{"id":56928,"date":"2019-07-20T22:54:55","date_gmt":"2019-07-20T15:54:55","guid":{"rendered":"https:\/\/bahtera.jp\/cost-calculation\/"},"modified":"2026-09-03T19:23:16","modified_gmt":"2026-09-03T12:23:16","slug":"cost-calculation","status":"publish","type":"post","link":"https:\/\/bahtera.jp\/en\/cost-calculation\/","title":{"rendered":"Cost Calculation Methods in ERP Systems in Indonesia"},"content":{"rendered":"<p>There are systems that adopt the perpetual inventory method, where journal entries occur with each transaction, synchronizing the accounting and inventory management valuation amounts. Additionally, some systems use the periodic inventory method (three-part method) to calculate manufacturing costs by subtracting the ending inventory from the beginning inventory and the costs incurred during the month. These cost calculation methods are explained by dividing them into variable and fixed costs.<\/p>\n\t\t\t\t<a href=\"https:\/\/bahtera.jp\/en\/cost-management-indonesia\/\" class=\"st-cardlink\" aria-label=\"Cost Management Systems in Indonesia\">\r\n\t\t\t\t<div class=\"kanren st-cardbox\" >\r\n\t\t\t\t\t\t\t\t\t\t<dl class=\"clearfix\">\r\n\t\t\t\t\t\t<dt class=\"st-card-img\">\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<img decoding=\"async\" width=\"150\" height=\"150\" src=\"https:\/\/bahtera.jp\/wp-content\/uploads\/2025\/03\/indonesia-10-150x150.png\" class=\"attachment-st_thumb150 size-st_thumb150 wp-post-image\" alt=\"Infographic on cost management systems in Indonesian manufacturing, comparing process and job costing\" srcset=\"https:\/\/bahtera.jp\/wp-content\/uploads\/2025\/03\/indonesia-10-150x150.png 150w, https:\/\/bahtera.jp\/wp-content\/uploads\/2025\/03\/indonesia-10-100x100.png 100w\" sizes=\"(max-width: 150px) 100vw, 150px\" \/>\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<\/dt>\r\n\t\t\t\t\t\t<dd>\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<p class=\"st-cardbox-t\">Cost Management Systems in Indonesia<\/p>\r\n\t\t\t\t\t\t\t\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<div class=\"st-card-excerpt smanone\">\r\n\t\t\t\t\t\t\t\t\t<p>Mass production factories in Indonesia adopt comprehensive cost accounting. Custom order production factories adopt individual cost accounting.<\/p>\n\t\t\t\t\t\t\t\t<\/div>\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t<p class=\"cardbox-more\">\u7d9a\u304d\u3092\u898b\u308b<\/p>\r\n\t\t\t\t\t\t\t\t\t\t\t\t\t<\/dd>\r\n\t\t\t\t\t<\/dl>\r\n\t\t\t\t<\/div>\r\n\t\t\t\t<\/a>\r\n\t\t\t\t\n<div class=\"article-point\" id=\"key-takeaways\">\n<h2 class=\"article-point-title\">What this article covers<\/h2>\n<ul>\n<li>Microsoft Dynamics and Sage Accpac adopt the perpetual inventory method, automatically generating accounting journal entries.<\/li>\n<li>In the perpetual inventory method, direct material costs are calculated using FIFO or moving average methods.<\/li>\n<li>The three-part method calculates manufacturing costs by subtracting ending inventory from beginning inventory and monthly incurred costs.<\/li>\n<li>Standard cost accounting calculates variable cost unit prices by expanding BOM for planned production quantities and multiplying by material unit prices.<\/li>\n<li>Cost management systems can be used for both management and financial accounting, performing journal entries for cost of goods sold calculations.<\/li>\n<\/ul>\n<\/div>\n<p><script type=\"application\/ld+json\" id=\"wprestapi-ai-jsonld\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"BlogPosting\",\"@id\":\"https:\/\/bahtera.jp\/en\/cost-calculation\/#article\",\"headline\":\"Cost Calculation Methods in ERP Systems in Indonesia\",\"description\":\"Microsoft Dynamics and Sage Accpac adopt the perpetual inventory method, automatically generating accounting journal entries. In the perpetual\u2026\",\"mainEntityOfPage\":{\"@type\":\"WebPage\",\"@id\":\"https:\/\/bahtera.jp\/en\/cost-calculation\/\"},\"inLanguage\":\"en\",\"datePublished\":\"2019-07-20T22:54:55\",\"dateModified\":\"2026-08-05T20:00:55\",\"author\":{\"@type\":\"Person\",\"name\":\"yamazou\"}},{\"@type\":\"ItemList\",\"@id\":\"https:\/\/bahtera.jp\/en\/cost-calculation\/#key-takeaways\",\"name\":\"What this article covers\",\"itemListElement\":[{\"@type\":\"ListItem\",\"position\":1,\"name\":\"Microsoft Dynamics and Sage Accpac adopt the perpetual inventory method, automatically generating accounting journal entries.