MA_A2.1: Use of Planning Tools & Management Accounting Response

This report analyzes the use of planning tools and management accounting techniques to address financial problems, focusing on Coffeegreen Ltd. The assignment is divided into two parts: the first part examines the strengths and weaknesses of planning tools like standard costing, standard prices, budgets, and balanced scorecards, including cost calculations and revenue maximization strategies. The second part focuses on ethical considerations and proposes methods for dealing with financial problems in both Coffeegreen Ltd. and Galaxy Hotel. The report includes SWOT, PEST, and balanced scorecard analyses to assess the company's performance and strategic position, along with detailed monthly budgets and an examination of budget variances. The student provides insights into how these tools can be used to improve financial performance and decision-making.

MA_A2.1: Use of planning tools and management accounting to respond to
financial problems techniques
(Assessment 2 of 2, Individual assignment)
Unit Assessors: Nguyen Thi Phuong Hoa/ Le Quang Dung
Student’s name: Nguyen Ngoc Quang
Student’s ID: 10200189
Table of Content

I. INTRODUCTION........................................................................................................................3
II. PART A: SCENARIO 1:............................................................................................................4
1. Strengths and weaknesses of different planning tools.............................................................4
1.1. Standard cost.....................................................................................................................4
1.2. Standard prices..................................................................................................................5
1.3. Budgets.............................................................................................................................5
1.4. Balanced Scorecard..........................................................................................................6
2. Cost calculation.......................................................................................................................7
2.1. Task 2................................................................................................................................7
2.2. Task 3 :.............................................................................................................................7
2.3. Task 4................................................................................................................................9
3. SWOT, PEST and balanced scorecard analysis of Coffeegreen Ltd.....................................10
3.1. Balanced Scorecard........................................................................................................10
3.2 PEST....................................................................................................................................11
3.2.1. Political........................................................................................................................11
3.2.2. Economic.....................................................................................................................11
3.2.3. Social...........................................................................................................................12
3.2.4. Technology..................................................................................................................12
3.3 SWOT..................................................................................................................................13
III. Part B: SCENERIO 2...............................................................................................................14
1. Task 1.....................................................................................................................................14
1. A strong ethical sense................................................................................................................15
2. Task 2.....................................................................................................................................15
3. Task 3.....................................................................................................................................16
IV. CONCLUSION.......................................................................................................................17
VII. REFERENCE LIST...............................................................................................................18

I. INTRODUCTION
For the majority of accountants, a key role is giving the manager a clear picture consists of the
information gathered, processed, and interpreted. The organization might employ several
approaches and planning tools to finish the work. This report will be divided into 2 parts. The
first part is dedicated to the use of planning tools in management accounting of Coffeegreen Ltd
and the other part is about suggesting different methods for both Galaxy Hotel and Coffeegreen
Ltd to help them deal with financial problems

II. PART A: SCENARIO 1:
1. Strengths and weaknesses of different planning tools
1.1. Standard cost
Standard costing is a method of allocating costs to a product based on an analysis of the
resources used to create it and the related costs. This is a common method that has been used by
many suppliers to see the differences between the estimated cost of the products manufactured
and the cost of the estimated goods sold (Standard costing - What is standard costing? n.d.).
According to Mr. Kieso and his partners wrote in “Intermediate accounting” in 2019, there are
several advantages and disadvantages for this method,
 Advantage:
- Firms could enhance their cost management by setting higher targets for the expanding
type of spending.
- Helps the firm to be able to calculate the cost of the product precisely to make better
preparations.
- Assist in simplifying the process of predicting inventories, which is easier compared to
actual costing systems.
- Manages to help managers keep the cost down to maximize the profit
 Disadvantage:
- It is difficult for managers to calculate the cost precisely since it requires them to analyze
a lot of data to assess cost performance.
- Due to the enormous amount of date needed to do analysis, it can put more pressure on
workers, which can lead to the reduce in productivity
- If the firm does not update the statistics regularly while preparing financial statements,
the actual expenses may fluctuate.
1.2. Standard prices
Standard price is a pre-determined standardized pricing for a good or service based on its current
value, cost of replacement, or an assessment of its strategic significance in the industry
(BusinessDictionary.com, 2020).

According to Mr. Blocher and his partners wrote in “Cost management: A strategic emphasis” in
2010, there are several notiocable advantages and disadvantages about standard prices.
 Advantage
- It can increase the firm’s revenue by decreasing the input costs
- Allowing the organization to make the selection of the perfectly suited provider
- Helping managers work more effietly by providing data about price-fixing
- Provide further information about generating an emergency reserve money.
 Disadvantage
- Similar to one biggest drawback of standard cost, it takes a lot of time and effort from
employees to analyse precisely.
1.3. Budgets
Budgets are organized lists of predicted sales and expenditure that are focused on the probable
objectives that the company expects to achieve. It is therefore a kind of management's wish-list,
which are prepared as a document to use as a template for the company's expected future year
expenditures based on the organization's objectives (My Accounting Course, 2019).
According to Mr. Drury wrote in “Management and cost accounting” in 1980, there are several
notiocable advantages and disadvantages about this planning tool.
 Advantage
- With regards to the budget management in the implementation stage, the primary job is to
provide an outlet for resources and to produce business activities.
- Itoisousedoasoanoinnovativeostrategyothatoletsofirmsocontrolocapitaloandoaccomplisho
targets.
 Disadvantage
- The budget cannot support organizational strategies only if the financial strategy is
precise, accurate and practicable.
- It will be difficult for the firm to focus on its long-term goals if the managers don’t put
much effort into tracking, monitoring its present activities and operations.

