FINAL REPORT COST ACCOUNTING

COST ACCOUNTING ANALYSIS AT LANG-LANG BUANA ICE FACTORY

GROUP 4 MEMBERS :
1. RADINDA LARASATI K (C1C022015)
2. DHIYA MUFIDAH ERYA KAMILA (C1C022050)
3. ANISA FEBRIANA (C1C022100)
4. M NABIL IBRAHIM (C1C022101)
5. EEN REPANI ELSYA S (C1C022171)

LECTURER :
SRIWIDHARMANELY, SE, MBM, Ak., CA

ACCOUNTING STUDY PROGRAM

FACULTY OF ECONOMICS AND
BUSINESS BENGKULU UNIVERSITY
2023
 PREFACE

Assalamualaikum wr.wb

We express our gratitude and thanks to the Almighty Allah for His blessings,
enabling us to complete the research paper on “Cost Accounting Analysis at
Lang- Lang Buana Ice Factory” assigned by Mrs. Sriwidharmanely, SE, MBM,
Ak., CA, our Cost Accounting course instructor.

We realize that despite our efforts to present this paper to the best of our abilities,
there may still be shortcomings. Therefore, we welcome critiques and suggestions
from Mrs. Sriwidharmanely, SE, MBM, Ak., CA, our peers, and anyone reading
this paper. Through their feedback, we aim to improve not only our future paper
writing but also our lives, striving continuously for betterment.

This concludes our introduction, and we apologize for any inaccuracies in our
writing.

Wasalamualaikum wr.wb

ii
 TABLE OF CONTENTS
Page
COVER................................................................................................................................i
PREFACE...........................................................................................................................ii
TABLE OF CONTENTS.................................................................................................iii

CHAPTER I PRELIMINARY

1.1 Background..................................................................................................1

1.2 Problem Formulation.................................................................................2

1.3 Objectives of The Project...........................................................................2

1.4 Contribution Of The Project (Practices and Theoritical).......................2

1.5 Data Collection Methods............................................................................2

1.6 Reporting Scopes.........................................................................................3

CHAPTER II LITERATURE REVIEW

A. Cost Accounting, Cost Concept, Cost Classificattion and Allocation....4
B. Process Costing..........................................................................................10
C. Materials: Controlling, Costing and Planning.......................................12
D. Labor: Controlling and Costing Accounting..........................................15
E. FOH Planned Actual and Applied...........................................................17

CHAPTER III FINDINGS AND DISCUSSION

3.1 Findings......................................................................................................20
3.2 Discussion...................................................................................................27

CHAPTER IV CONCLUSION AND RECOMMENDATION

4.3 Conclusion..................................................................................................28
4.2 Recommendation.......................................................................................28

BIBLIOGRAPHY

APPENDIX

iii
 CHAPTER I

PRELIMINAR

1.1 Background
In the era of globalization and intensifying business competition, manufacturing
companies, including ice factories like Lang-Lang Buana, play a crucial role in
providing quality products that meet consumer needs. As a manufacturing entity,
Lang-Lang Buana engages primarily in producing block ice for sale, especially
catering to fishermen. Several distinct characteristics of manufacturing
companies, possessed by Lang-Lang Buana, involve the process of transforming
raw materials into finished products with added value.

An integral aspect of operational management in manufacturing companies is the

analysis of production costs. Production costs play a pivotal role in determining
pricing strategies and a company's profitability. Involving all cost elements, from
raw material procurement to processing into finished products, constitutes a
crucial step in determining a company's sustainability and competitiveness in the
market.

In the context of an ice factory, computing production costs becomes increasingly

complex due to the involvement of processes that encompass energy, machinery,
and labor. These factors necessitate careful consideration to ensure that the
resulting production costs accurately reflect the company's operational realities.
Errors in determining production costs can adversely affect pricing strategies, the
company's profitability, and impede its ability to compete effectively in the
market.

By understanding the significance of production cost analysis in the context of

manufacturing companies like Lang-Lang Buana, this paper aims to delve deeper
into appropriate and relevant methods for calculating production costs within an
ice factory setting. Consequently, this paper endeavors to provide better insights
into production cost management within the ice manufacturing industry, with the
hope of aiding companies in enhancing operational efficiency and
competitiveness in the market.

1
1.2 Problem Formulation
1. What is cost accounting , Cost concept, Cost classification and Cost
allocation?
2. How to calculate process costing?
3. How do you calculate biaya bahan baku?
4. How do you calculate biaya tenaga kerja?
5. How to calculate Biaya Overhead Pabrik?

1.3 Objectives Of The Project

1. Explain about cost accounting, cost concept, cost classification and cost
allocation.
2. Explain how to calculate process costing.
3. Explain how to calculate biaya bahan baku.
4. Explain how to calculate biaya tenaga kerja.
5. Explain how to calculate Biaya Overhead Pabrik.

1.4 Contribution Of The Project (Practices And Theoritical)

With this report it is hoped that it can increase knowledge about cost accounting
in manufacturing companies for writers and provide information for all parties
and can be used as material for discussion and additional information to conduct
research in the same field by correcting the deficiencies that exist in this report.

1.5 Data Collection Methods

A. Time and Place

Day/Date : Monday, November 20th 2023
Time : 1) 07:00 – 08:00 WIB
2) 16:00 – 17:00 WIB
Place : Lang-Lang Buana Ice Factory, Jl.Enggano
Pasar Bengkulu, Sungai Serut District,
Bengkulu City.

