THE lMPACT OF ACCOUNTlNG lNFORMATlON

ON MANAGEMENTS DEClSlON MAKlNG

VlNAMlLK CASE STUDY
DECLARATlON

l hereby declare that the graduation project is based on my original work except for
quotations and citations which have been duly acknowledged. l also declare that it has
not been previously or concurrently submitted for any other course/degree at HELP
University College or other institutions
ACKNOWLEDGEMENT
First and foremost, my sincere gratitude is dedicated to my supervisor ----------. Thanks for your
strong support, guidance, intuitive comments and also motivation
through the process of completing this thesis.
ln addition, l would like to send my gratitude to the lnternational School and HELP for
giving me an opportunity to conduct my study in my favorite area.
Thanks to all my family and friends for your supports, helps and motivation and made it
possible for me to complete this study
Chapter l: lntroduction
l.l Back ground
The Vietnam Dairy Products Joint Stock Company (Vinamilk) was established in l976
and it has grown to become the leading corporation of the dairy industry, currently has
75% market share of milk in Vietnam. Vinamilk always provides with the quality
products, most nutritious and delicious for health. Vinamilk always satisfies and be
responsible for customers by diversifying products and services, quality assurance, food
hygiene and safety with competitive prices, business ethics of respect and obey the law.
ln generally, management accounting usually provided the decision-making functions to
the managers. lt involves functions through from planning, organizing
to test the evaluation stage. The function of decision is applied continuously during
operation of the business. The decision making process is the choice of many different
alternatives. ln which ln which each option is considered including accounting information,
particularly information on the investment costs to achieve optimal business benefit.
Each action plan is a different situation, with the type, amount, expense items and other
investment income. But they only have one thing in common that are associated with
accounting information. Therefore, the management is required to consider carefully
making a right decision. However, in order to make a right decision, the management should
have the tools to help them distinguish the proper accounting information relating
to each plan. Based on this, the plan chosen will give the highest profit or lowest cost.
ln recent year, there are many companies which have gone to bankruptcy because of the
mismanagement. So today, the management is required to train more with experienced
and professionals skills. Moreover, the management is also able to see right things to 2
make decisions and choose the plan that set out on the basis of selecting the appropriate
information.
This thesis "The impact of accounting information on managements decision making
Vinamilk case study" is conducted to provide some purpose tools and select the
appropriate information for decision making of the Vinamilk Company. Besides, the
necessary of this thesis not only serve for the commercial organizations but also non
commercial organizations which need the accounting information to survival and
development. The commercial organizations such as private companies, joint venture,
and limited companies need the accounting information to determine the production and
business efficiency in the period. While non-commercial organizations such as clubs,
associations with the main objective is social activity, charitable activities which need
accounting information to determine the level of service. And State institutions also need
accounting information to assess the provision of security and social services.
To sum up, accounting information is a key factor which plays an important role overthe
activities of an organization and impact on decisions to achieve the level of the target
set.
l.2 Problem statements:
1 Which are accounting tools available used to support decision making process?
Accounting tools play a vital role in business decision making process. Management
accounting consists of a set of tools that have been proven to be useful in making
decisions involving cost data, price and profit. The costing system provides to the
obtainable knowledge of costs, and it builds the basis for numerous decisions like as
determining prices, estimating the profit. Profitability is used especially for making
decisions relating to suspended operations of organization. Nowadays, accounting toolsapply
differ from organization. A tool that proves to be very effective in an organization,
however, it may fail in another organization. Different information is required for
different purposes, so the organization must focus on the different accounting tools to
support the decision making process.
1 Which accounting tools are applied in Vinamilk? How does the company use
those in the decision making process?
