PDF Management Accounting - Sample Assignment

Nguyen Thi Thuy Linh_10190552_MA_A2.1

Table of Contents
Introduction.................................................................................................................3
Scenario 1....................................................................................................................4
Question 1:...............................................................................................................4
Question 2:...............................................................................................................5
Question 3:...............................................................................................................6
Question 4:...............................................................................................................8
Question 5:...............................................................................................................9
PEST analysis.......................................................................................................9
SWOT analysis....................................................................................................10
Balanced Scorecard analysis.............................................................................11
Scenario 2..................................................................................................................12
Question 1 + Question 2:.......................................................................................13
Question 3:.............................................................................................................15
Conclusion.................................................................................................................16
References.................................................................................................................. 18

Introduction
Planning tools are important in management accounting that each company should
conduct them well to reduce costs and reach high profits. To analyze and evaluate the
advantages and effectiveness of planning tools in management accounting, this
assignment is going to analyze the management accounting activities of Ricegreen and
compare to the SpaceZ to discover how management accouting respond to solve
financial problems.

Scenario 1
Question 1:
a. Standard cost
Standard cost is used for estimating and controlling the cost of a product. According to
Bragg (2019), the variance can be reported after using standard cost to show the
different between the actual cost and the budgeted cost
- Advantages (Paul, 2016):
+ Effectively control the costs
+ Measure the actual costs to minimize the operations cost
+ Avoid wasting materials and labor forces as well as determine the best methods
and materials.
+ It is effective accouting system that requires low resources
+ Provide information for planning more accurate budgets
- Disadvantages (Paul, 2016)
+ It can affect the quality of materials because good quality may cost more compared
to the budget
+ Non-reporting of negative exceptions and variances may decrease the effectiveness
+ When standards are too high, employees may be under pressure to act unethically
to reach those standards
b. Standard price
Standard price predetermined price of products based on previous price, replacement
cost and market price (Definition of standard price, n.d)
- Advantages:
+ Help to adjust and control the costs to the prevailing trends
+ Easy to apply
+ Lead to effectiveness of purchasing department
- Disadvantages:
+ Difficulty in setting specific standard price due to the price depends on many
unspecified variable factors
c. Budget

According to Harold (n.d.), budget is a plan in terms of finance for future activities of
a company.
- Advantages (Mariana, 2015)
+ Help manager to decide which activities should be done and how to utilize the
resources
+ Help the company to control the actual costs and avoid over spending
- Disadvantages (Mariana, 2015):
+ Can be time-wasting and expensive
+ Can be strict and unrealistic
d. Balanced scorecard:
The balanced scorecard is a framework which is used for tracking and controlling
company’s strategies (Ted, n.d.). The manager can use BSC to determine both
financial and non-financial problems of the company.
- Advantages (Patricia, Lucia, Beatriz, 2017):
+ Provide a specific view of the strategy in both long-term and short-term
+ Allow the company to work on four perspectives at three levels: mission and vision,
goals, measures and innitiatives.
+ Easier to report the strategies regularly
+ Enhance the connection and communication between employees and company
- Disadvantages (Salem, Hasnan, Nor, 2012)
+ BSC does not concentrate on external factors, which results in missing risk analysis
+ There is no time dimension to evaluate the performance
Question 2:
- Predetermined overhead rate: ($3.6 + $2) * 50% = $2.8
 Standard cost of 1kg rice = material cost + direct labor cost + overhead cost =
$3.6 + $2 + $2.8 = $8.4
- Allocated overhead in October = $2.8 * 36000 = $100,800
- Actual overhead in October =$102,000
 Under-allocated overhead accounted for Cost of goods sold (COGS):
$102,000 - $100,800 = $1,200

- Amount of sales in October = 36,000 – 6,000 =30,000 (kg)
 Cost of contract No.198 = $8.4 * 25,000 + ($1,200/30,000) * 25,000 =
$211,000
Quantity Selling price Revenue
640,000 10 6,400,000
620,000 11 6,820,000
580,000 12 6,960,000
540,000 13 7,020,000
500,000 14 7,000,000
 Selling price to maximize its revenue in 2020 is $13
Question 3:
Assume that the sales volume in January of the next year equals to the sales volume in
January of the current year
- Sale volume in low season is x and in high season is 1.5x
- Total sale volume in 2020: 6x + 6*(1.5x) = 540,000 (units)
- x= 36,000 => sales volume in high season is 54,000
- Total revenue = sale volume * price
- Production volume = next month sale volume * 40% + current month sale
volume * 60%
- Total material = production volume * 1.2
- Total material cost = Total material * $3
- Total labor hour = production volume * 0.5
- Total labor hour cost = Total labor hour * $4
- Total overhead (Variable overhead) = production volume * $2.8
Monthly budget
Jan Feb Mar Apr May June Jul Aug Sep Oct Nov Dec Total
1.5x 1.5x 1.5x 1.5x x x x x x x 1.5x 1.5x
Sales budget
Sales 54,000 54,000 54,000 54,000 36,000 36,000 36,000 36,000 36,000 36,000 54,000 54,000 540,00

