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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.

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.

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.

The designed model is compared to other models presented in the literature.

This study shows a real example of TDABC in manufacturing and the procedural innovation of the time equations.

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.

The purpose of this paper is to present a procedure to implement time-driven activity-based costing (TDABC) using Maynard Operation Sequence Technique (MOST). In this paper three research questions are addressed: How can MOST be used to frame time equations? How can MOST be used for the improvement of productivity? How can TDABC cost information be used?

Case study research was performed at a manufacturing industry. Data have been collected for overhead distribution. The overhead cost was distributed on activity. Time equations are framed using MOST. Cost of activity is assigned to the product using time equations.

The proposed system simplifies the process of implementation of TDABC using MOST. This system not only determines the cost but also identifies the area where cost is consumed. It also identifies opportunity for productivity improvement.

The case study was conducted in a manufacturing industry. The proposed methodology is suitable for manufacturing industry where standard work procedure is adapted.

The study explains the implementation of TDABC using MOST using a case study and results are meticulously discussed from a management point of view for appropriate decision making.

Besides the articles published so far dealing with the implementation of TDABC, no research was found on the implementation of TDABC using MOST.

The purpose of this paper is to describe the experiences of a wholesaler with time‐driven activity‐based costing (TDABC). Three research questions are addressed: How are complex logistics operations modeled by TDABC? Does TDABC provide more accurate cost information than activity‐based costing (ABC)? How is TDABC cost information used?

Case study research was performed at a Belgian wholesaler. Interviews were conducted. The cost and activity database was analyzed.

This case study illustrates that there are logistics operations that cannot be modeled using a single cost driver, as is done with ABC. TDABC uses time equations to estimate the time spent on each activity. The results herein show how the time equations can capture the different complexities, by including different terms or interaction terms in the time equations. The database analysis clearly demonstrates that TDABC provided more accurate cost information than ABC at this case company. ABC oversimplified 64 percent of the activities, and misallocated 55 percent of all indirect costs.

This study is one of the first, investigating the experiences with TDABC. The results are derived from analyzing all activities, at a single case company.

The study illustrates the technique of TDABC and provides a real company example of time equations in logistics. The users declared the TDABC model very useful for profitability reporting and profit management. The time drivers provided insight into the causes of excessive distribution and logistics costs.

This paper complements current discussion on cost drivers and subtasks and logistics costing.

The current article aims to give an overview of how the new cost accounting models, such as activity‐based costing (ABC) and time‐driven activity‐based costing (TDABC) are researched and adapted by university libraries, focusing on the methods used for measuring work time allocation as well as on the strengths and weaknesses of both models.

The data used in this paper are based on reviewing and summarizing of relevant studies which were conducted in libraries inspired by the ideas of modern theoretical considerations and treatments relating to cost accounting and costing, originally developed for industry and private sector organizations.

The implementation of cost accounting systems in libraries has historically been treated as a technical innovation rather than an organizational or management innovation. The most important consideration is that librarians are not machines, which can be set at a given speed and expected to produce a uniform product. It turns out that the results of such research are largely affected by what methods are used to identify the time spent on activities and how well the management of libraries or researchers were able to explain to the staff the necessity for such research.

Besides the articles published so far dealing with the implementation of ABC and TDABC in libraries, no research or surveys focus on these issues from the perspective of employees.

The purpose of this paper is to discuss the potentialities of innovative accounting tools in supporting “transparency” and “resource allocation” in public hospitals, by describing the implementation of a pilot project of time-driven activity-based costing (TDABC).

An interventionist research (IR) approach has been adopted: two medical doctors, three financial controllers and three researchers were involved. Collection of data used to implement the accounting model is based on hospital databases and interviews.

The information produced may allow a higher coherence between resources and activities. TDABC may enhance transparency and support decisions toward a better organization of work and an informed allocation of resources.

Further studies are required to analyze decisions following the implementation of the TDABC model.

The accounting literature lacks case studies describing the application of TDABC in hospital settings, despite its good informative potentialities and the limited investment required to introduce TDABC. Moreover, the use of the IR approach and the involvement of medical doctors may help to get coherence between accounting data and clinical work and may support the further diffusion and development of this costing model in hospitals.

The purpose of this paper is to show the implementation of customer profitability analysis (CPA) using time‐driven activity‐based costing (TDABC), in a Turkish hotel.

A case study was conducted in a four‐star hotel with 100‐room capacity in the Çukurova region of Turkey. Interviews, direct observations, and documentation collection were used to collect the data.

The results showed that some of the customer segments which were found unprofitable under the conventional ABC method were determined profitable using TDABC. The case study also revealed the cost of idle resources devoted for front office, housekeeping, food preparation, and marketing activities.

Only a single hotel operating in Turkey is examined in this paper. Further research should focus on implementing CPA using TDABC in other hotels in Turkey and abroad.

Based on the results of the study, the hotel management is better able to understand profitability of different customer segments and implement appropriate strategies. Moreover, the time equations of TDABC are considered to provide hotel management with an opportunity to better balance the capacities supplied in departments.