As mentioned above, Vinamilk uses an old way of classifying costs, which considers all
administration and selling cost as fixed costs and all production costs as variable
although within the production costs there would be fixed costs, like depreciation. Thus
labor costs of the production are also seen as variable. ln addition, Vinamilk produces a
lot of vary products and buys the ingredients such as milk from outside supplier. Milk
imported nowadays accounts 70% raw materials of Vinamilk. Hence, the manager has to
evaluate and calculate the cost in the future due to the management cannot consider the
price of materials in the future. Furthermore, Vinamilk manages indirect cost and
overhead cost, selling costs and administrative costs as well. Base on costing system,
manager should determine the price. Vinamilk uses both of cost plus pricing and target
costing such as it decides first how much it costs and then its department works together
with the production to stay within this cost structure. Prices of competitors and their
reaction also effect on prices for the valuation of the company. Consumers assess the
value and price of a product based on price and value of similar products. A strategy of
high prices, high profitability levels, may attract competition, while a strategy of low
cost, low-can discourage the competition or do they withdraw from the market.
Companies need to know price and quality of the opponent. This can be done in several
ways. Companies can send personnel to study and compare the prices of the
competingproducts. Companies can search by price of competitors, looking to buy their
equipment
and analysis. The company may ask the buyer to see how they feel about the price and
quality of competitors. Another tool often used in Vinamilk is profitability, which is
defined as the price customers paid minus the cost of production. ln Vinamilk, they split
up the products in different groups of product and they also distinguish the cost of the
machine for each product. Hence, they can calculate the gross profit for each product
group every month. By this system, Vinamilk knows which products are profitable. ln
order to attaining a better profit, the managements also made the most difficult decision
in his career. Vinamilk maintains high profit margins; this suggests that the ability to
manage costs and price of company is very good.
Furthermore, besides information of managerial accounting provided, the managers
should consider the financial information such as financial ratio in order to understand
the business activities of company.
l.2 Structure of paper
The paper is conducted to find out the accounting tools which are applied in Vinamilk
and how these tools affect to the decision made by the company. This paper contains five
chapters as follow:
Chapter l: lntroduction
Chapter 2: Literature review
Chapter 3: Methodology
Chapter 4: Analysis
Chapter 5: Conclusion
ln the chapter l, the information of Vinamilk and the importance of this thesis are
introduced. ln chapter 2 and chapter 3, the basic theory which includes the ideas ofdifferent
accounting tools and steps for decision making is recommended. The
methodology will provide the process of how this study is conducted. After collecting
data and information, the analyzing process would be implemented in chapter 4. Finally,
the chapter 5 will draw the conclusion as well limitation and recommendation.
Chapter 2: Literature review
Nowadays, financial information and non financial information provided by
management accounting can help managers in making decisions as well. ln order to
clarify the relationship between management accounting and decision-making, the both
of concepts will be proved independently in the following.
2.l Decision making process
Before explain the concept decision making process, the decision should be determined.
A decision is a choice leading to a certain desired objective (Holsapple, pp. 35 36).
A person or other different participants that are included in decision-making can be
called decision makers. lndividual decisions can be made by a computer or asingle person while
the various decision makers can be divided into independent and
negotiated decisions. The first one is that the single person who has the power to decide
and the other people can greatly influence how the decision will be. ln negotiated
decisions, the different decision makers will share the right of making a decision. That
means the people have practically equal rights and discuss their different ideas in various
meeting and organization decisions. The second one is that the right of making a
decision is unequally shared due to the organizations hierarchy and the management
between the decision participants is highly structured.
Table l will give more information about the typesMaking decision is the one of main functions
of the managers. The management often
faces some decisions such as what to produce? How to produce? How to distribution? ln
order to successful in making decision, the managers need have relevant information in
some circumstances.
There are many types and context of decision and the outcome of decision often depend
on the decision maker. ln some model of decision making process, every decision has to
follow some common steps. These steps can be applied for decision making process
usefully (Holsapple , p.7l).
Figure l indicates the diagram of decision making process. There are seven stages in
Drurys model. The first five stages show the planning or decision making process. lt is
described as making choices between options and it is mainly decision making activity.
