Product Cost Management Practices in Textiles

Abstract

A field study and a survey were conducted to examine the types of product costing and cost management practices currently used by textile companies. Results were collected that provide an overview of the companies' characteristics, product offerings, and current and near-future costing practices. These results are evaluated qualitatively on a case-by-case basis as well as collectively. The results show that textile companies predominantly use traditional costing systems, leaving room for improvement in their cost management practices. This may involve correcting their use of standard costing and variance reporting or variable costing. Often, this means that textile companies would benefit from a greater understanding of the causes of their sizable overhead costs; they may want to consider implementation of such contemporary cost management practices as activity-based costing/activity based management. Some companies are certainly more inclined to charge ahead with the implementation of contemporary cost management practices than others. The reasons for this are discussed and suggestions for improvements are pointed out. The sharing of cost management practices in the textile industry can allow for benchmarking and, ultimately, improvements in cost, quality, and delivery time along the entire supply chain.