2
B. Methods Of Data Collection
 Interview
 Voice Recording
 Photos

C. Data Assessment
1. Literature from various sources such as books and the internet
2. Data from direct interviews with informants Mrs. Icapranita Sari S.H as
the factory owner and Mr. Heri as the factory manager.

1.6 Reporting Scopes

In compiling this paper our group provides several limitations of the
problem in the discussion including:

1) The accounting used in this study is cost accounting in manufacturing

companies.
2) Our group calculated the accounting used by Lang-Lang Buana Ice
Factory using data and information sources obtained from two
interviews.
3) Our group only reported according to what happened in the company
(case study), namely Lang-Lang Buana Ice Factory, not about what
should have happened.

our group only reports company data (Lang-Lang Buana Ice Factory) in
November 2023

3
 CHAPTER II
LITERATURE REVIEW

A. Cost Accounting, Cost Concept, Cost Classification and Allocation

1. Cost Accounting
Cost accounting is a system of information that identifies, analyzes, and
presents financial and non-financial information related to the costs associated
with the acquisition or utilization of organizational (company) resources. Cost
accounting provides the necessary cost information for financial and
managerial accounting. Therefore, the information generated depends on the
intended audience.

2. Cost Concepts
Cost accounting is an information system that provides cost information to
management to execute managerial functions. Hence, understanding cost
concepts and terminology is crucial, as cost information can significantly
impact a company's financial success.

3. Cost Classification
The objective of cost accounting is to provide high-quality cost information to
management for planning, monitoring, and decision-making. Therefore, costs
should be classified according to their purpose, i.e., what they are used for.
Categorization involves grouping all components more rigorously and
systematically to obtain more precise (useful and meaningful) information.

 Classification Based on Company Activities

In manufacturing companies whose primary function is processing raw
materials into finished products for sale, the scope becomes more complex as it
encompasses production, marketing, and administration.

a) Production Costs
These costs are related to production functions, incurred during the
processing of raw materials into finished products ready for sale. Three
factors of production costs:
1) Direct costs are those directly traceable or identifiable to a
specific product and are an inseparable part of that particular
product.
2) Indirect costs arise from production department labor or
resource sacrifices, whose benefits can be traced or identified
4
 and accurately attributed to the product.
3) Factory overhead costs are production costs that cannot be
directly associated or identified with a product. These costs
include:
 Indirect material costs: components used in the production
process, with relatively small values and cannot be directly
traced or identified from the product.
 Indirect labor costs: costs resulting from production worker
jobs or resource sacrifices that cannot be traced or identified
in the company's produced products. Other indirect costs
are beyond indirect materials and indirect labor costs
incurred in the production department when these costs
cannot be identified or recovered from the company's
produced products.

b) Non-Production Costs
Non-production costs are expenses unrelated to the production
process, including marketing and general administrative costs.
1) Marketing costs encompass activities to market a
product, from pre-sales product preparation to after-
sales.
2) General administrative costs are associated with
administrative and general activities concerning the
smooth planning, coordination, direction, and
management of the company.

 Classification Based on Activity Behavior

Understanding cost behavior is crucial for management to respond to operational

changes. Cost behavior refers to how an expense reacts or changes when there is a
change in a company's operations. If an activity increases or decreases, will its
costs change proportionally or disproportionately, or maybe not at all? Classifying
costs based on activity behavior requires management in planning, control, and
decision-making.

a) Fixed Costs
Fixed costs are expenses whose total amount does not change with changes in
activity (production volume) in the relevant area. However, the fixed cost per
unit output changes. The change in fixed costs per unit output is inversely
related to changes in activity (production volume); as activity increases, the
fixed cost per unit output decreases, and vice versa.

5
b) Variable Costs
Variable costs are expenses where the total amount varies in proportion to
changes in demand within an area. Activity can refer to production quantity,
quantity of products sold, number of machines, and so forth. The higher the
activity (quantity produced), the higher the total quantity (variable cost), and
vice versa. However, the variable cost per unit of production remains constant
within a certain range.

c) Semi-Variable Costs
Semi-variable costs are expenses where the total amount varies, but this
variation is not proportional to changes in activity (production volume) in that
area. The greater the activity (production volume), the higher the total cost,
and vice versa, but the change in value is not proportional. Semi-variable costs
contain elements of both variable and fixed costs, hence distinguishing these
costs from variable and fixed components is necessary for management's
planning, control, decision-making.

 Grouping Costs Based on Cost Object

Understanding absolute costs is necessary because management needs
significantly influence cost classification based on the cost object. Each cost
change affects cost recognition and measurement. The cost object or cost target
is an item or activity to which costs are allocated and debited. Examples
include products, departments, divisions, processes, contracts, a group of
similar entities, product lines, customer orders, strategic goals for the fiscal
year, etc. In a cost accounting system, two stages need to be implemented: cost
accumulation and cost allocation. Cost accumulation is a set of cost
information organized by an information system. Costs are allocated by
considering the cost of the cost object (accumulated cost). Cost determination
depends on the ability to trace costs to cost objects, ranging from simple to
more complex tasks. The most common way to differentiate cost characteristics
is by grouping costs into direct and indirect costs.

a) Direct Costs
Direct costs are expenses that can be directly traced or identified to a cost
object, forming the basis for allocating direct costs to a cost object.

b) Indirect Costs
Indirect costs are expenses that cannot be directly traced or identified to a cost
object, or several cost objects benefit from these costs, making cost allocation
the basis for determining indirect costs of the cost object.

