EVALUATION ON THE IMPLEMENTATION OF STANDARD PRODUCTION COST AT PT. SML

Abstract

There are three main objectives of this research. First, the researcher collects the data by using the three types of evidence instruments. Second, the researcher identifies the weaknesses on implementation of standard production cost. Third, the researcher defines recommendation to overcome the weaknesses. In this thesis, the type of research is qualitative method which involves exploring issues, understanding phenomena, and answering questions. The research methodologies used are literature review and field research. Literature review is classified as secondary data which is used as criteria to assess primary data. On the other hand, methods in field research are interview, observation, and documentation. The data that is used in this research is primary data in which gathered from primary sources. The researcher found several findings related to implementation standard production cost of the company. First, the company does not have written SOP on the production process. Second, there are activity variances that consist of less production in cutting activity for 28 pieces and in embroidery activity for 2 (two) pieces. Third, Production Manager negotiates sewing costs with outside party. Fourth, factory overhead costs are not included in production costs. Sixth, there is efficiency variance of material costs. Seventh, there is price variance of material costs. Based on the findings found, the researcher developed several recommendation. First, the company should have written SOP. Second, the company should provide the training to the all staffs who are involved in production process. Third, the company should only allow the Purchasing and Logistic Department to handle all purchasing activities and forbid Production Manager to negotiate the price with service providers or suppliers. Fourth, the company should include factory overhead costs to the production costs, so that the production costs become real. Fifth, the company should give the training for the all staffs production and do the strict supervision. Sixth, the company should set the standard of raw material price based on the price negotiated with the suppliers in that time and by considering the possibility of price increases that occur later on.