There is limited research relating to profitability analysis in service companies in general and in the hotel industry in particular. Therefore, this paper is unique in the sense that it analyzes the use of TDABC systems for CPA within a real case hotel.

The purpose of this paper is to provide a case study about the capacity utilization analysis in a small-sized manufacturing company through the application of time-driven activity-based costing (TDABC). After a brief overview of development of the TDABC system, a detailed application of TDABC and capacity utilization analysis in a bakery is given.

This paper is based on a case study about the application of TDABC in a small-sized Greek manufacturing firm. In the case study, time equations were developed for the supporting, operating and manufacturing departments and product costs determined based on the model. Capacity utilization analysis made through the application of TDABC system.

The study shows that TDABC is more applicable in small-sized manufacturing companies because of their labor-intensive nature. In contrast to previous studies, authors argue that even in small firms simple excel sheets are not enough to capture the complexity of the time equations and business intelligence software and programming coding is required.

Although the fundamental structure of TDABC is the same for all companies there is no strict form of application.

The practical implication of this paper is that each firm has unique characteristics that need to be reflected in the application of the TDABC model.

This paper contributes by providing insights into cost accounting in SMEs. More specifically, this paper contributes to the TDABC literature regarding the application of the system in small and medium sized manufacturing firms.

Upon completion of the case study discussion, successful students will be able to define and list the steps of time-driven activity-based costing system (TDABC); understand and explain the ideas behind the TDABC; implement the TDABC in customer profitability analysis; draw connections among the cost and profitability analysis; evaluate the importance of better costing techniques in profitability analysis; and make managerial decisions based on TDABC analysis.

Gluten Limited’s financial affairs and operations manager, Fatih, was aware that the company was making very little profit from its operations with its biggest customer. The main reason appeared to be that it delivered its products in bulk to the main warehouses of the customer, which then distributed them to the stores. Fatih believed that products were being sent to stores late, so that their expiration dates passed quickly and they ended up being returned.

The case study documents the past year of Gluten Limited’s delivery operations with one of its biggest customers. It focuses on the effectiveness of its delivery operations and ways to increase profitability by reducing sales returns. The case dilemma involves the choices that Fatih faced following a six-month trial period: either delivering products in bulk to the customer’s main warehouses at lower cost but higher return rates or delivering small amounts directly to stores at higher cost but lower return rates. Fatih needed to decide which mode of customer operations was more profitable and continue that way.

Knowing the importance of determining costs properly in profitability analysis, Fatih made the cost calculations using the TDABC system.

This case was written for use in Cost Accounting and Managerial Accounting classes at the undergraduate level. The focus of the case aligns well with discussions of customer profitability analysis, cost reductions, eliminating non-value-added activities, and profitability of operations. Instructors seeking to emphasize the most suitable costing methods for customer profitability analysis could assign this case.

Teaching notes are available for educators only.

CSS 7: Management Science

This paper aims to show the potential of time-driven activity-based costing (TDABC) to value and integrate corporate social responsibility (CSR) and quality management (QM) processes in the assembly industry. It provides valuable insights about operational processes, sub-process and activities within assembly companies by using TDABC’s time equations with more accurate costs for the decision-making process.

The current paper proposes a new methodology framework with four QM and CSR implementation levels and several costing scenarios through the TDABC system. The valuation was built based on the activities of essential referents in each subject, such as ISO, Ethos Institute and electrostatic discharge control programs. To this end, a case study in the assembly industry processes was conducted with data from a TV assembler.

The results highlight that TDABC can be extended to perform a cost analysis with QM and CSR processes. The environmental management and occupational safety and health administration processes were considered part of CSR to do so. Consequently, managers can simulate the cost and impact of incorporating CSR and QM in assembly processes and thus decide the implementation degree and its corresponding planning according to the needs and available resources. In this particular case, the company increases a maximum of 12% of its resources to be socially responsible and manage its products’ quality.

Although theoretical models on CSR have been developed, the current study provides a practical framework based on TDABC scenarios that enterprises can easily implement to support and evaluate QM and CSR processes.

The purpose of this paper is to highlight the particularities of the time consumption of transactions performed in an insurance firm and the prospective impact on costing.

This paper uses the results of an archival study conducted on data collected in an insurance firm.

The results suggest that the reasons underlying the heterogeneity of transactions’ time consumption are multiple and rule out a systematic and unique explanation. They lend support to the importance of the “human effect” in explaining the time consumption of service transactions and support the need for more research into the evolution of marketing thought that subordinates the concept of transaction to the concept of relationship. In addition, our results not only suggest that the drivers of time consumption and their importance are contingent on the type of service activity performed within the same firm, but also that inside a generic service activity, deviations in time consumption remain due to the provision of specific services.

Services have their own characteristics which make it difficult to trace their resource consumption. Yet limited research has focused on examining the impact of services’ characteristics on predicting costs. Our findings contribute to our understanding of such impact and cast doubt on the possibility of obtaining accurate costs for very detailed transactions for an acceptable cost-benefit trade-off.