(Tiểu luận) topic business report in pug milk company h

Businessesneed not only strength and endurance, but also flexibility andsensitivity to find development directions when the economy returnsto "new normal".DEVELOPMENT STRATEGIES IN THE T

FOREIGN TRADE UNIVERSITY

HO CHI MINH CITY CAMPUS

…… ***……

REPORT

Class: Managerial Accounting

TOPIC: Business Report in PUG Milk Company

Group: PUG ( PLUS ULTRA GOAT )

Class: CA-B Course: K60

Lecture: Le Bach Tuan

Ho Chi Minh City, 16 May 2022 th

MEMBERS OF PUG GROUP

1 Huynh Ngoc Kim Cuc - 2142219003

2 Le Phan Thao Vy - 2142219039

3 Le Tang Khanh Loan - 2142219097

4 Le Thi Khanh Nguyen - 2142219098

5 Trinh Quy - 2142219025

6 Doan Truong Thanh Binh – 2142219084

INTRODUCTION ABOUT PUG MILK COMPANY 5

VISION 6

MISSION 6

BUSINESS PHILOSOPHY 6

QUALITY POLICY 6

THE COMPANY DEVELOPMENT HISTORY 6

COST CONCEPTS 8

SYSTEMS DESIGN: JOB – ORDER COSTING 11

SYSTEMS DESIGN: PROCESS COSTING 14

COST-VOLUME PROFIT ANALYSIS 14

THE DEVELOPMENT IN THE FUTURE 17

INTRODUCTION ABOUT PUG MILK COMPANY

PUG milk company is a startup founded in early 2019 with six founder:

QUALITY POLICY

Always satisfy and be responsible for consumers’ needs by assuringquality, food safety with competitive price, respecting the businessethics and complying with laws

THE COMPANY DEVELOPMENT HISTORY

It was not long before the PUG company was established when thepandemic broke out, and it became a very volatile period for thecompany

COVID-19 is a harsh test for business and economy which compelscompany to adapt and change to not only survive but also recover andgrow stronger as soon as the pandemic is under control.

PUG milk company with goals: stabilize production and prevent thedisease are implemented

At the initial stage of the pandemic in Vietnam, PUG milk companyhad to find ways to reduce inventory to optimize cash flow But at thetime when the disease intensified, disrupting the supply chain andcausing input materials to be in short supply, PUG adjusted itsstrategy to increase inventories to promptly supply productionactivities Because if keeping inventory at a normal level, it will notmeet the plan implementation of the next quarter

In addition, PUG has taken advantage of its nationwide productionand distribution system to stabilize production even when somelocalities had to implement social distancing measures

One of the most profound and obvious impacts of COVID-19 isforcing businesses to move “from offline to online” PUG’s factoriesand farms all apply automation and 4.0 technology, ensuringsystematic and remote management PUG's supply chain operatesentirely on the information technology system, connecting from theinput - the purchase of raw materials - to the final output - the product

to the consumer

The company also equips technologies, tools and software to supportcommunication and remote work including e-Office, online browsersystem, solutions to help employees access company data from homeand digital signatures to ensure smooth operation in the company andwith partners even during the "work-from-home" time

People - the decisive factor Confronting COVID-19, human issueshave become more important than ever The critical issue at this time

is to ensure the health and safety of employees to maintain stablebusiness and production amid the pandemic

From the beginning of 2020, PUG has established a professionalsupport committee for COVID-19 prevention and control,disseminating information and guiding employees to comply with thepreventive measures while being online 24/7 to support problemsrelated to the disease The company also provides employees withpreventive tools and nutritional products.

In addition, PUG also makes employees feel secure to work with fullsalary and welfare payment policy; enhancing support for employees

at “three on-site” units; and proactively supporting employees intesting and vaccination Even when the pandemic is under control, themarket picture will never return to the way it was before Businessesneed not only strength and endurance, but also flexibility andsensitivity to find development directions when the economy returns

to "new normal"

DEVELOPMENT STRATEGIES IN THE TIME COVID 19

Based on the knowledge gained during our studies, we have providedaccurate data as well as the income statement during this pandemicthat we had to follow in order to come up with suitable value for ouractivities business

For example : Factory Workers, Engineers, Quality Control,

Machine Operators, Painters, Raw Materials Delivery People

Indirect Labor:

Indirect labor is labor that is not directly related to theproduction of a product

Example : Accountants, Salespeople, Maintenance Personnel,

Administrative, Assistants, Marketing Executives, Janitors

Manufacturing Overhead Cost:

Is the sum of all the indirect costs which are incurred whilemanufacturing a product

Example : electricity or gas used in a factory, other utilities (such

as water and trash service), unforeseen repairs or maintenance,rent and property taxes, equipment depreciation…

Nonmanufacturing Cost:

