ATJ Asian Tax Journal

Asian Tax Journal

Print ISSN 1738-3323 Online ISSN 2733-9270

A Study on Current Status and Development Plan of Defense Industry Depletion Ratio

  • Ki-il Choi Graduate School of National Defense Management, Korea National Defense University

Asian Tax Journal Vol. 18 No. 4 (2017), pp. 9-32

Abstract

This study reexamines the significance of the depletion ratio system in the defense industry through analyzing the operational status of the defense rate reduction system. The defense industry needs specific cost accounting for unique defense products produced and manufactured by defense companies. This is because the contract amount is determined by negotiation based on actual cost data based on numerical contracts or forecast contracts rather than competition contracts, so that it is important to maintain sophisticated cost control. The defense materials are produced in small quantities in small quantities to produce a variety of products in small quantities, and have the characteristic of individual cost calculation that directly calculates the cost separately for the products of the specific standard required by the military. It also includes all the cost elements incurred for the completion of the product, and corresponds to the total cost calculation. Confirmation of the material requirement per unit of product in the cost calculation for the defense materials can reduce the unnecessary loss cost by using the resources efficiently, so it is necessary to measure the amount of the depletion effectively and calculate the appropriate depletion ratio. The defense depletion rate of defense products is an important concept in terms of efficiently managing the resources of the defense industry, but in reality, there is little interest and awareness in the depletion ratio system. Therefore, it is necessary to review the operational status of the defense system and to examine the policy improvement and development plan in general by reviewing the institutional weaknesses and problems related to the defense depletion ratio system.

Keywords

  • Defense Industry
  • Defense Materials
  • Defense Procurement Cost
  • Depletion Ratio

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