1.4. Balanced Scorecard
A phrase known as balanced scorecard (BSC) denotes a management strategy that is utilized to
identify and advance various business operations while also measuring and optimizing various
company outcomes and effects on external businesses (Tarver, 2020).
According to Mr. Ayres’s article “4 Pros and Cons of Balanced Scorecard”, there are several
notiocable advantages and disadvantages about this planning tool.
 Advantage:
- Creating a specific illustration that offers companies the opportunity to succinctly convey
their strategies both within and outside their organizations.
- Creating a collaborative working environment for the employees from different divisions
within the company.
- Offer a clear strategy foundation and communication system
- Help the firm’s customers and shareholders have more insight knowledge about the
organization.
 Disadvantage:
- The company-wide action plan focus mainly on the overall performance of the business,
and it will not focus on personal achievement or work satisfaction.
- Collaboration across several divisions is required, which is further compounded by
integration with other programs, such as KPI (key performance indicator) tracking.
2. Cost calculation
2.1. Task 2
The standard cost of 1kg of processed coffee :
Direct material + Direct Labour + Overhead
= 1.4 x 2 + 0.6 x 5 + 100% x (0.6 x 5)
= 8.8 ($)
The cost of contract No. 348 :
- Overhead Allocate :
Overhead Rate (150%) x Quantity ( 24000 x 0.6 ) = 21600 ( < 70000)

=> Over allocation overhead: 70000 – 21600 = 48400 ($)
 The cost of contract :
Standard Cost x Quantity – Over Allocated Overhead
= 8.8 x 24000 – 48400
= 162800 ($)
The revenue of Coffeegreen Ltd :
Quantity Demand (kg) Selling Price ($/kg) Revenue ($)
300,000 10 3,000,000
280,000 11 3,080,000
250,000 12 3,000,000
240,000 13 3,120,000
200,000 14 2,800,000
 Coffeegree Ltd should produce 240,000 kg coffees with the selling price of
$13/kg to maximize the revenue.
2.2. Task 3 :
According to the scenario, monthly sales volume of high season is equal to 150% of the low
season’s figure combining with the information of 6 month in the high season, the same way for
the low season as well as the addition in the requirement , we can make a following math
Call the sales volume of low season is X
 The sales volume of high season is 150%X
 The total sales of 2021 :
6 x X + 6 x 150%X = 240000
 X = 16000 (kg)
 The budget sales volume in a month of high season = 24000 (kg)
The budget sales volume in a month of low season = 16000 (kg)
Following the given data, we can calculate the other monthly budgets of Coffeegreen Ltd
Sales revenue : High season ( November to April ) = 24000 x 13 ($)

Low season ( May to October ) = 16000 x 13 ($)
Production volume :
Sale volume current month x 60% + Sale volume next month x 40%
Production resources: Raw material = Production volume x 2.8
Labour = Production volume x 3
Variable overhead = Production volume x 3
The table below demonstrates the monthly budgets of Coffeegreen Ltd :
Month January February March April May June
Budgeted sales volume
(kg)
24000 24000 24000 24000 16000 16000
Budgeted sales revenue
($)
312000 312000 312000 312000 208000 208000
Budgeted production
volume (kg)
24000 24000 24000 20800 16000 16000
Budgeted
production
resource
($)
Raw
materials
67200 67200 67200 58240 44800 44800
Labour 72000 72000 72000 62400 48000 48000
Variable
overheads
72000 72000 72000 62400 48000 48000
Month July August September October November December
Budgeted sales volume
(kg)
16000 16000 16000 16000 24000 24000
Budgeted sales revenue
($)
208000 208000 208000 208000 312000 312000
Budgeted production
volume (kg)
16000 16000 16000 19200 24000 24000
Budgeted
production
resource
($)
Raw
materials
44800 44800 44800 53760 67200 67200
Labour 48000 48000 48000 57600 72000 72000
Variable
overheads
48000 48000 48000 57600 72000 72000

