opportunities for development as well as faced many challenges in the process of international economic integration, especially ever since Vietnam joined the WTO (2007). Well controlled cost is a vital solution for Vietnam garment enterprises to survive and develop sustainably. The organization of cost management accounting information system is perceived as an essential tool to help managers at all levels in garment enterprises to control costs and make decisions. For the purpose of objectives set out, the thesis had executed the following contents: - Carried out the synchronous study on three important issues of cost management accounting information system and the thesis pointed out that there was an intimate relationship of cost control information between the past (executed costs), present (cost analysis) and future (cost estimates) information. Besides, the thesis also had studied the experience in organizing the cost management accounting information system in a number of foreign countries and drawn useful lessons for Vietnam enterprises. Thence, the thesis drew the necessary foundation for the organization of the cost management accounting information system in garment enterprises in Vietnam. - Based on the theory of Enterprise management information system, the thesis focused on clarifying the role of the cost management accounting information system for the enterprise management in order to achieve the objectives of cost control, production cost reduction and competitiveness enhancement during the international integration period. The thesis confirmed the relationship between the cost management accounting information system and the efficiency of the enterprise management. The cost management accounting information system created a useful management channel for managers in changing business environment and a transparent system of internal responsibility in the enterprise operation and management. - By the qualitative research methodology through in-depth interviews and survey questionnaires, the thesis conducted the study in Vietnam garment enterprises to analyze and assess the reality of the organization of the cost management accounting information system in the garment enterprises today, especially in which there was the garment manager’s demand for the cost management accounting information system that was a condition for the successful application of research results. 24 - Proposing the construction of the cost management accounting information system model in Vietnam garment enterprises with three contents: Organizing the cost estimating information systems; Organizing the executed cost information system; Organizing the cost control and business decision-making. Simultaneously, thesis also stated the conditions on the side of the State and garment enterprises to ensure that the cost management accounting information system business to ensure that the system of management accounting information would be organized and operated effectively. - An overview of researches at home and abroad related to the thesis such as cost accounting, cost accounting management, accounting information system, cost management accounting information system is the basis for the inheritance and development of researches on the organization of the cost management accounting information system in garment enterprises in Vietnam. - The deep study of factors affecting the cost management accounting information system proved that the objectives and strategy of enterprises and the demand for cost management accounting information on the side of enterprise managers was the most important factor in establishing the cost management accounting information system in enterprises. The author hopes that this this can make its contribution to the organization of the cost management accounting information system in garment enterprises in Vietnam. The thesis’s direction of development: Based on the cost control through the cost management accounting information system, it is necessary to expand this research toward the direction of building the system of assessment criteria for the responsibility of each individual, department related to the kinds of costs in garment enterprises with the use of the quantitative research methodology to measure and assess responsibility. Thence, proposing the solutions associating the responsibility and benefits of each individual and department of enterprises.

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