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Time-driven activity-based costing: Designing a model in a Portuguese production environment

Rúben Silva Barros (Instituto Universitário de Lisboa (ISCTE-IUL), Business Research Unit (BRU-IUL), Lisboa, Portugal)
Ana Maria Dias Simões da Costa Ferreira (Instituto Universitário de Lisboa (ISCTE-IUL), Business Research Unit (BRU-IUL), Lisboa, Portugal)

Qualitative Research in Accounting & Management

ISSN: 1176-6093

Article publication date: 18 April 2017

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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.

Keywords

Acknowledgements

The authors would like to thank the editor, Professor John Burns, and the two anonymous reviewers for their helpful comments and suggestions, who have helped to improve the paper. The usual disclaimer applies.

Citation

Barros, R.S. and Ferreira, A.M.D.S.d.C. (2017), "Time-driven activity-based costing: Designing a model in a Portuguese production environment", Qualitative Research in Accounting & Management, Vol. 14 No. 1, pp. 2-20. https://doi.org/10.1108/QRAM-10-2015-0095

Publisher

:

Emerald Publishing Limited

Copyright © 2017, Emerald Publishing Limited

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