The final two stages present the control process that should measure and correct the
detailed performance of the alternatives chosen. (Drury, p.6-9)
2.1.1 Planning process
1. Identify objectives: This is a first step of planning process; the managements need to identify the
specific of the goals or objectives of organizations. They will give to decision makers some guidance
or directions and enable decision makers to estimate the action desirability compared to another
action. In economic, maimizing profitability of company!s owners and shareholders wealth should
be a main objective. 2. Search for alternative courses of action: This is not only the most important
but also difficult step in the decision"making process. The management has to look for alternative
ways of action that enable goals to be achieved. Thus the organization has to look at its environment
for challenges and opportunities.
3. Gather data about alternatives: The managers should access the potential growth rate of
activities, potential areas of company in order to gain market share and cash flow.
Furthermore, the decision makers have to differentiate between certainty, uncertainty
problem that are difficult to control such as inflation, competitions strength etc. Data and
information are gathered by both short term and long term decision. 4. Select alternative
courses of action: The decision making includes the choosing between competing
alternative courses of action and best satisfies objectives of the company. For example, if
the profit maximization is main objective, all options should be planned in terms on
differences in profit. The option that seems to achieve the goal best then it should be
selected by the decision makers. 5. Implement the decision: This is final steps of planning
process. After choosing the best alternatives, the decision would be conducted through the
planning process. The management has to consider carefully and communicates with other
people in the organization who work closely together before to implementation decision
2.1.2 Control process 6. Compare actual and planed outcomes: This is the first stage of control
process. The managers should compare actual implementation and budgeting, and then determine
what the difference is. #n accountant has to set up presentation reports which provide feedback by
comparing results with plans. 7. Respond to divergences from plan: #fter the alternatives chosen
should be fre$uently checked and if the results of the decisions made differ from the designed one,
corrective actions should be taken.
2.1.3 Limitations of Drury model
There are several reasons criticized %rury model. &irstly, the right decisions are easily and clearly
identifiable. 'econdly, it does not include factors, like emotions, imagination, memories, culture and
mindset of the decision"makers. &inally, it is built on ()
the idea that each step can be clearly separated from the other that does not correspond to the reality
of decision making. *+angley, pp.,-(",-./ 2.1.4 Long term and short term decisions The decision
can classify into long term and short term decisions. +ong term decision refers to the decision that
impacts on the longer periods of time *Ibid. p. 0/. In organization, long term decision may be a
capital investment such as buying machinery, building factory and so on. 1n the other hand, short
term decision is the decision that affect on one year or less than one year *Ibid. p. ,22/. This decision
is based on currently data and be easily to changes. The one of eample of short term decision is
determining of acceptation or rejection order. 2.2 Management accounting and decision making
#ccording to investorwords.com, accounting is defined as the systematic recording, reporting and
analyzing of financial transactions of a business. There are two types of accounting which are
management accounting and financial accounting. In this project, management accounting would be
focused. 3anagement accounting refers to the process of preparing management reports and
accounts that provide accurate and timely financial and statistical information re$uired by managers
to make day to day and short term decisions *www.businessdictionary.com/.
The management accounting information plays a vital role in decision making of the managers.
#ccounting can be viewed as the process of identifying; measuring and communicating economic
information to permit informed and predicted decisions for the user of information. *4orngren
pp.(0.(0,/. This means that understanding clearly of accounting information will help the
management to give out better decisions for the organization. 3anagement accounting is a division
of information systems of an ((
organization. 3anagers rely on accounting information for management planning and control
activities of the organization *4ilton, (55(/. Therefore, the reported and collected accounting
information can influence on making management!s decision and it will result in the management to
make decisions that are consistent with the organization!s goals. 3oreover, the decision maker often
decides what information is inputted and considers information as relevant for the decision. 6sing
accounting information depends on different decisions and it often relies on the choices of decision
maker whose may be affected by eperience, perceptions and objectives. #pparently, accounting
information is used for decision"making rises if the information provided is relevant for the decision,
and again. The increasing decision making is also relies on the decision maker who regards the
accounting information as reliable and trustiness. 2.3 Defining the cost terms: 1. cost is known as
the resources are in place to complete a special reason. It is very common to determine the amount
the cost of money to obtain goods and services. *4orgngren, p. (22/ 2. cost object is looked as a
cost of products and as well as costs of a department or service. *%rury, p. ,(/ !. "i#ed cost and
variable cost: &ied cost refers to the cost that does not increase or decrease when level of activities
decrease or increase. 'o the cost per unit will decrease when the level of activities increase and again.