\"},{\"@type\":\"ListItem\",\"position\":2,\"name\":\"In the perpetual inventory method, direct material costs are calculated using FIFO or moving average methods.\"},{\"@type\":\"ListItem\",\"position\":3,\"name\":\"The three-part method calculates manufacturing costs by subtracting ending inventory from beginning inventory and monthly incurred costs.\"},{\"@type\":\"ListItem\",\"position\":4,\"name\":\"Standard cost accounting calculates variable cost unit prices by expanding BOM for planned production quantities and multiplying by material unit prices.\"},{\"@type\":\"ListItem\",\"position\":5,\"name\":\"Cost management systems can be used for both management and financial accounting, performing journal entries for cost of goods sold calculations.\"}]}]}<\/script><\/p>\n<h2>Cost Calculation Functions of Business Systems<\/h2>\n<p>Business systems (ERP) commonly implemented in Indonesia, such as Microsoft Dynamics and Sage Accpac, adopt the perpetual inventory method, automatically generating accounting journal entries when production results and input results are recorded. In this case, the direct material costs, which are variable costs, are recorded by multiplying the unit price obtained using FIFO or moving average methods by the input quantity.<\/p>\n<p>Fixed costs such as direct labor costs and manufacturing overhead are also recorded by setting allocation rates as standard values in the BOM and multiplying them by actual work hours or operating hours. The difference from the actual incurred amount, confirmed at the end of the month, needs to be manually allocated to the manufacturing costs of the month (direct labor costs and manufacturing overhead) and the ending inventory.<\/p>\n<p>This cost calculation method, which emphasizes real-time linkage between inventory and accounting, is originally called actual cost accounting, but it is often said to adopt standard cost in practice.<\/p>\n<p>On the other hand, systems that do not generate accounting journal entries when recording production results and input results and calculate manufacturing costs by subtracting the ending inventory from the beginning inventory and the costs incurred during the month, adopt the three-part method. In these systems, variable cost unit prices calculated using the total average method are aggregated by cost center for actual incurred fixed costs, and the actual wage rate (or actual allocation rate) is calculated by dividing by the cost center&#8217;s actual direct work hours or actual production quantity, performing a build-up calculation.<\/p>\n<div class=\"graybox\">\n<div class=\"maruck\">\n<ul>\n<li>Actual direct labor cost per unit = Actual allocation rate (actual wage rate) x Efficiency (actual work hours)<\/li>\n<li>Actual manufacturing overhead per unit = Actual allocation rate<\/li>\n<\/ul><\/div>\n<\/p><\/div>\n<p>In standard cost accounting, the material requirements are calculated by expanding the BOM for the planned production quantity, and the variable cost unit price of the product is calculated by multiplying the master value material unit price. The fixed cost budget aggregated by cost center is divided by the planned direct work hours or planned production quantity calculated by BOM time expansion to calculate the standard wage rate (or standard allocation rate).<\/p>\n<div class=\"graybox\">\n<div class=\"maruck\">\n<ul>\n<li>Standard direct labor cost per unit = Standard allocation rate (standard wage rate) x Efficiency (standard work hours)<\/li>\n<li>Standard manufacturing overhead per unit = Standard allocation rate<\/li>\n<\/ul><\/div>\n<\/p><\/div>\n<h2>Calculation Methods for Product Cost Items<\/h2>\n<p>Products are produced through three manufacturing processes: first process, second process, and third process. This section explains how these manufacturing costs are accumulated by cost item according to each cost calculation method.