Thesis 2

 

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)*

ABSTRACT

    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 its problems.

    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 finished.

    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 in bidding.

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