Domestic Component Level of Absorption and Variable Costing Method for Interior Permanent Magnet Motor Cost

Technical related investigations of Interior Permanent Magnet (IPM) motor have been discussed in many previous studies. This article aims to investigate IPM motor from the economic point of view, in terms of the manufacturing cost. Two of the costing methods will be analyzed, namely Absorption and Variable costing. Each method has a cost component consisting of primary cost, fixed overhead cost, variable overhead cost, and non-manufacturing cost of the IPM motor cost. The calculation is applied for 1 unit motor and uses the Indonesian currency. The results show that the IPM motor costs are IDR 35,657,469.43 and IDR 39,619,410.48 for variable costing and absorption costing method, respectively. The difference in the results due to the difference in the overhead cost components employed in each method. Furthermore, the percentage of the domestic component level is calculated by referring to each IPM motor cost, the results for both are 69.64% and 72.68%, which means that the domestic component level of the IPM motor is qualified for goods procurement and the product implementation in Indonesia refers to the government regulations.