6
c) Operational Planning
Costs are easily classified as direct costs when company-owned facilities
(machinery) are specifically used for a specific cost item.

 Classification Based on Department Allocation

One cost classification based on the cost object is based on products, while
others are based on departments. Costs in manufacturing companies can be
grouped into direct departmental costs and indirect departmental costs. The
goal of cost classification is accurate cost allocation and control.
Manufacturing companies divide departments into two parts: production
departments and service departments.

a) Production Departments
Production departments are those processing raw materials into finished
products. Production departments are usually subdivided into smaller cost
centers based on product processing or machine groups to obtain more accurate
cost allocations.

b) Support Departments
Support departments do not carry out production processes. The task of support
departments is to provide service and contribute to the smooth operation of
other departments, both production and other support departments.

 Classification Based on Timing of Cost Incurrence

Expenses can be classified according to when the cost is reflected in income.
The goal of cost classification is to align costs with income (matching
principle) and periodically measure profits. Costs can be grouped based on the
timing of cost incurrence: product costs and period costs.

a) Product Costs
Product costs are all costs incurred to acquire or produce a product. In
manufacturing companies, product costs involve all costs involved in
processing raw materials into products, comprising material costs, direct labor
costs, and factory overheads until the product becomes inventory. Product
costs pass through raw material inventory, work-in-process inventory, and
eventually become finished goods inventory. Hence, production costs are also
referred to as inventory costs.

b) Period Costs
Period costs in manufacturing companies are all costs not included in
7
 production costs. These costs are included in the sales revenue account in the
income statement based on the timing of occurrence. Marketing expenses and
general administrative expenses are recorded as period costs because they are
not directly related to the production process but occur in connection with
sales. Therefore, these recurrent costs cannot be included in inventory costs;
hence, these costs are often termed as "sunk costs."

 Classification of Costs Based on Administrative Control

One of the managerial tasks is exercising control. If management can influence
and control costs, then management is responsible for those costs. This
classification of costs is used to monitor and evaluate managerial performance
based on departments. The extent of control authority also correlates with the
managerial level and is determined based on the expectation of whether the
costs are under management's control or not. Here are the details of these costs:

a) Controllable Costs
Controllable costs are those that management can significantly influence and
control within a specific timeframe.

b) Uncontrollable Costs
Uncontrollable costs are those that cannot be significantly influenced or
controlled by management over a particular period.

 Classification of Costs Based on Decision-Making

Decision-making is the process of choosing among several available options.
Each choice carries cost and benefit implications that need to be compared
with those of other available options, making an understanding of cost
concepts crucial. The objectives of classifying costs for management decision-
making are presented below:

a) Relevant Costs
Relevant costs are future costs that differ among various decision alternatives.
Criteria for a cost to be considered relevant include (1) being realizable and (2)
being different. Therefore, both these criteria should be considered when
making decisions. Here are some types of expenditures categorized as relevant
expenses: differential costs, opportunity costs, inherent costs, avoidable costs.

b) Irrelevant Costs
Irrelevant costs do not affect a decision; hence, they need not be considered.
Here are some types of costs classified as irrelevant: sunk costs and historical
costs.

8
4. Cost Allocation
Cost allocation is the process of identifying, gathering, and assigning costs to
cost objects such as departments, products, programs, or branches of the
company. It involves identifying cost objects within the company, identifying
costs incurred by these cost objects, and then assigning costs to cost objects
based on specific criteria. When costs are allocated accurately, a company can
track specific cost items that bring profit or loss. If costs are assigned to the
wrong cost objects, the company may direct resources to cost objects that don’t
generate the expected profit.

9
B. Process Costing

 Definition and Characteristics of Process Costing

The production process within a factory involves several departments, each
carrying out specific functional roles in assembling products. Finished goods
from a particular department become raw materials in the subsequent
department, continuing until the production unit is processed and moved to the
finished goods warehouse. Process costing is a system that allocates production
costs incurred by departments during a specific period, making the department
the focus of the costing system. Here are some features of process costing:
 Production processes occur continuously and massively, resulting in
uniformly standardized products.
 Total costs and cost per unit are calculated at the end of each
accounting period.
 Costs are accumulated per department, and the cost per unit for each
department is obtained by dividing the total costs of each
department by the number of units produced in that department.
 The cost of production reports for each department is used to
compile, summarize, and calculate total costs and costs per unit for
each department at the end of the period.

 Production Process Flow

The manufacturing process flow, depicted in a manufacturing process diagram,
may involve different pathways in processing. It's crucial to understand the
physical flow or movement, as the product consumption flow follows the physical
product flow. Here are common classifications of production processes based on
cost calculations:

1. Sequential Product Flow

In a sequential production flow, all products are manufactured in the
same order within the same process. For instance, in the shoe industry,
products pass through three departments sequentially: cutting, stitching,
and assembly. Costs are allocated at each stage based on material,
labor, and factory overhead. The finished product is then moved to the
finished goods warehouse for sale.

