NATIONAL ECONOMICS UNIVERSITY

INTERNATIONAL SCHOOL OF MANAGEMENT AND ECONOMICS

HIGHER NATIONALS
BTEC HIGHER NATIONAL DIPLOMA IN BUSINESS (RQF)

Unit Code, Number and Title H/601/0548 RQF level 4 - Unit 5: Management Accounting

Semester and Academic Year Semester 2/ Academic year 2020 - 2021

Unit Assessor(s) Nguyen Thi Phuong Hoa /Pham Thi Thuy/Le Quang Dung/Pham
Thanh Huong

Assignment Number and MA A2.1: Use of planning tools and management accounting to
Title respond to financial problems techniques (Assessment 2 of 2)

Issue Date Monday, April 19 2021

Submission Date 10:00 am, Thursday, 27th May 2021 (soft copy only)
IV Name Ho Hoang Lan

IV Date Thursday April 15th 2021

Student name

NEU Student ID Pearson ID

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Submission format and Instructions:

This assignment (Assessment 2) covers Learning Outcome 3 & 4 (LO3 and LO4).
 This is an individual assignment.

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 This assignment should be written in a concise, formal business style using Arial 11 or Times
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To achieve a Merit, you must achieve ALL the Merit criteria (and therefore the Pass criteria). To
achieve a Distinction, you must achieve ALL the Distinction criteria (and therefore the Pass and
Merit criteria).

Unit Learning Outcomes:

LO3 Explain the use of planning tools in management accounting

LO4 Compare ways in which organisations could use management accounting to respond to financial
problems
Assignment Brief and Guidance:

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SCENARIO 1:
Coffeegreen Ltd. is a joint venture between GiaLai Coffee Processing Company Ltd. and German
Drink Ltd. Coffeegreen’s products are high-quality Arabica coffee mainly for export. One kg of
processed coffee requires 1.4 kg of raw coffee bean. Coffeegreen receives the transfer of high
technology from its long-lasting parent in Germany. Barriers to enter the sector of coffee processing
are (i) strict standards of importers for food safety and hygiene and (ii) sophisticated technology.
Since 2018, Vietnam signed CPTPP and EVFTA, exports to foreign countries have become easier
and the market penetration has been easy. Coffeegreen Ltd. strategy is to produce high-quality
products using environmentally friendly technology. Coffeegreen is also active with social
responsibility by stating that it gives priority for women and minorities to be recruited and recycles its
waste. Recently, Vietnamese are more concerned with health and environment and willing to pay
more for high-quality and environmentally friendly coffee. This pattern of consumption is favourable
to the sale of Coffeegreen products as well.

Standard costs of Coffeegreen for 1 kg of coffee are as follows:

Coffee bean costs: 1.4 kg * $2/kg = $2.8

Direct labour costs: 0.6 labour hours * $5 per hour = $3
Predetermined overhead rate: 100% of labour costs

Coffeegreen applies normal costing to its products. In March 2021, Coffeegreen processed and
completed 24 tons of coffee. Of which 15 tons were exported to Aldi supermarket of Germany
following the contract No. 348 signed on December 15, 2020. 4 tons remained in the warehouse at
March 31, 2021 for sale in April 2021. Actual overheads for March 2021 were reported then
$70,000. The policy of Coffeegreen is that the over/under-allocation of overhead should be counted
in the cost of goods sold.

Estimates for the market possibility of coffee in 2021 of Coffeegreen are below:

Quantity demanded (kg) Selling price ($/kg)

300,000 10
280,000 11
250,000 12
240,000 13
200,000 14

The monthly sales volume in the high season (November-April) is 150% the monthly sales volume
of the low season (May to October). The monthly production volume is 40% of the sales volume of
the next month and 60% of sales volume of the current month.

The performance of Coffeegreen Ltd. for the first quarter of 2021 is shown in its balance
scorecard as follows:

Measure Target of Quarter 1 Actual

of 2020 results
Financial Perspective
Increase profit Profit increase from 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

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 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 4% 4.5%
costs
Social performance Women and minorities in workforce 3% 3.5%

Required (LO3, Grades: P4, M3, D3):

1. Explain advantages and disadvantages of planning tools (standard costs, standard price,
budgets, balanced scorecard) for Coffeegreen Ltd.
2. Calculate the cost of the contract No. 348. Calculate the standard cost for 1 kg of processed
coffee and determine the selling price that helps Coffeegreen Ltd. maximize its revenue in 2021.
3. With the sales specified from the requirement 2, prepare the monthly budgets for sales revenue,
production volume, each production resource (raw materials, labour, variable overheads).
4. Now assume in March 2021, actual performance of Coffeegreen was as follows: the purchasing
price of coffee beans: $2.3/kg of coffee bean, actual labour hour: 0.75 labour hours/kg of
processed coffee, other things were the same as planned. Management accountants of
Coffeegreen evaluated performance of Coffeegreen in March 2021 and prepared reports to
management indicating problems that Coffeegreen might acquire with the high price of coffee
bean materials and inefficiency of processing workers, then recommended remedies for the next
months. Evaluate how planning tools respond appropriately to solving financial problems to lead
Coffeegreen to sustainable success.
5. Apply PEST, SWOT and balanced scorecard analysis for Coffeegreen Ltd.

