Material flow cost accounting for aluminum gravity die casting in electrical products manufacturing

Abstract

Purpose

This study aims to determine the best way to apply material flow cost accounting (MFCA) in an SME environment with the goal of visualizing negative product cost during the manufacturing process and pinpointing places where improvements can be made.

Design/methodology/approach

This study uses a case study approach to demonstrate the usefulness of the MFCA tool in an SME in India that produces aluminum energy products used in the electrical power sector through gravity die casting.

Findings

According to the results, the company’s gravity die casting has a negative product cost margin of 27.38% as a result of MFCA analysis. It is also determined that the negative material cost is Rs. 22,919, the negative system cost is Rs. 462 and the negative energy cost is Rs. 1,069 for processing 300 kg of raw material. The typical monthly raw material processing for this company is 45,000 kg.

Originality/value

This research shows that MFCA’s implementation will improve the company’s environmental consciousness and bottom line. To the best of the authors’ knowledge, this study is the first to implement MFCA in aluminum gravity die casting of electrical parts manufacturing.