2. Parallel Product Flow

In a parallel production flow, specific parts of the work steps are carried
out simultaneously and merged into a final process or product. For
example, in instant noodle production, mixing and processing of the
noodles occur parallelly, as do the spice processing and packaging.
Costs are allocated based on each department's operations.
10
 3. Selective Product Flow
In a selective production flow, products move between different
sections within production departments based on the type of final
product being produced. Each process yields different final products.
For instance, in the meat industry, production starts at a cutting facility
and is then divided into three separate departments for different final
products.

 Cost Accounting System

The foundational concept of job costing systems also influences process
costing systems. The use of process-based costing does not change cumulative
production costs (materials, labor, and factory overhead). The distinction
between pass-through and process costing lies in the traceability of costs to
each processing department.

 Product Cost Reports

In a process-based costing system, all costs incurred in a department are
compiled into a cost report for that department. The industrial cost report is an
analysis of a department or cost center over a specific period. It presents the
quantity of processed units, accumulated production costs, and details thereof.

1. Quantity Schedule (Production Schedule)

This information covers the number of products entering and
exiting the processing during a specific period. Quantities are
expressed in production units (e.g., kilograms, liters, etc.). The
total processed units should match the total output.

2. Costs
This section includes total allocable costs, equivalent units, and
production costs per unit. Allocated production costs include
initial balances, costs received from previous departments, and
additional expenses incurred in the current department.
3. Cost Accountability
Cost accountability encompasses the absorbed production costs
within a product during a period, including finished products
moved to the warehouse, lost products, damaged goods, or
defective items.

11
C. Materials: Controlling, Costing and Planning

 The Material Management System

The accounting system for materials in manufacturing companies varies

depending on the size and type of the industry. However, the general process
begins with water processing and moves through various stages until ammonia
and salt are acquired. Whether conducted manually or through
computerization, tracking from acquisition to material usage is crucial in
calculating the cost of materials based on orders or departments managing
inventory with a perpetual inventory system. Several documents are needed at
each stage for recording and distribution among departments. Here are the
procedural steps for material management, starting from acquisition to material
usage:

 Production Line and Production Planning Section

For each product type, a production process sequence needs to be determined,
along with the main production process plan, accompanied by detailed material
requirements. The material requirement list includes the quantity, type, and
timing needed for each material in the production process.

 Material Receipt Report

A report is generated to ascertain the quantity and quality testing of purchased
materials. Quality testing involves freezing processed materials. Finally,
approval of purchase invoices received from suppliers is completed.

 Material Requisition Evidence

The Warehouse Department is responsible for material management, receiving,
and releasing materials based on specific requests from designated departments
(Production Department) at specified times.

 Material Inventory Card

The Accounting Department records the receipt and issuance of each type of
material. They determine a suitable recording system based on the material's
type and characteristics. Additionally, the Accounting Department maintains
inventory cards for materials, functioning as auxiliary material inventory
books.

 Material Acquisition (Purchase) System

The use of a material acquisition system ensures the purchased materials meet
specified quality standards, competitive prices, and production requirements.
Departments involved in this system typically include Warehouse,
Procurement, Material Receiving, and Accounting Departments. The
12
 acquisition procedures encompass material purchase requisition, ordering,
receipt, warehouse recording, and liability recording for material purchases.
Supporting documents at this stage include material purchase requisition lists,
material purchase orders, material receipt reports, and material purchase
invoices.
 Material Purchase Requisition Procedure
The Warehouse Department regularly checks material inventory. When
materials reach the minimum stock level (reorder point), the Warehouse
Department generates a material purchase requisition list addressed to the
Procurement Department for material purchase. These requisition requests are
duplicated, with the original sent to the Procurement Department and the copy
retained as records in the Warehouse Department.

 Material Purchase Order Procedure

Once materials reach the minimum stock level (reorder point), the Warehouse
Department issues a material purchase requisition list to the Procurement
Department. For supplier selection, the Procurement Department sends price
quotation letters to suppliers containing purchase price information and other
purchase terms. Upon supplier selection, the Procurement Department creates a
purchase order sent to the supplier. Purchase orders are made in five copies:
the first for the supplier as proof of material ordering, the second for the
Accounting Department, the third for the Material Inventory Holder
Department, the fourth for the Material Receiving Department, and the fifth as
an archive in the Procurement Department.

 Material Receipt Procedure

Suppliers deliver materials to the company according to the purchase order
they receive. The Material Receiving Department cross-checks the received
material's specifications with the purchase order copy. If the received materials
match the specified requirements, the Material Receiving Department
generates a material receipt report. This report is created in five copies: the first
is sent to the Procurement Department as a report of material conformity with
the purchase order, the second to the Accounting Department, the third to the
Accounting Department, the fourth to the Warehouse Department, and the fifth
as an archive in the Material Receiving Department.

 Material Recording Procedure in Warehouse

The Material Receiving Department transfers materials to the Warehouse
Department for storage. Generally, the Material Receiving Department is part
of the Warehouse Department. The Warehouse Department records these
materials in stock cards based on the received material quantities. The stock
cards serve as records of each material's movement and are unrelated to
material costs. Additionally, the Warehouse Department labels these materials
with inventory tags at their storage locations.
13
 Procedure for Recording Material Purchase Debt
The Accounting Department verifies the correspondence between primary and
supporting documents, such as material purchase invoices, material purchase
orders, and material receipt reports, which form the basis for the material
purchase journal entry. Documents such as material purchase orders and
material receipt reports are also used as the basis for recording on material
inventory cards, indicating the quantity and value of the materials purchased in
the entry column.