volume 0
Unit
selling
price
13 13 13 13 13 13 13 13 13 13 13 13
Total
sales
revenue
702,000 702,000 702,000 702,000 468,000 468,000 468,000 468,000 468,000 468,000 702,000 702,000 7,020,0
00
Production budget
Productio
n volume
54,000 54,000 54,000 46,800 36,000 36,000 36,000 36,000 36,000 43,200 54,000 54,000 540,00
0
Material budget
Material
per unit
(kg)
1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2 1.2
Total
material
(kg)
64,800 64,800 64,800 56,160 43,200 43,200 43,200 43,200 43,200 51,840 64,800 64,800
Material
cost per
unit ($)
3 3 3 3 3 3 3 3 3 3 3 3
Total
material
cost ($)
194,400 194,400 194,400 168,480 129,600 129,600 129,600 129,600 129,600 155,520 194,400 194,400 1,944,0
00
Labor budget
Labor
hours for
1kg of
rice
0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5 0.5
Total
labor
hour
27,000 27,000 27,000 23,400 18,000 18,000 18,000 18,000 18,000 21,600 27,000 27,000
Labor
cost per
unit
4 4 4 4 4 4 4 4 4 4 4 4
Total
labor cost
($)
108,000 108,000 108,000 93,600 72,000 72,000 72,000 72,000 72,000 86,400 108,000 108,000 1,080,0
00
Overhead budget
Overhead
cost per
unit
2.8 2.8 2.8 2.8 2.8 2.8 2.8 2.8 2.8 2.8 2.8 2.8
Total
overhead
cost
151,200 151,200 151,200 131,040 100,800 100,800 100,800 100,800 100,800 120,960 151,200 151,200 1,521,0
00

Question 4:
Actual Budget Variance
Purchase prices $3.4 3$ Unfavorable
Labor hour/unit 0.6 0.5 Unfavorable
 As can be seen from the table, Ricegreen’s accountant calculated standard costs for
materials and labor hour in detail to compare the budget performance to actual
performance as well as utilized the BSC to plan strategy. It is found out that the
company purchased with higher price and cost of labor exceeded the budget, then
the accountant wrote monthly reports and indicated the problems and solutions so
that the company can address the problems in time. The BSC is detailed and cover
sufficently 4 perspectives and has specific number to measure the target. Thus, the
planning tools of Ricegreen are specific and appropriate to solve financial
problem.
However, despite specific planning tools, the actual costs and BSC’s results are
unfavorable compared to the budgets. This may be due to lack of communication
between the accounting department and the market survey department, which
make accountant not know about the price fluctuations of inputs. For example, the
price volatility of paddy in 2020 is due to COVID-19 and in the Summer-Autumn
crops, paddy prices are also higher (VNP News, 2020). To solve this problem, it is
necessary to increase communication between the finance department and other
departments, planning tools should also be set up according to the high season and
low season. In addition, the increase in labor hour cost is due to the lack of
resources of the company, leading to an employee doing many jobs despite not
having professional skills, so the working hour increases (Hydra Cloud, 2020).
Therefore, the manager needs to manage the workload, understand the employees'
ability to avoid over or under allocations.

Question 5:
PEST analysis
 Political
According to Nhat Linh (2018), Vietnamese government always supports cooperation on
producing and exporting rice as well as plans strategies for developing rice export markets.
Additionally, the rice production and export industry is supported a lot in terms of taxes by
the government, signing with CPTPP and EVFTA is also an advantage for Ricegreen
because there will be no more trade restrictions. Although these factors may help
Ricegreen expand its market and gain more revenue, the company also has to face high
requirements for rice quality as well as compete with many other rice exporters. Besides,
due to COVID-19, the government has a policy of restricting rice exports to ensure
domestic food sources and limit the risk of disease transmission (Nam Khanh, 2020),
which has a negative impact on Ricegreen due to its large inventory.
 Economic
The growth rate, inflation rate, interest rate as well as exchange rate have significant
impact on the rice exporting industry. According to the statistics of Trading Economics
(2020), Vietnam’ GDP went up from 0.39% to 2.62% after the COVID pandamic. The
recovery of GDP after COVID-19 is a positive sign for rice industry because domestic
purchase goes up, then there will be higher rice consumption. Additionally, the low
inflation of 2.47 % in October of 2020 and the low interest rate result in the low cost of
capital, materials and labor, then the company can set the cheaper prices for consumers.
Moreover, the exchange rate in Vietnam is stable in 2020 (Nguyen Long, 2020), which
may bring Rice Green many benefits in export activity.
 Social
Vietnam is an argricultural country with over 97 million of population is a potential market
of rice industry. Additionally, the annual growth rate in Vietnamese population is 1,12%,
which results in a prospective sales of rice company in the fututre. Furthermore, according
to the scenario 1, Vietnamese people currently takes more concern about health and accept
to pay more for high quality rice, this is a favorable point for higher sales because of
increasing consumption.
 Technology

