Time Driven Activity Based Costing (TDABC) Model for Cost Estimation of Assembly for a SSI

Abstract

Costing is an important issue in a competitive world. Many companies had adopted TDABC for better cost visibility. Assembly is very common activity in the small scale industries (SSI). In a SSI, many operations like riveting, drilling, fastening, loosening and tightening, hammering, labeling, aligning, etc. are carried out at the time of assembly. Also the sequence and the time of the operating vary for each product. Therefore, it is difficult to estimate the cost of complex assembly. This paper proposed a time driven activity based costing (TDABC) model to estimate the cost of assembly for SSI. TDABC uses time equations to estimate the time required for an activity. A new approach to develop the time equation using maynard operation sequence technique (MOST) is presented. This paper also presents the modification in the time equation to handle the complexity of the activity. The application of the model is presented with the case study. The cost analysis helps to identify the opportunities for low cost assembly solution.

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

“…In ABC, resource costs are assigned to an activity based on a cost driver. Then, costs are allocated from the activity to the product based on the product's consumption of that activity (Ganorkar et al, 2018;Javid et al, 2016). The information required by the ABC system regarding the time spent by employees on several activities is usually collected through interviews, observations, and surveys (Kaplan and Anderson, 2004;Siguenza-Guzman et al, 2013).…”