Abstract
A micro, small and medium enterprise (MSME) becomes a special attention of the government to increase Indonesian economic sector. The development of MSME and creative economy will create a new economic resource and support regional economic development to provide a job, and MSME has high economic resilience too. In a practice, some problems often occur in cost-production calculation, the determining of sell price, and financial literacy that cause an error in calculating profit, so a business actor is wrong in analyzing the financial condition of the MSME. That condition encourages low business growth and even bankruptcy of MSME due to not being able to compete or experiencing acute Financial Distress. The development of the number of small sub-district industries in Pekanbaru City has decreased significantly by 53%. The number of small industries in 2016 amounted to 117 decreased to 54 units in 2017. Such a situation makes it necessary to pay special attention to understanding the calculation of production costs, determining selling prices and financial literacy among MSME sector players.The research method conducted here is a Qualitative method using a case study strategy in analyzing and applying it. The result of this study shows the lack of understanding of welding workshop owners related to the calculation of production costs, determining the selling price and financial literacy will have an impact on business continuity. This error – in analyzing costs and selling prices – causes it to be one of the factors of loss or inability to reach the break-even point of production, resulting in a loss and the inability of the company to remain competitive. Keywords : Production Costs, Selling Prices, Financial Literacy, Business Continuity DOI: 10.7176/RJFA/11-6-09 Publication date: March 31 st 2020
Highlights
1.1 Background of the Problem One of the main objectives of each business unit formantion is survival (Going Concern) and the development of the company
1.2 Problem Formulation Lack of adequate knowledge in the calculation of production costs, determining the selling price and financial literacy in small industries will lead to bankruptcy of MSME business in the city of Pekanbaru
Classifying production costs, based on the tabulated data, shows that the “factory overhead cost” that is charged with the cost of producing orders is only a small part such as production auxiliary materials, and factory equipment, while other factory overhead costs are not calculated into the cost of producing orders
Summary
1.1 Background of the Problem One of the main objectives of each business unit formantion is survival (Going Concern) and the development of the company. 1.2 Problem Formulation Lack of adequate knowledge in the calculation of production costs, determining the selling price (per unit) and financial literacy in small industries will lead to bankruptcy of MSME business in the city of Pekanbaru. The choice of welding workshop as an object of research is since this industry is a manufacturing entity whose characteristics are complex from raw materials, labor and overhead costs, causing difficulties in calculating production costs and selling prices. Raw material costs and direct labor costs are calculated based on costs that occur, while factory overhead costs are calculated using rates determined in advance In this welding workshop, most of enterpreneurs do not use an order fee card, but only record it in one book, and there are even entrepreneurs who do not record the cost of their products by the reason of having memorized the costs to be incurred. For this welding shop business, production cost can be grouped as follows:
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