The Ready-Made Garments (RMG) sector—responsible for more than four-fifths of Bangladesh’s export earnings—operates within a fiercely competitive global supply chain where accurate costing is crucial to preserving profitability. Even with export receipts topping US38 billion in recent years, factories continue to endure margin compression driven by increased pay commitments, heightened compliance requirements, changing raw material prices, and fluctuating logistical costs. This study examines how different costing strategies—from conventional absorption and standard costing techniques to more sophisticated methods like Activity-Based Costing (ABC), Cost-Volume-Profit (CVP) analysis, and integrated e-accounting or ERP systems—affect profitability results in RMG companies in Bangladesh. The research evaluates cost-allocation accuracy, overhead visibility, digital adoption, and managerial decision-making behavior by synthesizing insights from industry assessments, sectoral studies, and previous academic work using a qualitative thematic review technique. Evidence from the reviewed literature shows that relying too much on traditional costing models frequently results in poor pricing decisions, erroneous overhead distribution, and distorted order-level profitability. In contrast, factories that use ABC, ERP modules, and digital accounting frameworks offer superior tracking of production costs, enhanced control over wastage and rework, greater pricing precision, and more consistent margins. Nonetheless, adoption of these advanced technologies remains unequal, restricted by skill shortages, perceived implementation hurdles, inconsistent data standards, and organizational reluctance to transition away from established manual methods. Although thorough causation evidence is still lacking, profitability assessments from earlier research indicate that companies utilizing advanced costing systems typically produce greater gross and operational margins as well as improved returns on assets. By integrating these key findings, the report underlines the vital role modern costing approaches play in establishing financial resilience, developing competitive pricing capacity, and enhancing operational efficiency in Bangladesh’s RMG industry. The insights provided provide a platform for practical changes and policy focus aimed at upgrading cost management and boosting long-term profitability across the industry.
Jumman Sani (Wed,) studied this question.