1n the other hand, variable cost is the increasing or decreasing cost when the activities increase or
decrease. 7ut for per unit, the level of activity is constant cost, and it will disappear when stop
working. *Ibid., pp. ,5 8 2)/ (,
$. %irect cost and indirect cost: %irect cost is known as the cost that is easily and conveniently
monitored to the particular cost object under consideration. 3eanwhile, indirect cost is known as all
the other costs that cannot be related to or identified with, a particular cost object under
consideration. *www.accountingformanager.com/ &. Relevant and irrelevant cost' 9elevant costs are
those costs that can be affected by
decisions whereas irrelevant costs cannot be affected through a certain decision. It may be irrelevant
for some situations, but relevant for others. :amples of irrelevant costs involve fied overheads,
notional costs, sunk costs and book values *www.businessknowledgesource.com/. 2.4 ools for
decision making In order to make a better decision by using accounting information, management
has to rely on the tools of accounting system. There are many tools of accounting, but in this thesis,
three accounting tools are discussed. &irstly, the cost accounting system determines the costs that are
accounted in goods produced of company. 4ence, management needs to understanding about the
information of costs that occur in an organization. This tool is considered as the most important tool
in guiding decision. 7ecause the management would be able to set prices and estimate profit based
on information about costs. 'econdly, pricing and competition tool would be discussed It involves
the ideas of target costing and cost plus pricing, competition. &inally, profitability tool would be
recommended. 2.4.1 Cost accounting system
;ost accounting refers to a part of accounting that evaluates the overall costs associated with
conducting business. The main aim of cost accounting is basically providing product costing
information for financial statements, control, and decision making (2
*www.wisegeek.com/. # cost accounting system includes two steps, the cost gathering by classifying
costs into categories and the assignment of costs to cost objects. The first one refers to the collection
of costs by using classification criteria, like the relevance of costs or the cost behavior. %ifferent
types of costs are available for different decisions. 4ence, as first step is useful for decision"making
to sort out costs as fied or variable, relevant or irrelevant and direct or indirect. &or eample, when
the management wants to make"or"buy machinery, decisions will concentrate on relevant costs in a
particular decision situation. The second one is cost allocation related to indirect costs that are
allocated to a cost object. It is related to methods of classifying the direct and indirect cost, and
determining which is important for cost accounting system. In generally, there are two main methods
of allocating indirect cost: traditional accounting system and activity based costing *#7;/. The first
one refers to the allocation of factory!s indirect cost to product manufactured. That means traditional
accounting system allocates the indirect cost to cost centers. It is rely etensively on the volume
based allocation such as the direct labor hours, number of units produced, or machine hours. &or
eample direct labor hours are used as a basis to allocate costs of materials to a cost object *%rury, p
<,"<2/. 1therwise, the second one refers to assign the costs to activity cost centers. #ctivity based
costing system is based on cause and effect allocations. 7y identifying the costs driver that cause the
cost to changes and assigning the costs to cost objects on the basis of cost driver usage, so the cost
can be more accurately traced *%rury, p ,,(/. The major difference between two methods is
collecting of the cost driver. Traditional costing system relies on arbitrary allocation while activity
based costing is based on cause and effect allocation. The traditional costing system will be applied
when the production process is very simple and clearly, (.
