Title: Product costing practices: evidence from SMEs throughout Jogyakarta Province, Indonesia

Authors: Christina Wiwik Sunarni

Addresses: Accounting Department, Faculty of Economics, Atma Jaya Yogyakarta University, Bonaventura Campus Building, Jalan Babarsari 43 Yogyakarta, 55281, Indonesia

Abstract: This paper addresses the product costing practices, by examining the product costing method use by 46 small and medium manufacturing companies. Product costs information is very important to managers in helping them doing their functions. Because overhead cost is the only indirect product cost, this research focuses on the method use to assign factory overhead cost to each product. There are three methods of factory overhead cost allocation: plant-wide or single rate, departmental rate and activity rate. The research reveals that 66.67% of obserbed companies use single rate in assigning the overhead costs. Although in the past several years, activity-based costing is getting its popularity but plantwide and departemental rate that are considered as traditional approach in allocating overhead costs still dominated the costing practices. The result is in line to Krumwiede and Suessmair (2007). Additional finding is that in general, there is no divergence the product costing practices across the different type of manufacturing companies in observed companies. This research finding is alike to Brierly et al. (2007).

Keywords: product costing; indirect costs; plant-wide rate; departmental rate; activity rate; Indonesia; SMEs; small and medium-sized enterprises; manufacturing industry; factory overheads; overhead cost allocation; overhead costs.

DOI: 10.1504/IJEPEE.2012.052306

International Journal of Economic Policy in Emerging Economies, 2012 Vol.5 No.4, pp.308 - 317

Published online: 26 Feb 2013 *

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