<\/p>\n<p>In systems using the perpetual inventory method, actual cost accounting is performed in real-time. On the other hand, in systems using the three-part method, actual cost accounting is executed in batch after the accounting month-end processing, and standard cost accounting is expected to be executed as part of management accounting based on the next period&#8217;s production plans and fixed cost budgets.<\/p>\n<table style=\"border-collapse: collapse; width: 100%;\">\n<tbody>\n<tr>\n<td style=\"width: 25%; background-color: #000000; text-align: center;\"><span style=\"color: #ffffff;\">Cost Item<\/span><\/td>\n<td style=\"width: 25%; background-color: #000000; text-align: center;\"><span style=\"color: #ffffff;\">Calculation Method<\/span><\/td>\n<td style=\"width: 25%; background-color: #000000; text-align: center;\"><span style=\"color: #ffffff;\">Calculation Procedure<\/span><\/td>\n<td style=\"width: 25%; background-color: #000000; text-align: center;\"><span style=\"color: #ffffff;\">Breakdown<\/span><\/td>\n<\/tr>\n<tr>\n<td style=\"width: 25%;\">Direct Labor Cost<\/td>\n<td style=\"width: 25%;\">Perpetual Inventory Method BOM item-specific wage rate x Actual work hours Three-part method (actual\/standard) Allocation calculation of accounting journal amount and budget amount to process direct allocation<\/td>\n<td style=\"width: 25%;\">Actual Calculate the wage rate by dividing the direct labor cost aggregated by process by the actual direct work hours. Standard 1. Calculate the planned production quantity by expanding the BOM from the product production plan, and calculate the planned direct work hours by multiplying by efficiency. 2. Calculate the wage rate by dividing the direct labor cost budget aggregated by process by the planned direct work hours.<\/td>\n<td style=\"width: 25%;\">Third process direct labor cost Second process direct labor cost First process direct labor cost<\/td>\n<\/tr>\n<tr>\n<td style=\"width: 25%;\">Manufacturing Overhead<\/td>\n<td style=\"width: 25%;\">Perpetual Inventory Method BOM item-specific allocation rate x Actual work hours Three-part method (actual\/standard) Allocation calculation of accounting journal amount and budget amount to cost center, followed by allocation calculation from cost center<\/td>\n<td style=\"width: 25%;\">Actual 1. The total value aggregated by cost center of actual direct work hours is used as the primary allocation ratio. 2. Calculate the allocation rate by dividing the manufacturing overhead of the cost center by direct work hours or production quantity. Standard 1. Calculate the planned production quantity by expanding the BOM from the product production plan, and calculate the planned direct work hours by multiplying by efficiency. 2. The total value aggregated by cost center of planned direct work hours is used as the primary allocation ratio. 3. Calculate the allocation rate by dividing the manufacturing overhead budget of the cost center by planned direct work hours or planned production quantity.<\/td>\n<td style=\"width: 25%;\">Third process manufacturing overhead Second process manufacturing overhead First process manufacturing overhead<\/td>\n<\/tr>\n<tr>\n<td style=\"width: 25%;\">Depreciation<\/td>\n<td style=\"width: 25%;\">Perpetual Inventory Method BOM item-specific allocation rate x Actual operating hours Three-part method (actual\/standard) Allocation calculation of accounting journal amount and budget amount to line direct allocation<\/td>\n<td style=\"width: 25%;\">Actual Calculate the allocation rate by dividing the manufacturing overhead aggregated by line by the actual machine operating hours. Standard 1. Calculate the planned production quantity by expanding the BOM from the product production plan, and calculate the planned direct work hours by multiplying by efficiency. 2. Calculate the allocation rate by dividing the manufacturing overhead aggregated by line by the planned operating hours.