1n the other hand, activity based costing will be used when the process of production is more
complicated and used more cost driver. 4owever, using activity based costing will be more epense
and low benefit. !igure 2.2: (raditional costing vs. ctivity based costing )source from internet*
2.4.2 Price and competition
# price is epressed in the currencies of commodity value or in other words is the number of money
pay for goods. =rice is also considered an important competitive factor in attracting customers of all
businesses. =ricing decisions can categorize into short term and long term decision. The first one
refers to the price made for the day to day decision or in short time decision. 1therwise, the second
one is that the price would be determined for the long time of products. =ricing decisions making are
one of the most important decisions that the management have to face *4orngren/. The results of the
making pricing decision for new products or responds to price of competition are (<
very important because if a company wants to be survival and develop in the future, it has to have a
reasonable price policy. The price decision has to not only affect to the market demand but also attain
the company!s objectives. There are some factors that affect to pricing decisions such as legal
re$uirements, competitors actions and customer demands. There are two common tools for pricing:
target costing and cost"plus pricing. The target costing is known as an effective tool to keep the
customer value while reducing costs. 7efore products are designed, the target costs are established
based on estimated selling price of the product and the company>s profits. 3eanwhile, cost plus
pricing refers to the adding an amount or a percentage of the cost of production and product
distribution. This is tools for the company to make the maimized profit. ;ompetition is way to use
other word for company rivals producing similar products or services. ;ompanies usually use
resources effectively, business opportunities to win other companies in order to ensure the
development of business. There are many methods of competition: price competition *lower
prices .../ or non"price competition *advertising .../ or competitiveness of a business, an industry, a
country is the level at which, under conditions of free market and fair can produce commodity
products and services to meet the demands of the market and creating jobs and raising real incomes
respectively. ;ompetition is the gain of market share. The nature of competition is the search for
profit which is higher than average profits of enterprises. The outcome of the competitive process is
the average profitability of the industry which trend to effect in depth, then lead to the price may be
reduced *3ichael =orter, (50)/ 2.4.3 Profita"ility
=rofitability is defined by the ability to make a profit meanwhile profit can be defined as the
difference between total revenue and total cost. =lanning of profit is often conducted (-
during the budgeting process. =rofitability will be achieved when the right decision was made by the
management and cost control is also good. There are some accounting tools related to profitability
are: ?ross profit is defined as the difference between net sales and cost of good sold *4orngren ;. et
al. *,)),/, p. <5/. 1perating profit is known as is the difference between total revenue and total cost
from production and business activities of enterprises. This profit is created before the payment of
interests and taes. *=rakash, *(5@5/, p. ,/ Aorking capital is an inde used to measure financial
performance as well as financial capacity of a company in the short"term. Aorking capital is also
assessing the ability to pay short term debt obligations of companies. *www.investorwords.com/
2.4.4 !inancial ratio &inancial ratios are calculated from one or more kind of information from a
company>s financial statements. &inancial ratios also give a financial analyst and management an
ecellent picture of a company>s situations and the trends that are developing *www.finpipe.com/.
There are some common categories of financial ratio such as: 1. +i,uidity ratios It indicates the
entity!s ability to meet its current obligations. There are two common used li$uidity ratios are current
ratio and $uick ratio. Current ratio is calculated as current assets divided by current liabilities. It
includes all current assets and current liabilities and is considered acceptable if it is , to ( or better.
-uic. ratio is defined as $uick assets divided by current liabilities. Buick assets are defined as cash,
accounts receivable, and notes receivable 8 it is determined by current assets minus inventory. The
$uick ratio provides better picture of the entity!s li$uidity (@
position if inventory contain obsolete or slow moving items. If the ratio is greater than ( generally
shows that the entity!s li$uid asset are sufficient to meet the cash re$uirement for paying current
liabilities. 2. Capital structure %ebt to e,uity is calculated by the short term and long term debt
divided by the shareholder!s e$uity. This ratio provide information on solvency of the entity !.
/perational capability These ratios indicate how effectively the entity!s assets are managed.
