In: Accounting
Japanese companies are companies that apply Material Flow of Cost Accounting (MFCA) and this cost calculation method is then brought to Indonesia. Material Flow of Cost Accounting (MFCA) collaborates with ISO 14051. In connection with of MFCA to Indonesia, explain the MFCA starting from the historical process of MFCA, the definition of MFCA, the process of calculating MFCA, and the advantages if the companies using MFCA (using info graphic and explanation, and using example).
Definition of Material Flow of Cost Accounting
Material flow cost accounting is the tool for the management that helps organization to understand better financial effect of their material and eniviromental. It gives practices and to get improvement in changing practices. Its done by assessing the physical materials flows in organization or a supply chaiin and to give satisfactory associated cost to these flows.
History Process of MFCA
It was developed in Germany in 1980s and is linked to tactics such as eco balances, flow cost accounting.
This method were giving good results so its has become huge success in 2000s in japan. In 2010 many companies had applied the MFCA method, which was highly supported by the japanese government.
In 2011 the International Organization for Standardization (ISO) published a norm on MFCA
MFCA is a management information system that traces all input materials flowing through production processes and measures output in finished product and wastes.
MFCA can help boast a company's economic and enviromental performance.
Cost Elements
Material - Input of material
Energy - Input value of energy (Fuel, Electricity ETC.)
System- Labor, Depreciation, Maintainence and Transportation
Disposal - Waste Management Cost (Reworking of reject products, recycling, waste tracking, storage, treatment of disposal
MATERIAL FLOW COST MATRIX (Process of calculation)
Particular | Mass(kg) | Material Cost ($) | Energy Cost ($) | System Cost ($) | Waste Mgt Cost ($) | Sum |
Total Input | 100 | 6600 | 700 | 2000 | 700 | 10000 (100%) |
Positive Product | 65 (65%) | 4290 | 455 | 1300 | 0 | 6045(60%) |
Negative Product (Material Loss) | 35 (35%) | 2310 | 245 | 700 | 700 | 3955(40%) |
Total | 100 (100%) | 6600 | 700 | 2000 | 700 | 10000 |
Positive product output comes only 60% where as negative product (material loss) 40%
ISO 14051 : 2011
*MFCA becomes International Standard in September 2011
*Title Enviroment Management - MFCA - General Framework
*ISO 14051:2011 provides a general framework for MFCA
*Not Intended for the purpose of 3rd Party Certification
Advantage of using MFCA
*Reduce waste for the organization
*Reduce enviroment impact
*Increase profit for the organization
*Making the practices better on next process of practices
*Easy to understand for the management how the material flow in the process and there actual output & material loss