 Material Acquisition Cost

Materials are a primary component of a product after undergoing the
production process. According to general accounting principles, the cost of raw
materials doesn't just include the purchase price (invoice price) but also
encompasses expenses related to acquiring these materials until they are ready
for use in the production process. These expenses include ordering costs,
loading/unloading costs, transportation costs, insurance costs, storage costs,
and other related expenses. Discounts and purchase returns reduce the material
acquisition cost. The components included in the raw material cost can vary
significantly, necessitating adjustments in determining the purchase cost fairly
and comprehensively. Consequently, if material cost allocation is challenging
(impractical), material costs are usually treated as factory overhead costs.

 Material Usage System

The material usage system ensures that materials used align with the required
unit quantities for the production process and meet specified quality standards.
Departments involved in this system include Production, Warehouse, and
Accounting Departments. Material usage procedures involve material
requisition, material issuance, and material usage recording. Supporting
documents required for these procedures are material requisition evidence and
material issuance evidence.

 Material Requisition Procedure

The Production Department's primary responsibility is to process materials into
finished products. Hence, to meet production needs, the Production
Department submits detailed material requisition evidence to the Warehouse
Department. This evidence is prepared in quadruplicate: the original for the
Warehouse Department, the second for the Accounting Department, the third
for the Material Inventory Holder Department, and the fourth as an archive in
the Production Department.

 Material Production Procedure

Based on the material requisition evidence, the Warehouse Department issues
materials according to the specified requirements and quantity requested by the
14
 Production Department. The material requisition evidence forms the basis for
the Warehouse Department to record material usage (issuance) in stock cards
and material inventory records.

 Procedure for Recording Material Usage

The validated material requisition evidence from the Production Department,
specifying the requested material's specifications, quantity, and per-unit price
confirmed by the Accounting Department, serves as the primary source for
journal entries regarding material usage in the Accounting Department.
Additionally, the material requisition evidence received by the Material
Inventory Holder Department is used as a basis for recording on material
inventory cards in the usage column.

 Material Usage Costs

The frequency of material acquisitions (purchases) within an accounting period
can vary, possibly resulting in different acquisition costs. Consequently, the
stored material inventory might have diverse and fluctuating costs, even if the
materials used are the same. This situation presents challenges in determining
the cost of raw materials used in the production process. The aim of
determining the cost of materials used is to establish a fair and comprehensive
cost. Additionally, it drives activities for controlling material costs. Here are
several methods for determining the cost of materials used in the process:
 Specific Identification Method
 First-in, First-out (FIFO) Method
 Last-in, First-out (LIFO) Method
 Simple Average Method
 Weighted Average Method

D. Labor: Controlling and Costing Accounting

 Definition and Characteristics of Labor Costs

Labor costs are classified as direct and indirect. These costs form the labor
expenses, which, in turn, constitute a significant percentage of the total
production costs in manufacturing or service organizations. There is a need to
exercise maximum caution to minimize these costs. Minimizing costs doesn't
mean reducing expenses but achieving optimal and efficient productivity from
employees.

 Types of Labor Costs

A. Grouping Labor Costs According to Primary Function
This division is based on the primary functions within a company and
includes:
1. Labor costs for production, such as factory manager
15
 salaries, overtime wages for operators, and similar expenses.
2. Marketing labor costs, like sales commissions, employee marketing
incentives, and related expenses.
3. Administrative and general labor costs, such as salaries and welfare
benefits for HR personnel.

B. Grouping Labor Costs According to Departmental Activities

This classification is based on the activities within different company
departments. For example: Labor cost accounting, HR labor costs, and so on.

C. Grouping Labor Costs Based on Job Types

This categorization is based on employees' job natures within a department.
For instance, in the production department, costs are divided into foreman
wages, supervisor wages, operator wages, and so on.

D. Grouping Labor Costs Based on Their Relationship with Products This

classification is based on the products produced.

1. Direct Labor Costs

Costs for employees directly involved in the production process. These
labor wages are included in the production cost components.

2. Indirect Labor Costs

Costs for employees indirectly involved in the production process. These
labor wages are included in the overhead cost components.

E. Calculating Labor Costs

Generally, there are three components in labor costs: regular wages, overtime
premiums, and other labor-related expenses. Calculating employee wages in
each company differs, but one common method is multiplying the hourly wage
rate by the number of working hours in a specific period. If an employee works
longer than their normal hours (e.g., obligated to work 8 hours a day but works
for 10 hours), the excess hours are considered overtime. To calculate labor
costs, there are four stages:
1. Payroll Processing
2. Generating Payroll and Wages
3. Creating Fund Disbursement Vouchers
4. Tax Payment

 Labor Cost Accounting System

A. Human Resources Department

The HR department manages a series of HR-related activities concerning
administrative tasks in regulating the employment relationship between the
company and its employees. This includes payroll, employee documentation
like statements, resignation letters, terminations, and online attendance data.

B. Production Planning Department

 Creating a schedule for purchasing production materials for the "Es
16
 Balok Lang-lang Buana" and setting sales targets.
Managing employee work schedules.