Therefore, the ratios related to account receivable and inventory of company Receivable turnover is
defined as credit sales divided by receivables. The ratio represents that how many times accounts
receivable are turned over during a year. Inventory turnover provide information on the inventory
and is calculated as cost of good sold divided by average inventory. In this case, the average
inventory e$uals sum of beginning and ending inventory divided by two. This ratio indicates that the
fre$uency with which inventory is consumed in a year. The higher ratio is the better li$uidating
inventory. $. 0rofitability ratio It indicates the entity!s success or failure for a given period. #
number ratios measure the profitability of an entity, and each ratio should be interpreted by
comparison to industry data. 1ross profit percentage: is generally a good indicator of potential
misstatements and is calculated as gross profit divided by net sales.
0rofit margin: the profit margin ratio is calculated as net income of company divided by net sales.
This ratio measures the entity!s profitability after all epenses are considered. (0
The fluctuation in the ratio indicates that misstatements eist in the selling, general or administration
epense. Return on assets: this ratio shows the return earned on the resources invested by both the
shareholders and the creditors. It is calculated as net income divided by total assets. Return on
e,uity' the ratio is defined as net income divided by shareholder!s e$uity The ratio measures an
entity>s profitability by illuminating how much profit a company generates with the money
shareholders have invested. (5
Chapter 3: Methodology The purpose of this section is how to carry out the study and how to
analyze the data. There are many ways to carry out the research, but in this thesis, the $ualitative data
collection methods can be used within a case study. Ahen to consider the scope of $ualitative
research, the case study approach are adaptable for eploratory investigations of management
$uestions. #nd after that, the secondary data is collected to provide information for the researcher.
3.1 #ualitati$e research
Bualitative research is a type of scientific research. It finds to understand a given research problem or
topic from the perspectives of the local population it involves. Bualitative research is especially
effective in obtaining culturally specific information about the values, opinions, behaviors, and social
contets of particular populations. The advantages of $ualitative research are producing more in
depth and comprehensive information. 3oreover, $ualitative research can provide comple tetual
descriptions of how people eperience a given research issue. Bualitative methods are also effective
in identifying intangible factors, such as social norms, socioeconomic status, gender roles, ethnicity,
and religion, whose role in the research issue may not be readily apparent. Ahen used along with
$uantitative methods, $ualitative research can help us to interpret and better understand the comple
reality of a given situation and the implications of $uantitative data. 4owever, there are some
disadvantages when to use the $ualitative research. &irst of all is the subjectivity of the in$uiry leads
to difficulties in establishing the reliability and validity of the approaches and information. 'econd, it
is very difficult to prevent or detect researcher induced bias. #nd finally, scope of $ualitative
research islimited due to the in"depth, comprehensive data gathering approaches re$uired.
*www.eperiment"resources.com/. The core method to figure out the solution to these $uestions is
$ualitative research. The data is collected in secondary sources and case study. The secondary
sources involve annual reports, note to financial statement of company, accounting reports, internet
source and other books like management accounting books, business activities analysis. 3.2 Case
study
# case study is one of the methodologies commonly used for $ualitative research. This research
design employs a number of data collection methods, which includes interviews, documentary
analysis, and observation *www.$srinternational.com/. 9esearchers have used the case study research
method for many years across a variety of disciplines. 'ocial scientists, in particular, have made wide
use of this $ualitative research method to eamine contemporary real"life situations and provide the
basis for the application of ideas and etension of methods. ;ase study research generally answers
one or more $uestions which begin with ChowC or Cwhy.C The $uestions are targeted to a limited
number of events or conditions and their inter"relationships *www.gslis.uteas.edu/. # case study is a
good option to develop and improve understanding of a comple problem. It can add a lot of
eperience and ideas to knowledge that was gained in previous studies. 4owever, the case studies are
often not relied on some random observations and can not draw generalizations from a case, so the
limitations are the lack of reliability and value of statistics. 3.3 Data resources
;ollecting the information and data plays an important part in completing this research. There are
two types of data resource: primary data and secondary data. In this thesis, the ,(
secondary data is better choice than ones. 'econdary data is defined as public data or data collected
in the past or outside of company. 'econdary information sources of internal business are plentiful
and can be processed to provide good information for the preparation of the decision. &or eample:
receipts, sales receipts, public debt reporting, accounting reports, evaluation of personnel. 'econdary
information sources of outside such as newspapers, magazines, books such as management
accounting policies, businessmen management, strategic management, business activities analysis.