<\/td>\n<td style=\"width: 25%;\">Third process machine depreciation Second process machine depreciation First process machine depreciation<\/td>\n<\/tr>\n<tr>\n<td style=\"width: 25%;\">Direct Material Cost<\/td>\n<td style=\"width: 25%;\">Perpetual Inventory Method Latest material unit price calculated using moving average method x Input results Three-part method (actual\/standard) Calculate by multiplying the total average unit price calculated at the end of the month or the standard material unit price by the usage per product calculated by BOM expansion<\/td>\n<td style=\"width: 25%;\">Actual The required quantity is obtained from the parent-child relationship of input results and production results. Standard The required quantity is obtained from the child requirement quantity in the parent-child relationship of the BOM.<\/td>\n<td style=\"width: 25%;\">First process direct material cost<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<p>Primary allocation refers to the allocation of fixed costs of indirect departments or common line costs to cost centers such as departments or lines using direct work hours or personnel numbers. This allows the allocation rate (wage rate) to be calculated by dividing the fixed costs aggregated by cost center by direct work hours or production quantity.<\/p>\n<p>Specifically, the allocation rate refers to the direct labor cost per minute or the manufacturing overhead or depreciation per product unit.<\/p>\n<h2>Journal Entries Related to Inventory Transactions<\/h2>\n<p>The cost management system can be used for both management accounting and financial accounting. Particularly, in &#8220;accounting journal entry generation by business system,&#8221; the calculation journal entry of cost of goods sold (COGS) is performed as an adjustment entry, manually transferring the beginning balance, ending balance, and current month purchases to the COGS account, assuming the three-part method.<\/p>\n<p>On the other hand, when &#8220;using the cost management system as financial accounting,&#8221; inventory transaction journal entries are generated, and all necessary journal entries for the COGS calculation process are interfaced to the accounting system. This sequentially generates journal entries for the series of transaction processes such as material receipt, material consumption, product completion, product sales, and COGS, eliminating the need to transfer the beginning and ending balances for the three-part method.<\/p>\n<p> <img decoding=\"async\" alt=\"Journal Entries Related to Inventory Receipts and Issuances\" class=\"aligncenter wp-image-13296 size-full\" height=\"307\" src=\"https:\/\/bahtera.jp\/wp-content\/uploads\/COGM.jpg\" width=\"564\" srcset=\"https:\/\/bahtera.jp\/wp-content\/uploads\/COGM.jpg 564w, https:\/\/bahtera.jp\/wp-content\/uploads\/COGM-300x163.jpg 300w\" sizes=\"(max-width: 564px) 100vw, 564px\" \/> <\/p>\n<div style=\"clear: both;\"><\/div>\n<h3>Material Purchase<\/h3>\n<p>The actual amount of material purchase can be obtained from the transaction table of cost calculation results, but it is usually managed in the accounting system.<\/p>\n<div class=\"graybox\">\n<div class=\"maruck\">\n<ul>\n<li>(Debit) RAW MATERIAL (Credit) ACCOUNTS PAYABLE (R) &#8211; IDR<\/li>\n<\/ul><\/div>\n<\/p><\/div>\n<h3>Material Consumption<\/h3>\n<p>Material consumption is the total of the actual material input amount based on the transaction table of cost calculation results.<\/p>\n<div class=\"graybox\">\n<div class=\"maruck\">\n<ul>\n<li>(Debit) MATERIAL COST (MF) (Credit) RAW MATERIAL<\/li>\n<\/ul><\/div>\n<\/p><\/div>\n<h3>Product Completion<\/h3>\n<p>The total of the purchased main raw material cost, direct labor cost, and manufacturing overhead becomes the total manufacturing cost for the month, which is transferred to the product (assuming no work in progress).<\/p>\n<div class=\"graybox\">\n<div class=\"maruck\">\n<ul>\n<li>(Debit) FINISHED GOODS (Credit) Material Cost (MF) &#8211; Offset<\/li>\n<li> (Credit) Labor Cost (MF) &#8211; Offset<\/li>\n<li> (Credit) FOH (MF) &#8211; Offset<\/li>\n<\/ul><\/div>\n<\/p><\/div>\n<h3>Sales<\/h3>\n<p>The actual sales amount can be obtained from the transaction table of cost calculation results, but it is usually managed in the accounting system.<\/p>\n<div class=\"graybox\">\n<div class=\"maruck\">\n<ul>\n<li>(Debit) ACCOUNT RECEIVABLE &#8211; IDR (Credit) SALES<\/li>\n<\/ul><\/div>\n<\/p><\/div>\n<h3>Cost of Goods Sold<\/h3>\n<p>The cost of goods sold is the total cost amount in the sales inquiry of cost calculation results.