C. Punctuality Department
 Creating employee check-in times.
 Developing employee work schedules.
 Recording employee work hours.

D. Payment Department
The primary function of the payroll department is to calculate, prepare, and
distribute salaries and wages to all employees in the company.

E. FOH Planned Actual and Applied

 Definition and Characteristics of Factory Overhead Costs

In discussions related to process-based cost allocation systems, factory overhead

costs refer to expenses other than material and labor costs. Therefore, factory
overhead costs consist of plant maintenance and repair costs, depreciation of
factory assets, utilities such as electricity and water, taxes, and other similar
expenses. If a factory has support departments, the costs incurred by these
departments are included in the factory overhead costs. Other terms for factory
overhead costs are indirect production costs, production overhead costs, among
others. While direct material and labor costs are charged to specific products or
orders based on actual costs, factory overhead costs are based on predetermined
rates.

Factory overhead costs are allocated to products based on predetermined

rates because they possess characteristics that differ from other production costs.
These fluctuating costs are caused by:

a) Changes in production activities over time, resulting in changes in the cost of

products per unit.
b) Changes in production efficiency due to insufficient supervision, causing
fluctuating or changing product costs.
c) Costs arising from the shared use of facilities, resulting in inaccuracies in
assigning costs to each product unit.
d) Sporadic costs that occur at specific times, resulting in uneven costs across
products.

Therefore, predetermined overhead rates are established to fairly and

comprehensively allocate costs to specific products or orders, ensuring that
product costs reflect actual and reasonable expenses. The allocation of factory
overhead costs to all products or orders is done during an accounting period,
17
 while the budget for factory overhead serves as the basis for rate determination
concurrently. Furthermore, established factory overhead rates can be used as tools
for planning, control, and decision-making.

It is important to separate factory overhead rates into variable and fixed

components. Budgeting factory overhead is categorized into variable and fixed
costs. Variable costs fluctuate proportionally with a company's activities within a
certain range, while fixed costs remain unchanged within the same range.

 Factors to Consider in Determining Factory Overhead Rates

In determining factory overhead rates, several factors need consideration,

such as selecting the appropriate capacity and whether to allocate fixed factory
overhead costs or not. Various methods for setting factory overhead rates include
full absorption costing, variable costing, and using single or departmentalized
rates.

 Basis of Factory Overhead Cost Allocation

Selecting the basis for allocating factory overhead costs is crucial in

ensuring fairness in product allocation. Commonly used allocation bases include
unit product, machine hours, direct labor hours, direct material cost, and direct
labor cost. These bases are used to determine the predetermined factory overhead
rates, ensuring that costs are appropriately assigned based on the nature of the
production process or resources used.

 Determining the Production Capacity Used

Choosing the production capacity used is fundamental in calculating

factory overhead rates. It can impact cost levels, and therefore, the factory
overhead costs assigned to products could be either too low or too high. Different
capacities, including theoretical, practical, normal, and expected actual capacities,
serve as the basis for determining factory overhead rates.

 The Presence of Fixed Factory Overhead Costs

The calculation of a product's cost heavily relies on what cost information

is included. Calculations could include all production costs or only variable costs.
Therefore, factory overhead costs allocation to products can be done through full
absorption costing or variable costing methods. Full absorption costing includes

18
both variable and fixed factory overhead costs, while variable costing focuses
only on variable costs such as direct materials, direct labor, and variable factory
overhead costs.
For external parties, the production cost considers both variable and fixed
costs, including direct materials, direct labor, variable, and fixed factory overhead
costs. For internal management, the cost calculation focuses only on variable
costs such as direct materials, direct labor, and variable factory overhead costs.
Therefore, determining factory overhead rates considers only variable costs..

19
 CHAPTER III
FINDINGS AND DISCUSSION

3.1 FINDINGS
A. Cost Accounting, Cost Concept, Cost Classification and Allocation
1) Cost Accounting

Cost Accounting is a process of recording analyzing and reporting all costs

used by a company or business based on the production.
Management Accomplished the Following :
1. Creating and executing plans.
2. Estabilishing costing methods.
3. Controlling physical quantities of inventory.
4. Determining company costs and profits.

2) Cost Concept
Cost Concept is a cost object, or cost objective, is defined as any item or
activity for which cost is accumulated and measured. The following items
and activities can be cost objects.

The Object
1 Product 6 product line
2 Process 7 Department
3 Batch of like units 8 Division
4 customer orders 9 Project
5 contract 10 strategic goals

3) Cost Classification
No Factory Cost Commercial Cost
1 Direct Material Marketing and
Selling Expenses
2 Direct Labor Administration
Expenses
3 Factory Overhead
4 Indirect Material
5 Indirect Labor

The Volume of Production

20
 1. Fixed Cost
2. Variable Cost
3. Semivariable Cost

4) Cost Allocation
Kind of Cost Cost Object Total
1. Purchase of Machine IDR 150,000,000
2. Purchase of Ammonia /Year IDR 15,000,000
Direct Cost 3. Purchase of Salt /3 Months IDR 30,000,000
4. Water /month IDR 3,500,000
5. Employee Salary /month IDR 3,000,000
1. Driver Salary /month IDR 2,400,000
2. Vehicle Gas /month IDR 7,350,000
3. Machine Maintenance /month IDR 100,000
Indirect Cost 4. Property Tax /month IDR 2,000,000
5. Sumur Bor IDR 20,000,000
6. Purchase of Oil /3 Months IDR 12,000,000
7. Electric Cost /month IDR 80,000,000