'econdary data are used for three research purposes. &irstly, they fill a need for a specific reference
of $uotation to demonstrate why the proposed research fills a void in knowledge base. %ata from
secondary source can help to decide what further research needs to be done and can be rich source of
hypothesis. 'econdly, secondary data are an integral part of a larger research study to justify having
bypassed the cost and the benefits of doing primary research. #nd thirdly, secondary data may be
used as the sole basis for a research study, since in many research situations on cannot conduct
primary research because of physical, legal and cost influence.
?enerally, secondary data has some advantages. 'econdary sources can usually be found more
$uickly and cheaply than primary data, especially when national and international statistics are
needed. ;ollecting primary data can be costly and time consuming as to be impractical. 3oreover,
most research on past events also has to rely on secondary data sources. 'imilarly, data about distant
places often is collected more cheaply through secondary sources. 1n the other hand, secondary data
has a number of disadvantages. Dot all secondary data is readily available or inepensive. %ata
mining of company databases that are not designed for unstructured searches can be epense because
of the large amount of time such as activity consume. 7esides, the researchers may have less ,,
control over how the data was collected. 1therwise, it is difficult to assess the accuracy of the
information and the data may be out of date. ,2
Chapter 4: %nalysis 4.1 Company presentation &ietnam Dairy Products 'oint (tock Company
)&inamilk*
+ead,uarter () Tan Trao 'treet, Tan =hu Aard, %istrict @, 4o ;hi 3inh ;ity Tel: *0..0/ <. (<<
<<< &a: *0..0/ <. (-( ,,- :mail: vinamilkEvinamilk.com.vn Aebsite: www.vinamilk.com.vn
-ranch in +a .oi 4andi 9esco " Tower 7 " &loor (( <,( Fim 3a 'treet, 7a GHnh Aard, 4a Doi
;ity Tel: *0.../ 2@ ,.- )(5 &a: *0.../ 2@ ,.- ))< ,.
-ranch in Da .ang (, ;hi +ang 'treet, 4ai ;hau , Aard, 4ai ;hau %istrict, %a Dang ;ity Tel :
*0..<((/ 05@ ,,, &a: *0..<((/ 05@ ,,2 -ranch in Can ho 0-% 4ung Iuong 'treet, Thoi 7inh
Aard, Dinh Fieu %istrict, ;an Tho ;ity. Tel: *0..@(/ 0(( ,@. &a: *0..@(/ 0,@ 22. #s the sales and
production, Iinamilk is a leading dairy producer in Iietnam. +ist of Iinamilk products includes:
main products are milk and milk powder and products with added value such as milk, eating yoghurt
and drinking yoghurt, cream and cheese. Iinamilk give the market a portfolio of products, flavors
and packaging sizes have more choice. ;urrently, the company is focusing on the business activities
in fast growth Iietnamese!s market. :very year, the company produces <@),.)- tons of milk. The
company also has the leading distribution network in Iietnam, this allows to giving broad access to
consumers. ;ompany products are mainly consumed in Iietnam market and also eported to
overseas markets such as #ustralia, ;ambodia, Ira$, =hilippines and the 6nited 'tates.
