The research works on production and business cost accounting in the aspect of financial accounting There have been some works related to this research topic such as Nguyen Thu Hien 2016
Trang 1VIETNAM UNIVERSITY OF COMMERCE
-DUONG THI MY HOANG
ACCOUNTING OF THE PRODUCTION AND BUSINESS COSTS AT STEEL COMPANIES
IN CENTRAL VIETNAM
Major: Accounting Code: 934.03.01
SUMMARY OF THE PHD THESIS IN ECONOMICS
Hanoi, 2020
Trang 2Vietnam University of Commerce
Advisors:
1 Assoc Prof PhD Do Minh Thanh
2 Assoc Prof PhD Ha Thi Thuy Van
For the details of the thesis, please contact:
National Library of Vietnam
Library of Vietnam University of Commerce
Trang 31 The urgency of the topic
Production and business costs are one of the important indicators inthe system of economic indicators for business management, which are ofgreat interest to business owners Production and business cost accounting
is a part of the enterprise accounting system and plays an important role inproviding information about production and business costs for making thefinancial statement and helping managers to make planning, control anddecision
Therefore, accounting in general and production and business costaccounting in particular need to be completed to provide informationtimely, truthfully and accurately, suitable for management requirements forthe company’s business decisions From the said reasons, the author has
selected “Production and business cost accounting at steel companies in Central Vietnam” as the topic of the PhD thesis.
2 Overview of research situation related to the topic
2.1 The research works on production and business cost accounting
in the aspect of financial accounting
There have been some works related to this research topic such as
Nguyen Thu Hien (2016), “Completion of accounting of production costs and calculation of product prices in the clothing companies in the area of Hung Yen City”, Nguyen Thi Dieu Thu (2016), “Completion of accounting
of production costs and calculation of software product prices in software production companies in Vietnam today”, etc In general, they have
generalized, analyzed, assessed the situation and showed basic limitations
on expense and cost accounting at companies in related business lines For
the foreign research works, Vvchudovet (2013), “Current state and prospects of cost accounting development for sugar industry enterprise”
presents the current situation and factors affecting the development of cost
accounting at companies Naughton-Travers, Joseph P (2009), Based Costing: The new Management Tool” have mentioned the
“Activity-information and superiority of activity-based cost accounting methods
Michael R Kinney & Cecily A Raiborn (2011), “Cost Accounting: Foundations and Evolutions” have mentioned the accounting of
production costs in the aspects of terms of production costs, measurement,identification of cost types, activity-based costs, methods of calculating
Trang 4costs according to orders, production processes and analyzing expenses as
the basis for making production decisions or determining the selling price 2.2 The research works on production and business cost accounting
in the aspect of management accounting
Cost management accounting is one of the basic contents of theorganization of company management accounting in the system of
accounting organization of the unit Dam Phuong Lan (2019), based cost accounting in domestic animal feed companies”, Pham Thi Thuy (2007), “Model building of cost management accounting in Vietnam pharmaceutical companies”, To Minh Thu (2019), “Completion of cost management accounting in Vietnam paper companies”, etc have made
“Activity-solutions to complete and expand the research direction on the
organization of cost management accounting Kaplan, Robert S.; Atkinson, Anthony (2015) have generalized and developed management accounting
at companies including the role of management accounting, cost handlingmethod, cost distribution according to ABC model, building the costcenters at companies, costs for the decision-making, method of balanced
scorecard Maelah R, Ibrahim D N, (2007) have researched the factors affecting the application of ABC model in manufacturing companies A dam Paul Brunet, Steve New (2003) have researched Kaizen costing as a practice in Japanese companies Alkinson, Kaplan & Young (2012),
“Management accounting” have mentioned the aspects of management
accounting including the concepts of cost management accounting,methods of aggregating and allocating costs, measurement and activity
accounting Charles T Horngren (2016), “Cost Accounting: A Managerial Emphasis” has emphasized the role of cost information in management
accounting
2.3 The research works on cost accounting and production and business costs in the aspect of financial accounting combining with management accounting
There have been some works related to this research topic in differentaspects and applied application areas such as Do Thi Hong Hanh (2015),
“Completion of accounting on revenue, expenses and business results at steel companies of Vietnam Steel Corporation”; Dao Thuy Ha (2015),
