Material flow cost accounting: Case study in a manufacturing enterprise

Nowadays, with increasing global competition, enterprises are looking for ways to reduce costs and make more profits. For this purpose, some enterprises are trying to provide cost advantage by focusing on waste reduction and recycling. At this stage, with the implementation of Material Flow Cost Accounting (MFCA), which is one of the sub-branches of environmental management accounting, enterprises will focus on recycling and waste reduction activities, minimizing costs and providing a more efficient production process with the available raw materials. MFCA is a new system which is increasingly used abroad, however, it's usage is not yet common in Turkey. The aim of the study is to examine the applicability of MFCA in manufacturing enterprises and its contribution to environmental performance improvement and cost savings. For this purpose, a case study was carried out in a textile production company. According to the MFCA procedure, a particular type of shirt is selected and the whole process from cutting phase to packaging phase is examined. Positive and negative cost of each transaction by MFCA analysis is determined. It has been seen that the negative cost of the products is 16.32% and 8.35% respectively. It was determined that a large part of the negative product was caused by cutting. From this point of view, the main source of the cost of negative products was determined and solutions proposals were provided.