*www.vinamilk.com/ 4.1.1 &ision/ mission and o"0ecti$es
The aim of Iinamilk is commits to bring the communities the best"$uality nutrition source that
conveys our respectability, love and responsibilities for the people, life and society. In the future,
Iinamilk will become the leading Iietnamese trusted brand ,<
on nutrient and healthy products for human life and to be positioned one of <) biggest dairy
companies over the world. The objectives of the ;ompany are to continually develop production,
trading and service operations in its fields of business in order to maimize profits for 'hareholders
and to enhance the value of the ;ompany; to never stop improving the lives, working conditions, and
income of its employees; and to fulfill its ta obligations to the 'tate. #dditionally, Iinamilk
connects the processing industry with the development of raw material zones with the aim of
building a more independent source of raw materials now and in the future. 4.1.2 +istory " (5@-:
;ompany was founded under the name of 'outhern ;ofee"%airy ;ompany, a subsidiary of the &ood
?eneral %irectorate and had two factories in operation, namely Thong Dhat %airy &actory and
Truong Tho %airy &actory. " (5@0: The ;ompany had more factories: 7ich ;hi =owder &actory,
+ubico ;ake &actory and 7ien 4oa ;offee &actory. The management of company was transferred to
the 3inistry of &ood Industry and the ;ompany was renamed 6nited :nterprises of 3ilk ;offee
;ookies and ;andies I. " (55,: The 6nited :nterprises of 3ilk ;offee ;ookies and ;andies I was
formally renamed Iietnam %airy ;ompany and came under the direct management of the 3inistry
of +ight Industry. " ,))2: The ;ompany was formally transformed into a joint stock company in
Dovember ,))2 and renamed as Iietnam %airy =roducts Joint 'tock ;o., to reflect its change in
legal status. ,-
" ,)).: #c$uired 'aigon 3ilk Joint 'tock ;ompany and increased share capital of the company to
ID% (,<5) billion. " ,))-: Iinamilk was listed on 4ochiminh ;ity 'tock :change *41':/ on (5
January of ,))-. " ,)(): Iinamilk ac$uired ())K shares from &LD Iietnam +imited and changed
its name to %ielac %airy 1ne 3ember ;o., +td. 3oreover, company invested DM%(,.< million,
e$uivalent to (5.2K of share capital in 3iraka +imited in Dew Mealand. #nd ac$uired the remaining
shares of +amson 3ilk Joint 'tock ;ompany and changed its name to +am 'on %airy 1ne 3ember
;o., +td. ;ompany also inaugurated and put the 7everage &actory into operation in 7inh %uong.
4.1.3 1rgani2ation and management structure ?roup structure "igure $.1' 1roup structure of
2inamil. )adapted from annual report 2313* ,@
"igure $.2' 4anagement organi5ational structure of 2inamil. )adapted vinamil..com* 4.2 %nalysis
case study: This section will be divided into two parts. The first one concerned about the accounting
tools are applied in Iinamilk. #nd the second one will focus on how Iinamilk can use these
accounting tools in decision making process. 4.2.1 %ccounting tools are used in &inamilk #s the
mentiond on the theory, action of the management accounting is in order to achieve the company!s
strategic objective. 1fficially, the main intention of Iinamilk stated on the homepage is customer
satisfaction. 4owever, the indirectly goals of company implies the purpose of profit generation.
Therefore, Iinamilk considers profitability as the most important accounting tool. #nd other vital
tools will be epressed in the following: ;ost accounting system, pricing and competition. ,0
4.2.1.1 Cost accounting
system The implementation
costs are considered
carefully in order to reduce
cost and increasing profits
for companies. The process
of cost control is carried out
right from purchasing raw
materials to sales process.
:specially in the
manufacturing process, to
reduce material
consumption, the company
set the technical
specifications for each
product. :very month,
management accounting
department tracking of
production costs through the
periodic reports on the
production costs of each
unit, the report analyzes the
use of materials... 7ased on
these reports, company
control costs better in the
production of net month.
The report will be reviewed
regularly by the
management. 'tructure
costs of the company: ;ost
element
Near ,)() Near ,))5
Ialue K in 9evenue Ialue K in 9evenue
( ;ost of
goods sold
(),-@-,@(5,
0)(,5--
-@.20K -,@@@,<@2,-
2@,2@0
-2.-.K
, 'elling cost (,.20,(0<,0
)<,0@,
5.)@K (,,.<,.@-,)
,(,0.)
((.-5K
2 #dministrati
on cost
2@),.5,,05)
,52-
,.2.K ,@5,5<5,-(<
,02<
,.-2K
Total cost (,,.0<,250 @0.@5K @@.5-K