B. Process Costing
To provide a complete picture of the production process with a process-based
costing system at Lang-Lang Buana Ice Factory. The following is information
regarding the production process during October 2023:

1) Material Costs
 Water : Rp3.500.000
 Salt : Rp10.000.000
 Ammonia : Rp1.250.000
Total Material Costs : Rp14.750.000 /month

2) Labor Costs
 Employee : Rp3.000.000
 Operational Driver : Rp2.400.000
Total Labor Costs : Rp5.400.000 /month

21
 3) Factory Overhead Costs
 Electric : Rp80.000.000
 Machine Maintenance : Rp100.000
 Oil : Rp4.000.000
 Property Tax : Rp2.000.000
 Vehicle Gas : Rp7.350.000
Total Factory Overhead Costs : Rp93.450.000 /month

Total Costs per Month : Rp113.600.000

In its operations, this company produces approximately 240 blocks of ice per day,
assuming production occurs for 30 days in a month. Thus, the total production of
ice blocks by this company reaches 7,200 blocks within the monthly timeframe.
This demonstrates a stable and consistent production rate, aligning with the
monthly target set by the company.

Total Costs per Unit : Rp113.600.000 / 7200

: Rp15.777 per unit

Information Department I
Product :
7,200
Included in the production process
Finished products are transferred to the finished product 7,200
showcase
Products in the final process 7,200

Cost :
Material costs Rp. 14,750,000
Labor costs Rp. 5,400,000
Factory overhead costs Rp. 86,100,000

Product completion rate in the

final process:
Material costs 100%
Conversion fees 100%

Additional information :
Products sold at Lang-Lang Buana Ice Factory were 7,200 units /month with an
average selling price of Rp. 22,000 per unit.
Equivalent Unit
In process costing, equivalent units are a way to measure how many units are
actually completed in the production process, taking into account some units that are not
22
 yet completed but have reached a certain level in the production process. The general
formula for calculating equivalent units is:

Equivalent Units = Units Completed + (Units in Process x Percentage Completed)

In this case, if the quantity entering the production process is equal to the quantity
completed, the equivalent unit calculation has no units still in process or 0 because all
products have been completed. Therefore, the equivalent unit formula becomes:

Equivalent Units = Units Completed

Unit equivalent = 7,200 units

C. Materials: Controlling, Costing and Planning

1. Water Cost per Unit :
 Water Cost per unit : Rp3.500.000 per month / 240 unit × 30 days
: Rp3.500.000 per month / 7200 unit per month
: Rp486 per unit

2. Cost of Salt per Unit :

 Cost of Salt per unit : Rp10.000.000 / (240 unit/day × 30 days)
: Rp10.000.000 / 7.200 unit
: Rp1.388,89 per unit

3. Ammonia Cost per Unit:

 Cost of Ammonia per unit : Rp1.250.000 / (240 unit/days × 30 days)
: Rp1.250.000 / 7.200 unit
: Rp173,61 per unit

Total Material Costs per Unit : Rp486 + Rp1.388,89 + Rp173,61

: Rp2.048,5 per unit

D. Labor: Controlling and Costing Accounting

1. Production Department
 Number of Employee : 4 people
 Employee Salary per person : Rp100.000/day
 Working Hours per day : 9 hours
 Number of Working Days per month : 30 days

2. Distribution Department
 Number of Employee : 2 people
 Employee Salary per person : Rp80.000/day

23
  Working Hours per day : 9 hours
 Number of Working Days per month : 30 days

 Dasar Tarif per Jam Kerja

1. Production Department
: Rp100.000 / 9 jam = Rp11,111 per working hou
2. Distribution Department
: Rp80.000 / 9 jam = Rp8,888 per working hour

 Dasar Tarif per Unit Produksi

1. Production Department
: Rp100.000 / 240 unit = Rp416 per unit

2. Distribution Department
: Rp80.000 / 240 unit = Rp333 per unit

E. FOH Planned Actual and Applied

1. BOP per Unit Production : Rp93.450.000/ 7200 unit
: Rp12.979 per unit

2. BOP per Direct Materials : Rp93.450.000 / Rp3.500.000 × 100%

: 26,7% per direct materialss

3. BOP per Direct Labor : Rp93.450.000 / Rp5.400.000 × 100%

: 17,3% per direct labor

4. BOP per Jam Kerja Langsung : Rp93.450.000 / 270 jam

: Rp346.111 per jam kerja langsung

5. BOP per Jam Pemakaian Mesin : Rp93.450.000 / 150 jam

: Rp623.000 per jam pemakaian mesin

 Harga Pokok Produksi Es Balok

24
 PABRIK ES LANG-LANG BUANA
LAPORAN HARGA POKOK PRODUKSI
31 OKTOBER 2023

25
 KETERANGAN Harga(Rp)
Barang dalam proses awal 0
Biaya Produksi

Biaya Bahan Baku

Pembelian Bahan baku 14.750.000
Pembelian Bersih Bahan Baku 14.750.000
Biaya Angkut Pembelian 0
Harga Pokok Pembelian 14.750.000
Bahan Baku Tersedia 14.750.000
Bahan Baku dalam Proses Akhir 0
Total Biaya Bahan Baku 14.750.000
Biaya Tenaga Kerja Langsung 12.000.000
Biaya Overhead Pabrik 98.250.000 125.000.000
Biaya produksi barang dalam proses 125.000.000
Barang dalam proses akhir 0
Harga Pokok Produksi 125.000.000

