Calculating of Cost of Production Using Full Costing and Variable Costing Methods at PT. All Meubel

Abstract

Determining the cost of production is a crucial element in financial management and business decision-making. This study aims to analyze and compare the calculation of production costs using the Full Costing and Variable Costing methods. The Full Costing method includes all production costs, both variable and fixed, while the Variable Costing method considers only variable costs in the production process. The data used in this study include raw material costs, direct labor costs, and factory overhead costs from a manufacturing company. The analysis results indicate significant differences between the two methods in calculating production costs. Full Costing results in higher production costs because it includes all fixed costs as part of production costs, while Variable Costing provides a more focused view of costs that directly vary with production levels. These differences have varying implications for income statements and product pricing strategies. By understanding the characteristic of each method, companies can choose the most suitable approach for management purposes, such as cost planning, pricing strategies, or operational performance evaluation. This study is expected to provide insights to business practitioners and academics for making decisions based on accurate and relevant data.