Organizing the cost management accounting information system in garment enterprise in Vietnam

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PERMEABLE
1. Background
Textile and garment is considered as one of the main industries in
Vietnam in the period of accelerated industrialization and modernization
when textile and garment enterprises play the main role. According to the
Vietnam Association of Textile and Garment, the export turnover of textile
and garment and fibers of all kinds in 2012 reached over 17.2 billion USD
increased by 8.5% in comparison with 2011 and up to 2015, the export
turnover is aimed at reaching 19 billion USD over 2,500,000 workers and up
to 2020 reaching 25-27 billion USD. With the important and considerable
role of textile and garment industry for the national economy, it is very
essential to ensure the sustainable growth for the textile and garment industry
in the changing context of international economy, especially when the world
is falling into crisis and economic downturn as currently.
Garment enterprises in Vietnam still mainly produce according to
specifications and designs provided by customers and use materials specified
by the purchasers in many cases. In despite of great export turnover, the
actual revenue from these activities is very low, even negative profit in some
enterprise. Besides, ever since joining the WTO, the textile and garment
industry has been facing significant challenges and competing on par with the
powerful export countries such as China, India (competing for prices) and
South Korea, Japan (competing for designs and patterns). This competitive
pressure is forcing Vietnamese garment enterprises to set up the development
strategy and good management of cost in order to reduce the production costs
and invest in machines to improve the the product quality and business
efficiency. In this context, the demand for accounting management
information is great, especially for the execution of strategic objectives of
enterprises; it includes the provision and analysis of cost information so that
managers can make the investment decision and the provision of information

assisting the production at low cost, ensuring the product quality and timely
delivery of goods. However, the cost accounting system in enterprises in
general and garment enterprises in particular only focuses on establishing the
financial and accounting information to serve the preparation of the financial
statements and pays less attention to provide information for the enterprise
management.
Currently, the organization of the accounting information system for cost
control in garment enterprise is encountering a lot of difficulties; the
coordination between departments and systems in enterprise to collect the

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input data, process and provide the cost information is limited. With a cost
control accounting information system as currently, garment enterprises are
unlikely to stand firmly in the competitive environment in the region and the
world. The organization of cost control accounting information system which
serves the demand of enterprise management in the best manner is always the
complicated job requiring the efforts such as the need for cost control and
accounting information, the coordination between departments in enterprises,
the organization of accounting apparatus and allocation of cost control
accounting work to serve best the demand of cost information for the
enterprise management at all level in enterprises.
Therefore, the study of the characteristics and contents of the cost
management accounting information system in order to organize it in
Vietnamese garment enterprises are very urgent in the current stage.
Originated from the reasons stated above, the research thesis entitled
"Organizing the cost management accounting information system in Garment
Enterprises in Vietnam"
2. The research objectives
Cost control accounting information system is a useful tool to help

enterprise managers to control costs. The research objective of the thesis is to
study the status that how has the cost management accounting information
system been organized in Garment Enterprises in Vietnam? Thence the
proposal of solutions to organizing the cost control accounting system in
enterprises will be made in order to exploit the benefits of this system for the
enterprise management.
3. Research Questions
To achieve the research objectives of the Thesis, Thesis needs to analyze
the issues relating to accounting information system in garment enterprise in
order to answer the following questions:
1. What is the demand for management accounting information in
general and the manager’s demand for cost control accounting information in
Vietnamese Garment Enterprise and their satisfaction level with cost
accounting information provided currently like?
2. What are the factors that affect this system in garment enterprises?
3. What level is the organization of cost control accounting information
system executed?
4. From the results of assessing the reality of organizing the cost
management accounting information system in garment enterprises, what
solutions are given to organize the system in garment enterprise in order to


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exploit the benefits of information system in respect of the enterprise
management?
4. The research objects and research scope:
4.1. The research objects:

The Thesis studies on the cost management accounting information
system in garment enterprises in Vietnam.
4.2. The research scope:
Currently, the small-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

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


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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

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


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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

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.

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CHAPTER 2
LITERATURE REVIEW ON ORGANIZING THE COST
MANAGEMENT ACCOUNTING INFORMATION SYSTEM IN
PRODUCTION ENTERPRISES

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

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.


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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

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


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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.

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


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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.

- 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.

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
(1) Product
design

(2) Auxiliary
industry

(3) Production
(outwork)

(4)
Commercialize

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;


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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

(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


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- 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

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)


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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 selfconsumed 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.

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.


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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.

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- 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.