“Completion of cost management accounting in Vietnam steel companies”; Dao Manh Huy (2016), “Completion of preparing and presenting the consolidated financial reports at steel companies of
Trang 5Vietnam Steel Association”; Nguyen Thi Nga (2017), “Environmental cost management accounting in Vietnam steel companies”; Tran Thi Quynh Giang (2018), “Completion of accounting information system at steel companies of Vietnam Steel Corporation” The research projects abroad include PhD thesis of Topor Ioan Dan (2013), “New dimensions of cost type information for decision making in the wine industry” focuses on the
research of cost information for decision making in winemaking in
Bulgaria Majid Nili Ahmadabadi, Ali Soleimani (2013), “Feasibility Study for Implementation of an Activity - Based Costing System in Alloy Steel Industries”, they have shown 8 factors affecting the applicability of
activity-based cost method in the steel manufacturing industries in Iran.According to Eva Wager (2013), ABC used to be the most appropriate costdetermination method for small steel companies Mohammad D.A1 -Tahat,
AI -Refaie Abbas (2012) studied the traditional ABC implementationprocess in cast steel factories which has specific illustrations of ABC interms of making cost distribution technique and calculating the productprices but not connecting with ABC and ABM yet, etc
2.4 Research chance of the thesis
Through the research of foreign and domestic works of clarifying andconfirming the importance of production and business cost accounting forcompanies, there have not been any topics of deep research on productionand business cost accounting in both aspects of financial accounting andmanagement accounting Therefore, the author finds the chance for theresearch of production and business cost accounting at steel companies inCentral Vietnam in the context of current international economicintegration is very essential
3 Research objective and mission
- Research objective: Studying and proposing solutions to complete the
production and business cost accounting at steel companies in CentralVietnam in the context of international integration
- Research mission:
+ Systematize, analyze and clarify general theoretical issues onproduction and business cost accounting at steel companies in the aspects
of financial accounting and management accounting
+ Survey, analyze, assess the actual situation of production andbusiness cost accounting at steel companies in Central Vietnam in theaspects of financial accounting and management accounting Therefore,
Trang 6specify the results, limitations and causes.
+ On the basis of theory and practice, propose the solutions tocomplete the production and business cost accounting at steel companies inCentral Vietnam and make sure the information provision on productionand business costs in order to meet the management requirements ofresource costs during the international integration
4 Research questions of the thesis
To achieve the research objectives, the author makes some researchquestions include:
(1) General theory of production and business cost accounting andsamples of production and business cost accounting in both aspects offinancial accounting and management accounting at companies in themarket economy during the international integration?
(2) Actual situation of production and business cost accounting atsteel companies in Central Vietnam in both aspects of financial accountingand management accounting, outstanding matters and causes?
(3) Solutions and recommendation to complete the production andbusiness cost accounting at steel companies in Central in order to meet themanagement requirements in the market economy during the internationalintegration?
5 Subject and scope of study
5.1 Subject of study
The thesis focuses on the research of theories and actual situationabout production and business cost accounting at steel companies inCentral Vietnam
5.2 Scope of study
- Regarding the area: The survey scope is at steel companies in CentralVietnam, except for private companies with a super-small manufacturingscale The thesis focuses on the research of common production andbusiness cost accounting with billets and steel products at steel companies
in Central Vietnam Do not research on the accounting of financial costsand other costs
- Regarding the time: The thesis makes a survey of the actual situation
of production and business cost accounting at steel companies in CentralVietnam for 4 years from 2015 to 2018
Trang 7- Regarding the content: The thesis researches on both aspects offinancial accounting and management accounting
6 Method of study
6.1 Method of study
- Technical method: Using a combination of research methods such as
induction, interpretation, analysis, synthesis, comparative analysis, fieldsurveys to analyze and evaluate in order to make reasonable conclusions
- Method of information collection: Primary and secondary
information collection method
- Method of processing and analyzing data: The main methods used by
the author in data processing include methods of statistics, qualitativeanalysis and comparison, etc
6.2 Process of study