Currently, technology plays an important part in contributing to effective manufacturing.
According to the scenario 1, Ricegreen received high technology from its parent company
in Thailand. With high technology, Ricegreen can produce a large volume of rice in short
time but still ensuring the quality as well as support in inventory and issueing process,
which can reduce the production costs and raise profits.
SWOT analysis
Strength
- Support from government
- Achieve high technology from
parent company
- Available source of material in
domestic market
Weakness
- Actual inventory time is 40 days
(budget is 25 days)
- 6% of doubtful debts
- Vietnamese labor force is low
qualified
Opportunity
- Vietnam signed CPTPP and
EVFTA
- Vietnamese population is over 97
million and are willing to pay more
for high quality products.
- Vietnam well control the COVID-
19
Threat
- Vietnam has annual natural
disasters => unstable source of
paddy
- The negative impact of COVID-19
all over the world => possibility of
prevents rice exporting
- Changes in customer’s taste
a. S-O
Having support from government is an advantage of Ricegreen company, by
combining this strength with the opportunities created by signing with CPTPP and
EVFTA, Ricegreen can build a strategy to expand domestic and international markets.
Additionally, it is also possible for Ricegreen to enhance the quality of product
because the company has high technology provided by the parent company and the
Vietnamese are willing to pay more for the best quality products.
b. W-O

The poor labour force is a weakness of Ricegreen because using technology in rice
processing is still a new thing in Vietnam. However, this weakness can be overcome
because Vietnam has a large and intelligent labor force, along with easy access to
international markets thanks to the signing of CPTPP and EVFTA, Ricegreen can
learn knowledge and skills from foreign employees and train for Vietnamese
employees. The signing with CPTPP and EVFTA also helps Ricegreen export more
rice, thereby reducing inventory time.
c. S-T
In addition to its advantages, Ricegreen also faces a number of threats of natural
disasters and COVID-19. As an agricultural country, Vietnam is one of the five
countries most affected by climate change such as floods, droughts, and mangroves
(Nguyen Thi Lan, 2019). This seriously affects the inputs of Ricegreen. COVID-19 is
also a burden to the rice production and export. However, support from the
government can partly help the business overcome natural disasters, using technology
is also a good strategy to reduce the severity of natural disasters and epidemics.
d. W-T
A weakness of Ricegreen is the numer of doubtful debts of up to 6%, higher than
expected. To limit this, Ricegreen should have contracts with customers to deal with
the debt more easily. Additionally, Ricegreen should also invest in training courses for
employees so that they can performance better and increase productivity.
Balanced Scorecard analysis
In general, Ricegreen's BSC is specific and uses data to set strategic goals, but the
criteria set are not enough. In the Finance section, setting a goal to increase profit by
measuring the profit increase from the price and the sale volume is reasonable because
this will help the company try to sell more. However, Ricegreen plan to minimize
costs because the material costs and the labor costs of the company are higher
compared to the budget. In the customer perspective, the company should divide the
market share in the domestic market and the international market because Ricegreen
mainly focuses on exporting rice. In addition, it is unreasonable to measure market
share by % of market share, the measure should be the total revenue or sales volume

because market share equals the business sales / the market sales (tutor2u, 2016).
Moreover, customer satisfaction should be a measure because it can measure customer
loyalty, then helps the company identify the reason to solve and increase revenue
(Lisa Copley, 2017). To plan the strategy for internal business, the management
accountant did well because the measures for each indicators are suitable. In learning
anđ growh section, the management account should set strategy to train professional
skills for employees because the quality of labor is low. The measure for increase in
labor's technical skills should be KPIs and productivity because it helps the company
to know whether the business is on the right track or not (Marr, 2012). In conclusion,
the BSC of Ricegreen should add some other objectives to make the strategy more
sufficient, then the company can solve their existing problems and increase the
revenue.

