Job Order Cost
System for Ship Building Industry in Thailand.
by Mr. Suchat Gorpinpaitoon (1982) ;Master thesis.
*(The Full Text view in Thai Language only)*
The shipbuilding industry in Thailand has
been in long existence but most of the ships built are made of wood by labour of members
in the families. Nowadays the shipbuilding industry in Thailand is in a developing stage
by employing capable persons, uses modern instruments and advanced technology.
The study of this matter focuses on the costing method used by
shipbuilding firms in Thailand in order to ascertain the principle, the costing method and
The study covers process in designing and
calculating the cost of a ship, process of shipbuilding, the costing method of direct
material, direct labour, and factory overhead allocation, the operating system, and
accounting method, as well as problems in using job order costing method in calculating
the costs of ships built by the shipbuilding firms in Thailand.
The study of job order costing method for the
shipbuilding industry in Thailand was made by observing actual operation and interviewing
persons concerned with the shipbuilding such as the staff of two shipbuilding firms
personnel in the shipbuilding industry and other shipbuilding firms in Bangkok areas,
emphasizing only the shipbuilding, disregarding the ship repairing.
Results of study showed that the costs of direct
materials and direct labour are charged to the job, but factory overhead are accumulated
and allocated to each job on the basis of direct labour cost or as percentages of work
The problems of using job order costing method by
the shipbuilding industry in Thailand are as follows: Lack of good basis for factory
overhead allocation, the cost of shipbuilding cannot be immediately known when the job is
finished due to the allocation of actual expenses and no exact basis for considering which
material is direct material or indirect material.
The abovementioned problems can be solved as
follows: Since the majority of ship- building industry in Thailand and employ human labour
and the labour wage rates are widely different between the skilled labourer and the
general labourer, the basis for allocating the factory overhead to each job should be the
number of direct labour hours of each job. The calculation of factory overhead of each job
should be the factory overhead applied per direct labour hour. The rate of the factory
overhead applied shall be the same for the whole factory, so that the cost of ship can be
known as soon as the job is finished. Basis for consider which material is direct
material, should be as follows: It must be the major components of the ship which can be
seen and inspected and can be easily traced to the job concerned.
The advantages of using the suggested job order
costing method are as follows: The cost of the inventories can be known at all time,
constant checking can be made between the balance of the control account and the sum of
the subsidiary account balances, the cost of the ship built can be known as soon as the
job is finished, control can be made by comparing the actual cost with estimated cost and
analysis of the variances should be made in order to improve operating efficiency.
Other major problems of the shipbuilding industry
in Thailand are lack of sufficient working capital by the shipbuilding firms, lack of
definite governmental policy in developing Thai merchant marine and inappropriate
regulations in bidding set by the government bodies with the result that no Thai firm is
qualified to did. Therefore, the government should consider giving aids to the
shipbuilding firms by providing loans through commercial banks by establishing a definite
policy in developing Thai merchant marine and by abolishing the inappropriate regulations
Copyright@1997 Transportation Institute
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Last modified: 13-02-2001 11:27