The process of study of the thesis is shown in the charts
7 New contributions of the thesis
7.1 New academic and theoretical contributions: The thesis has
systematized the general theories on production and business costs atcompanies in both aspects of financial accounting and managementaccounting Therefore, learn experience and draw lessons on productionand business cost accounting at Vietnam steel companies
7.2 New practical contributions: Assess the actual situation and
propose the solutions to complete the production and business costaccounting at steel companies in Central Vietnam
8 Structure of the thesis
Chapter 1: General theory of production and business costaccounting in manufacturing enterprises
Chapter 2: Actual situation of production and business costaccounting at steel companies in Central Vietnam
Chapter 3: Completion of production and business cost accounting
at steel companies in Central Vietnam
Trang 8CHAPTER 1 GENERAL THEORY OF PRODUCTION AND BUSINESS COST ACCOUNTING AT STEEL COMPANIES
IN CENTRAL VIETNAM 1.1 Definition, nature, classification of production and business costs
in the manufacturing companies
1.1.1 Definition, nature of production and business costs
During the production and business activities, companies have paid forresources such as manpower, materials, capital for production, labor work,transportation and investment
Until now, there have been many definitions of production andbusiness costs It means that there is no only definition of production andbusiness costs In my point of view, the production and business costs areall expenses of resources paid by the companies related to the productionand business activities in a certain period (month, quarter, year) andpresented by a currency measure
Nature of production and business costs: During the production and
business activities, companies are always aware of the principle ofensuring to cover the costs invested to produce and consume products andother costs Therefore, the nature of production and business costs is themovement of factors during the production and business activities in theperiod into the product value
1.1.2 Classification of production and business costs
To facilitate the cost management and cost accounting organization,companies often classify production and business costs in both aspects offinancial accounting and management accounting according to thefollowing factors: Based on the content and the economic nature of costs;based on the purpose and use of costs; based on the input of the productionprocess at companies, etc
1.1.3 Management requirements of production and business costs
- Must correctly determine the content and scope of production andbusiness costs incurred during the production and business activities
- The management must save costs on the basis of promotingproduction and business activities and improving product quality
Trang 9- Manage the production and business costs according to each activity,object, location, item, cost factor, etc.
1.2 Production and business cost accounting in the manufacturing companies in the aspect of financial accounting
1.2.1 Accounting principles governs production and business cost accounting
Production and business cost accounting must ensure the followingprinciples: Principles or original price, consistency, conformity, prudence,materiality and continuous operation, etc
1.2.2 Determine the production and business costs
On the basis of content, the scope is identified to correctly and fullycalculate the production and business costs, the accountant determines theproduction and business costs according to each item and type of expenseincluding costs of direct raw materials, direct labor, general production,selling, administration and the production and business costs for unfinishedproducts In which, methods of assessing unfinished products at the end ofthe period include evaluation of unfinished products according to costs ofmain direct materials (or costs of direct raw materials), unfinished productsaccording to an equivalent amount of completed product, unfinishedproducts at cost norms
1.2.3 Record the production and business costs
The accounting subject of production and business cost collectionneeds to be determined to record the production and business costs
Accounting for collecting production and business costs:
- Direct method: often used for the costs related directly to the subject
of cost collection and can be accounted directly for each subject
- Indirect allocation method: Apply when costs are related to many
objects, need to aggregate to allocate to objects in reasonable standards.Therefore, on the basis of the certain accounting method, theproduction and business cost accounting is conducted as follows:
Accounting vouchers of production and business costs: including cost vouchers of direct materials, general production, selling and company
administration In particular, the vouchers related to production andbusiness costs are VAT invoices, Sales invoices, goods delivery notes,
Trang 10goods received notes, Payments, Credit notes, Debit notes, Payrolls, fixedasset records, etc.