Scenario 2
Question 1 + Question 2:
a. Compare the accounting management system of Ricegreen and SpaceZ
The Ricegreen and SpaceZ both have mutual problem, which is the threat of
competitiveness leads to lower profits and the sales are more difficult and slow.
Ricegreen
Management accounting system Advantages
- Using standard cost, standard price and
quality standard to prepare budget to control
and reduce the costs
- The management accountant works with
technical department and prepare monthly
report based on the standards
- Ensure quality and minimize
operating costs
- Analyze and prepare monthy report about
the variance for costs, revenue and inventory
time to know the problems and solve them
- Help the director to identify the
problem in time and find how to
solve them
- Prepare report about bad debt every month - helps the director to speed up and
have stronger methods to collect
debt
- The long-term contract is signed with
suppliers
- It is useful to avoid interruption of
input procurement
- Apply the balanced scorecard for strategy - the company can easily follow
their strategy and evaluate the
effectiveness of each activities
 Management accounting system helps Ricegreen ensure the quality of new rice
products, avoid long inventory, and reduce doubtful debts, thereby helping the
company increase revenue, profit and develop more sustainably.
SpaceZ Management accounting system Advantages
- Upgrade the the data system - Easily track each order’s process

to have timely solutions for any
customer’s complaint
- Using budget and all of expenditures are
based on the budget
- Helping the director strengthen
control over customer’s orders,
costs, revenue and risks
- Prepare report about revenue and costs
every 3 months
- Make it easier for director to make
decisions about whether to expand
or cut spending.
- Update the risk assessment before signing
the logistic contract and carefully notify to
the employees
- Helps to mitigate the negative
choice
- Build Porter’s five forces - To learn more about the company's
position, how competitive the
industry is and find ways to deal
with.
 Management accounting system helps SpaceZ minimize costs, increase
revenue and profit, and promptly resolve the unwanted problems from
customer’s complaint to innovate, increase customer satisfaction and remain
the objective market share.
b. The characteristics of a good accountant
- Prediction: a good accountant should forecast the future to plan the goals about
budget and standard costs and make decisions
- Ability to analyze the reason and consequence of a financial problem
- Ability to use special techniques and concepts such as planning tools to give
specific data and easier to keep track
- Know suitable method to provide financial information
- The information given by management accountant can be used to increase
efficiency

Question 3:
a. Ricegreen
The goal of Ricegreen is to enhance the product quality and increase the sales volume
to make higher profits. However, according to the scenario, the accountant of
Ricegreen cannot write an annual report about product quality and the company’s
productivity. Report is very important because it provides insights such as spending,
profit, growth and helps to forecast to build plans and budget (Melanie, 2019).
Therfore, no report provided may make the director difficult in assessing exactly the
quality of the product and productivity, from which the low productity cannot be
improved. This may due to the accountant’s lack of knowledge about this
perspectives. Therefore, the director should let the accountant work with other
department such as HR department to understand about the productivity and R&D
department to understand about the product quality. Additionally, the company is
having problem with the competitiveness. Therefore, they should apply Porter’s five
forces to analyze the competive statement in rice export industry before using BSC
because this tool is useful in measuring the competition and planning strategy (Vinish
Parikh, 2018).
b. SpaceZ
The goal of SpaceZ is to develop high quality service and hold 5% of annual market
share. However, the company has not had built strategy to achieve those goals. In
order to successfully enhance the product and keep 5% of marekt share, SpaceZ
should apply SWOT analysis because this tool is the base of following specific
analysis, it helps the company to plan a distinguish stratergies from other companies
by taking advantages of its own strengths and opportunities (Emet, 2017).
Addtionally, BSC is also highly recommended because it is useful for managing the
specific long-term strategies linked to the actions as well as provides measure of
strategy achievement, which makes the decision-making process less complex
(Patricia, Lucia, Beatriz, 2017). Besides, competitives is also a problem. Although
Porter’s five forces are asked to prepare to analyze its position, the accountant cannot
write annual report about SpaceZ competitiveness. Consequently, the company
positioning in the industry's competitiveness failed, the weaknesses are not identified

to be improved and the strengths are unknown to take advantage of, then leading to
slow sales and decreased profits. The reason for this problem may be because the
accountant does not know how to analyze company’s competitiveness. Therefore, the
accountant should join the Porter’s five forces analyzing process with MCKinsey
Vietnam to gain more experience.

Conclusion
In summary, both companies have good planning tools to solve their financial
problems and each tool is conducted carefully. However, the planning tools of each
company is insufficent. Ricegreen should use Porter’s five forces to solve competitive
issue and SpaceZ should apply some strategy analyzing tools such as SWOT and BSC
to reach the expected quality service and market share. Thus, two companies should
make changes to get solve financial problem, reduce costs and get higher efficiency.

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