Are expenditures not associated with product costs

Include selling, general and administrative costs, as well asfinancing costs

Support critical parts of a business, such as its sales andmarketing activities, and so should not be considereddiscretionary cost

Selling Cost and Administrative Cost:

- Selling Cost: Costs necessary to secure the order and deliver the product Example: Distribution costs such as logistics, shipping and insurance costs ; Marketing costs

such as advertising, website maintenance and spending onsocial media ; Selling costs such as wages, commissionsand out-of-pocket expenses

- Administrative Cost: All executive, organizational and

clerical costs Example: Rent, Utilities, Insurance,Executives wages and benefits,

Prime Cost and Conversion Cost:

EX: Direct labor and related benefits and payroll taxes

Variable Cost and Fixed Cost

Chapter 7 - dssad

Managerial Accounting 89% (28)

117

Variable Cost:

Change when activity changes

Example : raw materials, piece-rate labor, production

supplies, commissions, delivery costs, packaging supplies,and credit card fees

Fixed Cost:

remain unchanged when activity changes

insurance, and loan repayments

Direct Cost and Indirect Cost:

Direct Cost:

Is a cost that can be easily and conveniently traced to aspecified cost object

Example: direct labor, direct materials, commissions, piece

rate wages, and manufacturing supplies

Indirect Cost:

Is a cost that cannot be easily and conveniently traced to aspecified cost object

Example: production supervisor salaries, quality control

costs, insurance, and depreciation

The strategy's overview was about the PUG Milk Company'sintention to sell milk in 2021, which would be the most difficultmoment because of the pandemic Covid-19 Normally, a milk boxcosts $2.50, but in 2021, we offered milk boxes for just $2 becausethe facility had reached its manufacturing capacity During theepidemic, some materials were the most difficult to come by As aresult, we have a discussion with the firm that provides us with theneeded substance in the milk to cope with the lower money forcreating and selling milk However, our business partners rejected ouroffer since the pandemic's materials were restricted, and they couldn'taccept it

The tables have been updated for the year 2021 and the period

covid-19 The date may be appropriate for the circumstance based on thestatistics

SYSTEMS DESIGN: JOB – ORDER COSTING

Process costing is used in companies that produce many units of a

single product for long periods Examples include producing paper at

Weyerhaeuser, refining aluminum ingots at Reynolds Aluminum,mixing and bottling beverages at Coca- Cola, and making wieners atOscar Mayer These are all homogeneous products that flow throughthe pro- duction process on a continuous basis.

Process costing systems accumulate costs in a particular operation ordepartment for an entire period (month, quarter, year) and then dividethis total cost by the number of units produced during the period Thebasic formula for process costing is: Unit product cost = Totalmanufacturing cost : Total units produced

Job-order costing is used in situations where many different products

are produced each period For example, a Levi Strauss clothingfactory would typically make many different types of jeans for bothmen and women during a month A particular order might consist of1,000 stonewashed men’s blue denim jeans, style number A312 Thisorder of 1,000 jeans is called a job In a job-order costing system,costs are traced and allocated to jobs and then the costs of the job aredivided by the number of units in the job to arrive at an average costper unit

A bill of materials is a document that lists the type and quantity of

each type of direct material needed to com- plate a unit of product

The materials requisition form is a document that specifies the type

and quantity of materials to be drawn from the storeroom andidentifies the job that will be charged for the cost of the materials Theform is used to control the flow of materials into production and alsofor making entries in the accounting records

Direct labor cost is handled similarly to direct materials cost Direct

labor consists of labor charges that are easily traced to a particularjob Labor charges that cannot be easily traced directly to any job aretreated as part of manufacturing overhead Workers use time tickets torecord the time they spend on each job and task A com- plated timeticket is an hour-by-hour summary of the employee’s activitiesthroughout the day

Manufacturing overhead is commonly applied to products using a

predetermined overhead rate The predetermined overhead rate iscomputed by dividing the total estimated manufacturing overheadcost for the period by the estimated total amount of the allocation base

as follows:

Predetermined overhead rate= Estimated total manufacturingoverhead cost: Estimated total amount of the allocation base

The predetermined overhead rate is then used to apply overhead

cost to jobs throughout the period The process of assigning overheadcost to jobs is called overhead application The formula fordetermining the amount of overhead cost to apply to a particular jobis:

Overhead applied to = Predetermined : Amount of the allocation aparticular job overhead rate base incurred by the job

The PUG company has estimated that 4000 direct labor-hours would

be required to support the production planned for the year and that thetotal manufacturing overhead costs would be $40,000 at that level ofactivity Consequently, its predetermined over- head rate for the yearwould be per $10 direct labor-hour, as shown below:

Predetermined overhead rate = Estimated total manufacturingoverhead cost: Estimated total amount of the allocation base