<\/p>\n<div class=\"graybox\">\n<div class=\"maruck\">\n<ul>\n<li>(Debit) COGS from F\/G (Credit) F\/G<\/li>\n<\/ul><\/div>\n<\/p><\/div>\n<h2>Month-End Adjustment Entries<\/h2>\n<h3>Transfer Entries to Other Accounts<\/h3>\n<ol>\n<li>Deduction of Manufacturing Costs (Transfer within Manufacturing Costs) Spoilage occurring in the manufacturing process is deducted from manufacturing costs and transferred to spoilage costs through transfer to other accounts. This is a transfer within manufacturing costs. Manufacturing cost = Beginning WIP + Current Month Manufacturing Costs &#8211; (Other Accounts + Ending WIP)\n<div class=\"graybox\">\n<div class=\"maruck\">\n<ul>\n<li>(Debit) Loss due to spoiled work 2 (Credit)Transfer to other account 2<\/li>\n<\/ul><\/div>\n<\/p><\/div>\n<\/li>\n<li>Deduction of Cost of Goods Sold Spoilage of products after being converted to manufacturing costs is transferred to SGA through transfer to other accounts and deducted from cost of goods sold. Cost of goods sold = Beginning Products + Current Month Manufacturing Costs &#8211; (Other Accounts + Ending Products)\n<div class=\"graybox\">\n<div class=\"maruck\">\n<ul>\n<li>(Debit) Stock losses and shrinkage 2 (Credit)Transfer to other account 2<\/li>\n<\/ul><\/div>\n<\/p><\/div>\n<\/li>\n<\/ol>\n<h3>Interdepartmental Allocation Transfer Entries for Direct Labor Costs and Manufacturing Overhead<\/h3>\n<p>Direct labor costs and manufacturing overhead interfaced from the accounting system to the cost management system are allocated interdepartmentally on the cost management system side, and interdepartmental allocation transfer entries are interfaced on the accounting system side to view departmental profit and loss.<\/p>\n<div class=\"graybox\">\n<div class=\"maruck\">\n<ul>\n<li>(Debit) Direct labor-Press Dept 5 (Credit)Direct labor 1<\/li>\n<li>(Debit) Direct labor-Assy Dept 5 (Credit)Direct labor 1<\/li>\n<li>(Debit) FOH-Press 4 (Credit)FOH 4<\/li>\n<li>(Debit) FOH-Assy 3 (Credit)FOH 3<\/li>\n<\/ul><\/div>\n<\/p><\/div>\n<h2>Frequently Asked Questions | Differences in Cost Calculation Methods<\/h2>\n<p>Choosing the calculation method adopted by production management.<\/p>\n<h3>What is the difference between job order costing and process costing?<\/h3>\n<p>Job order costing is aggregated by project, while process costing is aggregated by period or process. The basic orientation differs between make-to-order and make-to-stock production.<\/p>\n<h3>What does the build-up method accumulate?<\/h3>\n<p>It adds the cost of the previous process to the cost of the current process, accumulating manufacturing costs as the process progresses.<\/p>\n<h3>What are common pitfalls in method selection?<\/h3>\n<p>If the chosen method does not match the actual lot or production order on the shop floor, actual input and cost evaluation will not align.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>This article discusses cost calculation methods in ERP systems in Indonesia, focusing on the perpetual inventory and three-part methods. It highlights the\u2026<\/p>\n","protected":false},"author":2,"featured_media":103155,"parent":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[624],"tags":[],"class_list":["post-56928","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-cost-management"],"_links":{"self":[{"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/posts\/56928","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/comments?post=56928"}],"version-history":[{"count":3,"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/posts\/56928\/revisions"}],"predecessor-version":[{"id":103860,"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/posts\/56928\/revisions\/103860"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/media\/103155"}],"wp:attachment":[{"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/media?parent=56928"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/categories?post=56928"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/bahtera.jp\/en\/wp-json\/wp\/v2\/tags?post=56928"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}