Effects of Different Inventory Valuation Cost Accounting Methods on Company Profits and Return on Total Cost in Indonesia’s Private MSME fashion Industry: A Case Study of Brand EH
Aurel Shaleisha Adam, Ertambang Nahartyo, Dr., M.Sc., CMA., Ak., CA.
2026 | Skripsi | AKUNTANSI
This study examines the relationship between the different inventory cost
accounting methods using 2 cost flow assumptions acknowledged by the
Indonesian accounting standards of PSAK 202 and 2 different recording methods,
perpetually and periodically, of each cost flow assumption. The research is
motivated by the lack of understanding and application of proper cost accounting
in Indonesia’s MSME’s, more specifically in the fashion retail industry.
Using a case study of a local Indonesian micro manufacturing fashion retail,
segmented in streetwear, this study showcases simulation outputs in using said
methods. This thesis is a quantitative singular case study of the brand EH
(abbreviated to remain its anonymity), completed with additional explanatory and
descriptive factors and explores more about the applicability of various inventory
valuation methods.
The results of the research further proves that because of the economic inflation and
rising prices of materials, the First-In, First Out (FIFO) method causes a higher total
net operating profit and ROTC in comparison to the Average Costing (AVCO) cost
flow assumption since the value of the materials used in its calculation are taken
consecutively and based on the historical cost.
This study examines the relationship between the different inventory cost
accounting methods using 2 cost flow assumptions acknowledged by the
Indonesian accounting standards of PSAK 202 and 2 different recording methods,
perpetually and periodically, of each cost flow assumption. The research is
motivated by the lack of understanding and application of proper cost accounting
in Indonesia’s MSME’s, more specifically in the fashion retail industry.
Using a case study of a local Indonesian micro manufacturing fashion retail,
segmented in streetwear, this study showcases simulation outputs in using said
methods. This thesis is a quantitative singular case study of the brand EH
(abbreviated to remain its anonymity), completed with additional explanatory and
descriptive factors and explores more about the applicability of various inventory
valuation methods.
The results of the research further proves that because of the economic inflation and
rising prices of materials, the First-In, First Out (FIFO) method causes a higher total
net operating profit and ROTC in comparison to the Average Costing (AVCO) cost
flow assumption since the value of the materials used in its calculation are taken
consecutively and based on the historical cost.
Kata Kunci : First-In, First Out (FIFO), Average Costing (AVCO), cost flow assumption, inventory valuation, cost accounting, PSAK 202