= $40,000 : 40,000 direct labor-hours = $10 per direct labor-hourOverhead applied to = Predetermined * Actual direct labor-hours

= $10 per DLH * 3,300DLHs

= $33,000 of overhead applied

Because overhead is important for businesses for a number of reasonsincluding budgeting and how much to charge their customers in order

to realize a profit So when actual direct labor-hour just 3,300 hoursless than 4,000 hours prediction It means the PUG company canreduce the expenses for producing each bottle of milk During Covid

19, COGS increased significantly ( will explain detail in chapter 4)which means the PUG company decreased profit (the cost of goodsmanufactured, other expenses rose dramatically)

SYSTEMS DESIGN: PROCESS COSTING

The data about equivalent units of production

COST-VOLUME PROFIT ANALYSIS

What is Cost-Volume-Profit (CVP) Analysis?

The CVP analysis is used to ensure information for planning anddecision-making such as: choosing problems during theplanning of products for sale, expanding or narrowing theproduction line, and exploitation of production capacities duringthe expansion or recession economy of the country So thatmanagerial accountants to make plans for the future, they shouldtake information about:

1 Selling prices

2 Sales volume

3 Unit variable costs

4 Total fixed costs

5 Mix of products sold

Methods of Cost-Volume-Profit Analysis

In the CVP analysis, there are two basic approaches used: Graphicapproach and Algebraic approach

a Graphic approach:

This strategy is highly effective because it exposes thecost-volume-profit relationship in a broader context ofbusiness activity (manufacturing and service) In thissituation, it gives managers a wider view while planningand making future decisions The graphical techniqueincludes three steps: the profit area, the loss zone, and theequilibrium zone Managerial accountants should planproduction quantity, sales price, target profit, and riskthreshold based on three categories

b Algebraic approach

This method incorporates marginal contribution, incomestatement, and the estimation of several cost-volume-profitelements, such as unit selling price, variable costs for unit, fixedcosts of sales, target profit, marginal contribution for unit, andetc

Contribution margin = Sales – Variable expense

Unit CM = Selling price per unit - Variable expenses per unitProfit = Contribution margin – Fixed expense

Profit = (P x Q - V x Q) - Fixed expenses

Profit = (P - V) x Q - Fixed expenses

Profit = Unit CM x Q - Fixed expenses

Profit = CM ratio x Sales - Fixed expenses

CM ratio =Contribution margin / Sale

Unit sales to attain the target profit = (Target profit + Fixedexpenses) / Unit CM

Dollar sales to attain the target profit = (Target profit + Fixedexpenses ) / CM ratio

Unit sales to break even = Fixed Expense / Unit CM

Dollar sales to break even = Fixed Expense / CM ratio

Business Plan and Application of Managerial Accounting

To sum up, a target income of $225000 is desired The calculations

on the included calculation document show that to attain the targetincome the bottles of milk needed will be 602000 The Break-Evenpoint should be $81600, covering 10200 bottles of milk at $8 each,the Contribution Margin will be 4.5 showing that the sales cover theexpenses which can be seen as a good opportunity for the companybecause the return is good

THE DEVELOPMENT IN THE FUTURE

PUG MILK TOGETHER SUSTAINABLE

CHALLENGE OF THE NEW AGE

Social development brings many benefits to the community, but italso brings many challenges The whole world is facing many seriousproblems such as food safety and hygiene, environmental pollution,new diseases, depletion of resources as well as global warming Webelieve, to limit and solve the above problems, it is necessary to haveclose cooperation and support of all people and businesses Eachindividual, each organization is a part of society The development ofeach individual, each business is also the development of society, andvice versa, the rise of society will also have positive effects on eachmember in it We need to raise awareness about sustainabledevelopment and act responsibly towards the community and society.

It is necessary and useful work not only for ourselves but also forpresent society and future generations

Quality human resources are the foundation for sustainabledevelopment Therefore, PUG milk always focuses on quality andtransparency in recruitment The evaluation of candidates is fair,accurate and appropriate based on diverse, effective and qualityrecruitment sources and is regularly updated to suit the development

of the human market and job requirements and needs of theCompany

PUG MILK DEVELOPMENT AND SOCIAL RESPONSIBILITIES

PUG milk has made impressive progress in recent years, becomingone of the largest enterprises in Vietnam and is trying to conquer theinternational market with the goal of becoming one of the 50 largestdairy enterprises Global And obviously, the company's development

is always proportional to its influence on society, especially inVietnam Deeply aware of its influence on society as well as thechallenges facing society as a whole, PUG milk determines thebusiness principle is to harmoniously combine business goals withsocial responsibility, towards sustainable development We takeresponsibility for all stakeholders and strive to bring more and morevalue to our stakeholders