2.3. Task 4
Budget ($) Actual ($)
Price of coffee beans 2 2.3
Labor cost 3 3.75
Other factors are unchanged
Coffeegreen Ltd managers used planning tools to examine the variations between the
financial budgeted performance and actual performance and discovered that the problem is
the increase in the price of raw materials and decreased productivity of employees. Next, the
company's accountants designed several changes, solutions for next month.
As previously said in the report, the planning tools of Coffeegreen Ltd, which consist of
standard costs for material, labor, and overhead with the monthly budgets are extremely
detailed. The management accountants saw the difference between the actual and the
budgeted performance and recommended the next month's measures to be taken because of
it. At the end of the day, the planning tools have done what they were intended to do and
have helped ensure the company's long-term development.
3. SWOT, PEST, and balanced scorecard analysis of Coffeegreen Ltd.
3.1. Balanced Scorecard
Measure The target of
Quarter 1 of 2020
Actual
results
Financial Perspective
Increase profit Profit increase from the price $9,000 $7,500
Profit increase from sales volume $8,000 $6,000
Customer perspective

Increase market share Market share 10% 8%
Internal businesses
Improve product quality Quality index 99 points 96 points
Inventory time Inventory time 25 days 40 days
Doubtful debts Doubtful debts percentages 5% 6%
Environmental performance Recycle revenue $1,000 $1,300
Learning and Growth
R&D expenditures R&D expenditures as % of operating
costs
4% 4.5%
Social performance Women and minorities in the
workforce
3% 3.5%
Coffeegreen Ltd. first quarter of 2021’s balanced scorecard
It can be seen from the balanced scorecard that only “Learning and Growth” section surpasses the
company’s objectives while other sections all fall short of expectation. Noticeably, the actual
inventory time is 2 times higher than the target. All of that means Coffeegreen Ltd. hasn’t fully
understood its potential growth, especially in terms of internal businesses, customer and financial
perspective, therefore, many of the targets are unachievable. Coffeegreen Ltd’s managers have to
analyze deeply into these aforementioned sections to find out solutions, these problems can because of
the high production costs, unstable in employee’s productivity, etc. Overall, for the next quarter of
2021, Coffeegreen Ltd. has to modify its target objectives to match the actual performance of the firm.

3.2 PEST
3.2.1. Political
The decision toosignoCPTPPoandoEVFAoofoVietnameseogovernmento helps blurred the
foreign trade barriers, which makes it easier for a lot of Vietnamese businesses to expand the
market. As a result, there will be an increase in the number of new companies with big foreign
investment capital. In Coffeegreen Ltd.’s case, with the rapid growth trend in coffee production,
this seems to be a threat for the firm since there will be more new competitors with huge foreign
investment capitals. However, it’s sure that our government will try to support domestic
companies like Coffeegreen Ltd. in many ways such as promoting the slogan: “Vietnamese use
Vietnamese products”, applying Vietnam’s Law on Competition on these competitors, which
focuses on competition restraining agreements, market dominance, economic concentration, and
unfair practices (Das, 2019).
3.2.2. Economic
Due to the outbreak of Covid-19, the trading activities worldwide has been delayed, which poses
a great threat to not only our country’s economy but also every production company, included
Coffeegreen Ltd. However, thanks to many perceive methods and decisions from our
government, Vietnam is one of the best countries in the world in terms of coping with Covid-19.
Therefore, Vietnamese inflation in 2020 remained below 4% and the country’s growth rate was
2,2% (Lee, 2021)
According to the Ministry of Agriculture and RuraloDevelopment, Vietnam gained
approximately 2,7obillion $ by exporting 1,7omillion tons of coffee ino2020, which is incredible
since it accounted for over10% of global coffee value (VN to build upscale coffee brand, 2021)
3.2.3. Social
To be gain profit by exporting products to the foreign market, Coffeegreen Ltd must
ensure quality products meet the requirements of food safety and hygiene from many countries,
particularly from German, since German is the number one market for coffee exporting (Tran,
2020). As stated in the brief, the coffee produced by Coffeegreen Ltd is high-quality Arabica
coffee, which can attract the attention in the market easily since Arabica is the most favored
flavor in the world (Kalebjian, n.d.). While most Western countries are known for their attention

to human rights, labor laws, animal rights, and environmental protection, other countries from
the rest of the world are still increasingly concerned with corruption, nepotism, privacy
violations, and economic inequity. Therefore, if companies from these countries want to gain
profit by exporting their products to the Western market, they have to follow those
aforementioned requirements. Luckily, as stated in the brief, Coffeegreen Ltd with
environmentally friendly technology, high social responsibility in maintaining women's rights
and recycling its wastes, Coffeegreen Ltd seems to advantages.
3.2.4. Technology
Due to the rapid development of technology, many industries will always have new challenges to
face and great achievements to reach, particularly in the coffee industry. The high-tech
equipment is provided by Coffeegreen Ltd.'s German partner, who helps them meet the food
safety and hygiene standards, as well as the requirement of advanced technology. Although the
new technology provided by the German partner gives the company a great competitive
advantage, the expenses are high when consider functioning and maintaining that technology,
which may cause the company to face some complicated problems.
3.3 SWOT
Strengths
+ Having advanced technology from German
partner
+ Abundant in coffee resources
+ Coffee is a consumable good with high and
stable demand in the market
+ Having environmental friendly technology,
high social responsibility in maintaining women
rights, and recycling
Weaknesses
+ Production cost is uncompetitive
+ Quality of workers is not secured