The practice of accounting for production costs and the process method of determining production costs in cotton and textile clusters and ways to improve it
Abstract
Purpose: This study aims to analyze the characteristics of cost formation and accounting in cotton and textile clusters using the process-based costing method. The main objective is to identify inefficiencies in current cost allocation practices and propose methods to enhance cost accuracy, transparency, and resource management efficiency within the industry’s complex production structure. Research methodology: The research employs a descriptive and analytical approach that integrates theoretical analysis with a case-based examination of accounting practices in cotton and textile enterprises. Data were collected from production reports, accounting documents, and expert interviews to assess the application of the process costing method across various production stages. Results: Findings reveal that existing cost accounting systems often fail to fully capture production complexity and indirect cost distribution. The study highlights the benefits of implementing automated and digitalized accounting systems, which significantly improve cost control, accuracy, and decision-making efficiency. Conclusions: The process-based costing method is identified as the most suitable approach for the multi-stage textile industry. Its application, when supported by digital transformation, leads to more effective cost management and overall productivity enhancement. Limitations: The study is limited to selected clusters and does not include comparative analysis with other industrial sectors, which may affect generalizability. Contribution: This research contributes to the refinement of accounting methodologies in textile clusters by providing practical recommendations for process optimization and digital cost management implementation.