SCENARIO 2:

Joining CPTPP provides many export opportunities for Vietnamese products but also raises
competition to Vietnamese producers. This competition may lead to financial problems of
Vietnamese companies such as lower profit (hence lower owners’ capital) and weaker liquidity (as
sales can be more difficult and slow).

Coffeegreen Ltd. company (mentioned in details in Scenario 1) is a large processor of coffee, and
operating in Vietnam. Traditionally, it has been giving generous credit sales to customers to
compete. To catch the export opportunity to CPTPP and EVFTA members, since the late 2018,
the General Director (GD) of Coffeegreen has tried to introduce the new kinds of products,
conducted social responsibility and new sale patterns to satisfy better foreign customers. Besides,
the GD has increased control over its purchase, storage, receivables and quality of products so as
to reduce operating costs and ensure profit and liquidity. Coffeegreen Ltd. established and strictly
enforced quality standards for coffee products and coffee bean materials purchased to control and
reduce costs of quality. The GD also required management accountants to work with technicians
to establish standard costs for raw materials, labour and manufacturing overheads. Operational
budgets were then prepared (and made in details for each month of the year) based on these
standards. The GD also required management accountants to do variance analysis at the end of
month for cost items and revenue and inventory time. If a variance is more than the threshold,
which is specified to be 5% of the standard, management accountants have to include such
variance in the monthly report to the Director to help him recognize and correct in time. The credit
accountants were required to prepare monthly reports about the age of each customer. Purchases
are controlled by signing long-term contracts with farmers to ensure no supply interruptions and
no coffee bean fluctuations. Recently, the GD applied the balanced scorecard for monitoring its
strategy. The GD also demands accountants to prepare the annual report about productivity and
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 product quality but accountants have not been able to provide.

Galaxy Ltd. is a Vietnamese hospitality company. It has several 4-star hotels in Quang Ninh, Hue
and Danang. Its strategy is to provide high quality services and maintain the market share of 1%
every year. To catch opportunities from CPTPP and EVFTA, since the late 2018, the Director of
Galaxy has increased controls over service quality, costs, revenue and risks. Budgets have been
stringent and expenditures have been made based on budget items only. The information system
was upgraded to receive and process quickly orders and complaints of customers. Camera
systems have been upgraded to ensure security. Revenue and cost reports are prepared each
quarter by each kind of services to help Director decide on expansion or reduction of a service
line. Standard behaviours are designed and trained for staff. Feedbacks of customers are
scrutinized by the Director to seek improvements. Recently, the Director started to order McKinsey
Vietnam Ltd. to build Porter’s five forces so as to analyse its positions and to specify competing
measures. The Director demands Galaxy accountants to analyse and report about Galaxy room
occupancy rate each month, but the accountants have not been able to do such work.

Required (LO4, Grades: P5, M4, D3)

1. Compare how Coffeegreen and Galaxy are adapting management accounting systems to
respond to financial problems. Based on scenarios of Coffeegreen and Galaxy, indicate
characteristics of an effective management accountant?
2. Analyse how in responding to financial problems, management accounting can lead
Coffeegreen and Galaxy to sustainable success.
3. Evaluate how planning tools for accounting respond appropriately to solving financial
problems to lead Coffeegreen and Galaxy to sustainable success.
4.

Learning Outcomes and Assessment Criteria

Learning Achieved Achieved Achieved
Pass Merit Distinction
Outcome (ticked) (ticked) (ticked)
LO3 Explain P4 Explain M3 Analyse the D2 Evaluate how
the use of advantages and use of different planning tools for
planning disadvantages of planning tools accounting
tools in different types of and their respond
management planning tools application for appropriately to
accounting used for preparing and solving financial
budgetary control forecasting problems to lead
budgets organisations to
sustainable
success
LO 4 P5 Compare how M4 Analyse D3 Evaluate how
Compare organisations are how in planning tools for
ways in adapting responding to accounting
which management financial respond
organisations accounting problems, appropriately to
could use systems to management solving financial
management respond to accounting can problems to lead
accounting to financial problems lead organisations to
respond to organisations to sustainable
financial sustainable success
problems success

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* Please note that grades are provisional. They are only confirmed once internal and external verifiers
have taken place, and the final decisions have been agreed at the assessment board.
* This grade only reflects the result of this assignment, not for the whole Unit.

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