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Based on the above conditions, Vietnamese textile and garment businesses can
apply the traditional ABC model, which is typically used by multinational corporations,
foreign companies, or FDI companies with abundant resources, highly qualified
accounting teams, and process and resource support from affiliated companies abroad.
b. Applying the ABC model using the EAD matrix for Vietnamese textile and
garment businesses in digital economy
In order to apply the ABC model using the EAD matrix, businesses need to ensure
they meet the following conditions:
- Indirect costs account for a large proportion of total costs: This is a prerequisite for
considering the application of the ABC method in the business.
- Traditional cost calculation methods fail to meet the information requirements
related to costs and prices. Businesses want to take advantage of the significant benefits
of the ABC method but lack the capacity to implement and maintain large and complex
traditional models; they cannot provide sufficient and consistent data required by the
traditional ABC model;
- Limited technological and financial resources; managers and employees face
difficulties in accessing and familiarizing themselves with the complex ABC process.
- Limited textile product portfolio: Due to the nature of the ABC model using the
EAD matrix, based on the operating cost matrix (EAD) and the activity-product matrix
(ADP) for cost allocation, constructing these matrices becomes very complex and difficult
if the number of activities and product portfolio is too large.
- Managers with sufficient expertise and experience can make accurate estimates:
Due to the nature of the ABC model using the EAD matrix, the allocation of general
manufacturing costs is mainly based on estimates to calculate the cost allocation ratios in
the EAD and ADP matrices. These estimates, in turn, depend largely on the expertise and
experience of those performing the activities and the business managers. Therefore, if
managers have sufficient expertise and experience to make estimates as close to reality
as possible, then applying the ABC model using the EAD matrix is ​ ​ a suitable option.
The ABC model using the EAD matrix will be suitable for the majority of
Vietnamese textile and garment businesses today. This model is relatively easy to apply to
small and medium-sized Vietnamese textile and garment businesses without requiring
large investments in complex data collection systems and business restructuring.
c. Applying the TDABC model for Vietnamese textile and garment businesses in
the digital economy.
In order to apply the TDABC model, businesses need to ensure they meet the
following conditions:
- The business should have a significant proportion of general manufacturing
overhead costs in its total costs.
- The business should operate under a production-based model, resulting in a
variety of product types, activities, and cost centers. This diversity should exceed the
capacity of the traditional ABC system.
- The production process must be continuous, making it difficult to allocate costs to
individual activities.
- The business's ability to build a comprehensive Enterprise Resource Planning (ERP)
system is essential to support the application of the TDABC model.
Therefore, according to current surveys, the application of ERP systems in
Vietnamese textile and garment businesses is not yet widespread, making this model

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