Time-driven activity-based costing

Abstract

Purpose By designing a pilot time-driven activity-based costing (TDABC) model, this study aims to examine in depth the suitability and the complexity of TDABC in a manufacturing company. Design/methodology/approach To obtain a deeper understanding on the matters to analyse, this research adopts an interventionist approach. The host organisation is GP, a Portuguese company in the frozen food sector. Findings The authors’ experience allows them to assert that TDABC is suitable for a manufacturing company and it is able to deal with the variability of the industrial processes. Nonetheless, through a comparison with the models presented in the literature, TDABC appears to be more complex for manufacturing. The authors argue that this happens for two reasons. First, the two types of resources (human labour and machinery) used in production areas create a need to split tasks and to create two equations for each process, something that does not happen in service companies. Second, times are difficult to individualise for certain highly automated procedures, which could also give rise to some errors. Research limitations/implications The designed model is compared to other models presented in the literature. Practical implications This study shows a real example of TDABC in manufacturing and the procedural innovation of the time equations. Originality/value As the TDABC literature has been mostly focused on examples of service companies, the authors examine the technical suitability and the complexity of TDABC in manufacturing companies.

Does Implant Selection Affect the Inpatient Cost of Care for Geriatric Intertrochanteric Femur Fractures?

“…12 Additionally, when Plasis et al defined the overall cost for total hip and knee arthroplasties using time-driven activity-based costing they found implant selection accounts for 45% and 32% of the cost, respectively. 31 They subsequently emphasized the importance of orthopedic surgeons recognizing how their preferences of implant selection impact the cost of care.…”

Accounting for cognitive time in activity-based costing: A technology for the management of digital economy

“…In recent decades, a number of cost accounting systems and approaches have been developed, including traditional costing systems, the activity-based costing (ABC) system, and the time-driven activitybased costing (TDABC) system (Barros and da Costa Ferreira, 2017). Whereas ABC was developed to address the limitations of traditional costing systems, TDABC was developed to overcome the fundamental limitations of ABC, including the complexity of the ABC system, high implementation and maintenance costs, and difficulties in collecting quantitative data on cost drivers through interviews (Siguenza-Guzman et al, 2013).…”

“…Although some studies report that TDABC is useful for decision making, others indicate that TDABC's supposed advantages cannot be justified (Keel et al, 2017;Mortaji et al, 2013). Besides criticisms of TDABC in relation to the structural shortcomings of the basic theoretical assumptions and calculation procedures, the variety of time drivers and the lack of availability of reliable and accurate time estimates (Barros and da Costa Ferreira, 2017) also pose challenging research questions. These questions have become even more challenging for service firms that function in the new digital economy, where human time is central to cost assessment (Devece et al, 2017;Laudien and Pesch, 2019).…”

“…The challenges of time assessment in the context of TDABC have been addressed in many studies emphasizing the subjectivity involved in human agents' time assessment and reporting (Barros and da Costa Ferreira, 2017;Cardinaels and Labro, 2008;Gervais et al, 2010;Mortaji et al, 2013;Siguenza-Guzman et al, 2013). For example, it was found that 30 % of errors in time estimation were due to imprecise evaluations of the time spent on certain tasks (Hoozée and Bruggeman, 2007).…”

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“…Dunia usaha pun mulai beralih ke model JIT untuk proses manufaktur dan pembeliannya. Secara se derhana ide dasar JIT yaitu berproduksi hanya apabila ada permintaan (pull system): sesuatu yang diminta, pada saat diminta, dan sebesar kuantitas yang diminta (Barros & Ferreira, 2017). Sistem JIT memastikan proses berjalan secara terus-menerus de ngan menghilangkan segala pemborosan dan hal yang tidak bernilai tambah.…”