The account of production and business costs: The cost collection
depends on the companies make accounting on the inventory by a regularstatement or the periodical inventory Production and business costaccounting uses the following accounts: TK621 – “Direct material costs”,TK622 – “Direct labor costs”, TK627 – “General production costs”,TK641 – “Selling costs”, TK 642 – “Company management costs”
Production and business cost accounting is shown in the following charts: Charts of unfinished production and business cost accounting,
selling cost accounting and company management cost accounting in
manufacturing companies
1.2.4 Presenting the information on production and business costs
In the financial statement, the information on production and businesscosts is shown in the basic criteria: original price of sales products, salesprice, company management costs (Report of business results) andunfinished production and business cost (Balance sheet) At the same time,
it is explained in details in the Financial Statement
1.3 Production and business cost accounting in the manufacturing companies in the aspect of management accounting
1.3.1 Making norms and estimates of production and business costs
Norms of production and business costs: It is the crystallization of
production and business costs consumed by a unit of product through trialproduction or experimentation Norms are a measure of determiningexpenses for a necessary product unit
Estimates of production and business costs: It is a plan to use
resources in a period, showing detailed estimates of the situation ofmobilizing and using factors of production and financial resources toensure the normal operation of companies, contributing to improving theefficiency of all activities
1.3.2 Information collection of production and business costs for management requirements
Methods of determining production and business costs:
- Methods of determining costs by job
Trang 11- Methods of determining costs according to the production process
On the basis of the method of determining costs, depending on thequalifications and management requirements of companies, costaccounting management may use appropriate cost-determination methods
as follows:
+ According to the actual cost method
+ According to the common cost method
+ According to the standard cost method
According to the author, methods of common cost and standard costare more preeminent than the actual cost method because they provide theinformation faster and simplify the bookkeeping process
Method of information collection of production and business costs
On the basis of the method of cost determination to collectinformation for company management requirements, managementproduction and business cost accounting use the following methods:
- Accounting vouchers: On the basis of vouchers of financial
accounting reflecting incurred production and business costs, based on themanagement accounting requirements to supplement the details; makingand recording fully and accurately the arisen economic events will help thenext steps to carry out smoothly, ensuring quick information provision,meeting requirements of appropriately, usefully and timely
- Accounting accounts: The organization of accounting accounts to
collect previous information for decision-making should be conducted in asystematic and scientific manner while ensuring the detailed informationprovision according to management requirements as well as comparisonability between detailed information and relevant general information onspecific accounting objects
- Accounting books: System of accounting books, especially detailed
books need to be designed with the number, type, criteria in accordancewith management requirements and technology equipment level forinformation processing at companies
- Management accounting report of production and business costs:
On the basis of the information collected at companies, setting up asystem of management accounting reports for company owners to manage
Trang 12costs such as cost reports according to the center of cost responsibility; costreports in stages, etc.
1.3.3 Analyzing production and business costs information for management requirements
Depending on the information needs of the managers, the accountantwill analyze the information on corresponding production and businesscosts
1.4 Production and business cost accounting in foreign countries and business lessons for Vietnamese manufacturing companies
1.4.1 Production and business cost accounting in foreign countries
Production and business cost accounting in American accounting systemProduction and business cost accounting in French accounting systemProduction and business cost accounting in Japanese accounting system
1.4.2 Business lessons of production and business cost accounting for Vietnamese manufacturing companies
Through the production and business cost accounting in America,France, Japan, we can draw business lessons of production and businesscost accounting for Vietnamese manufacturing companies
CONCLUSION OF CHAPTER 1
In Chapter 1, the thesis has systematized and analyzed to clarifycommon theories on production and business costs at companies such asthe concept, nature, classification method of production and business costs.From that, it has analyzed and clarified the content production and businesscost accounting in manufacturing companies in the aspects of financialaccounting and management accounting It has summarized the applicationsituation of production and business cost accounting at companies in someforeign companies and business lessons for Vietnamese manufacturingcompanies
Trang 13CHAPTER 2 ACTUAL SITUATION OF PRODUCTION AND BUSINESS COST ACCOUNTING AT STEEL COMPANIES IN
CENTRAL VIETNAM 2.1 Overview of steel companies in Central Vietnam
2.1.1 Organizational characteristics of production and business activities at steel companies in Central Vietnam
Steel companies in Central Vietnam focus on investing for sustainabledevelopment; at the same time commit to protect the environment andrationally use the national resources The author quantifies the businesstypes at steel companies in Central Vietnam in the following chart:
Steel manufacturing process: Currently in Vietnam, there are two
technological processes of steel manufacturing which are short (open) andlong (closed) including:
- By short manufacturing process or it is called an open manufacturingprocess (electric arc furnace (EAF)) and induction furnace (IF))
- By long manufacturing process or it is called a closed manufacturing
process (basic oxygen furnace (BOF) or steel manufacturing technologyfrom upstream)
2.1.2 Management organization characteristics of steel companies in Central Vietnam
The author quantifies the organizational management structure at steelcompanies in Central Vietnam in the following chart: