Research conducted
by Rilly Keysia Salaki, together with Victorina Tirayoh and Diana Lintong
revealed how joint costs are allocated to calculate the cost of production of
ground coffee at PT Fortuna Inti Alam, a coffee processing company in North
Sulawesi.
Why Joint Costs
Matter in Manufacturing
Manufacturing
companies often rely on precise cost calculations to remain competitive. When
costs are miscalculated, selling prices may be set too low, eroding profits, or
too high, making products less competitive in the market. The challenge becomes
more complex when a single production process generates multiple products
simultaneously.
At PT Fortuna Inti
Alam, coffee beans are roasted and ground together before being separated into
different branded products. Up to this separation point known as the split-off
point costs such as raw materials, labor, electricity, and machine
depreciation cannot be directly traced to individual products.
How the Study
Was Conducted
The researchers
used a descriptive qualitative case study approach, examining PT Fortuna
Inti Alam’s production data from October to December 2024. Data were
collected through company documents, direct observation, and internal
production records.
Instead of relying
on complex statistical models, the study applied straightforward cost
calculations that reflect real operational conditions. All production
costs both variable and fixed were included, following the principles of absorption
costing, a method widely recognized in financial accounting.
This approach
ensures that every unit of product carries its fair share of production costs,
making the results easier for managers and external stakeholders to understand.
Key Findings:
Clear Numbers, Clear Decisions
The study found
that PT Fortuna Inti Alam incurred a total joint production cost of IDR
347,132,000 during the three-month period. This cost covered raw coffee
beans, direct labor, electricity, machine maintenance, and depreciation, up to
the split-off point.
From this process,
the company produced 9,300 kilograms of ground coffee, resulting in a cost
of goods manufactured (COGM) of IDR 37,326 per kilogram.
Production output
was divided as follows:
- Formula-1: 7,440 kg (80%)
- Fortorang: 1,860 kg (20%)
Using proportional
allocation, both products ended up with the same cost per kilogram,
reflecting consistent and fair cost distribution. When converted into retail
packaging of 600 grams, the production cost per pack for both
products was IDR 22,396.
“These results
show that absorption costing provides consistent and proportional cost figures,
even when multiple products share the same production process,” the authors
explain.
Supporting
Local Coffee Industries
PT Fortuna Inti
Alam sources coffee beans from local farmers in North Sulawesi. Accurate cost
calculations not only benefit the company but also support sustainable
partnerships with farmers by ensuring stable pricing and long-term demand.
The study reinforces the idea that sound accounting practices are not just technical tools, but key enablers of local economic development.
Author Profiles
Rilly Keysia Salaki, S.E. Lecturer and researcher at Sam Ratulangi University, specializing in cost accounting and managerial accounting.
Victorina Tirayoh, S.E., M.Si. Faculty member at Sam Ratulangi University, with expertise in financial accounting and business analysis.
Diana Lintong, S.E., M.Si. Academic researcher at Sam Ratulangi University, focusing on management accounting and production cost analysis.
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