26
  Laporan Harga Pokok Penjualan dan Laba Rugi
A. Cost Of Goods Sold Report
HARGA POKOK PENJUALAN
PABRIK ES LANG-LANG BUANA
31 OKTOBER 2023
Penjualan Rp 158.400.000
Penjualan Bersih Rp 158.400.000
Pembelian Rp 14.750.000
Beban Angkut Rp 0
Pembelian
Total Pembelian Rp 14.750.000
Total Persediaan Rp 14.750.000
Persediaan Akhir -
Harga Pokok Penjualan Rp 14.750.000
Laba Kotor Rp 143.650.000
BIAYA
Beban Gaji Karyawan Rp 16.800.000
Beban Listrik Rp 80.000.000
Beban Bensin Rp 7.350.000
Beban Bangunan Rp 2.000.000
Total Beban Usaha Rp 106.150.000
Laba Bersih Sebelum Pajak Rp 37.500.000

27
 B. Income Statement
PABRIK ES LANG-LANG BUANA
LABA RUGI
UNTUK PERIODE 31 OKTOBER 2023
Penjualan Rp 158.400.000
Harga Pokok Penjualan:
Harga Pokok Produksi Rp 125.000.000
Barang jadi tersedia dijual Rp 125.000.000
Persediaan akhir barang jadi - Rp 125.000.000
LabaBersih SebelumPajak Rp 33.400.000

3.2 DISCUSSION
 In an effort to address the electricity cost issue in the company's ice factory, one
solution that can be implemented is to reduce the operating hours of the machines.
By minimizing the operational time of the machines, the company can lower energy
consumption and directly alleviate electricity costs. Optimizing the schedule of
machine operations enables the company to strike a balance between meeting market
demands and achieving electricity cost efficiency. This aligns with cost accounting
principles that advocate for efficient use of company resources. Moreover, this step
can have a positive impact on calculating the cost of goods sold, enhancing the
company's competitiveness, and ultimately boosting overall profitability.

 To tackle the challenges faced by the ice factory concerning adverse weather
conditions, a viable solution is to forecast consumer demand during storms.
Leveraging historical data and current weather information, the company can identify
periods of inclement weather and project potential demand levels. In the context of
cost accounting, this enables the company to more efficiently manage inventory and
production in line with anticipated demand. By accurately planning production, the
company can avoid overproduction, which might lead to wastage of resources and
unnecessary production costs. Furthermore, this strategy can assist the company in
adjusting pricing policies or developing special promotional packages to drive sales
during adverse weather periods. By integrating weather factors into cost accounting
planning, the company can become more adaptive to market condition changes and
optimize.

28
 CHAPTER IV
CONCLUSION AND
RECOMMENDATION
A. Conclusion

Based on the research conducted at Lang-Lang Buana Ice Factory, it can

be concluded that the average daily production of ice blocks at the factory
ranges around 240 blocks per day, operating the machines for 5 hours. The
production cost per unit is Rp15,777, while the selling price per unit is
Rp22,000. The profit margin obtained by Lang-Lang Buana Ice Factory
amounts to 39.3%.

B. Recommendation

The cost analysis research report conducted at Lang-Lang Buana Ice

Factory is anticipated to serve as a strategic guide to achieve the company's
objectives and optimize incurred expenses. By meticulously investigating the
cost structure, this report will provide comprehensive insights into cost
elements that can be optimized or reduced. Through measured
recommendations and solutions tailored to the company's specific conditions,
this report is expected to aid in curbing the company's operational costs. By
detailing and analyzing cost patterns, the company can identify efficiency
opportunities, minimize the risk of waste, and enhance overall profitability.

Furthermore, this report is envisioned to provide a strategic foundation for

the company to navigate market dynamics and changes in the business
environment, enabling it to attain its long-term objectives.

29
 BIBLIOGRAPHY

Abdul Halim. 2004. “Dasar-Dasar Akuntansi Biaya". BPFE.

Yogyakarta.

Ande Sofiani. 2003. “Peranan Perhitungan Harga Pokok Produksi

Dalam Menetapkan Laba yang

Diharapkan Pada PT Intinusa Selareksa, TBK”. Jurnal Ilmiah Kesatuan.

Vol 5,No 2.

Bastian Bustami& Nurlela. 2007. “Akuntansi Biaya Tingkat Lanjut:

"Kajian Teori dan Aplikasi".

Yogyakarta: Penerbit Graha Ilmu. Edisi Pertama.

Hendra Setiawan, Ade Wisni Wihandranti.

2006. “Analisis Perhitungan Harga Pokok Air Minum Dalam

Menentukan Tarif Air Minum

Pada PDAM Tirta Pakuan Kota Bogor”. Jurnal Ilmiah Ranggagading.

Vol 6,No 1.

Hongren, Datar, dan Foster. 2005. “Akuntansi Biaya: Penekanan

Manajerial”. Jilid 1. Jakarta.

30
APPENDIX

31
32