Paper Information

Journal:   IRANIAN JOURNAL OF MANAGEMENT STUDIES   SUMMER 2016 , Volume 9 , Number 3; Page(s) 457 To 482.
 
Paper: 

TIME-DRIVEN ACTIVITY-BASED COSTING: THEORY, APPLICATIONS AND LIMITATIONS

 
 
Author(s):  NAMAZI MOHAMMAD*
 
* COLLEGE OF ECONOMICS, MANAGEMENT AND SOCIAL SCIENCES, SHIRAZ UNIVERSITY, SHIRAZ, IRAN
 
Abstract: 

The aim of this study is to explore the strategic applications and limitations of Time-driven Activity-based Costing (TDABC) and to evaluate the degree of accuracy of the proponents’ arguments concerning its usefulness. In this study, published works directly related to this area from the period 2004-2015 are analyzed. This study reports TDABC's applications in strategic areas such as cost of production, unused capacity, price determination, customer profitability analysis, and modeling complex decisions in various small, medium, and large private, governmental, and nonprofit service and manufacturing organizations. However, since they are not based on any concrete empirical investigations, only future empirical studies can authentically reveal the advantages of this technique. TDABC also severely suffers from the following spheres: it lacks the ability to identify activities in the first implementation step, such as practical capacity costs rate, uniform capacity costs rate, managers’ time estimation for each activity, determination of unused capacity, as well as lack of data accuracy, and limitations of managerial decision makings. As a result of these drawbacks, proponents’ arguments regarding TDABC’s usefulness and its widespread applications -in the future and around the world- are baseless.

 
Keyword(s): ACTIVITY-BASED COSTING (ABC), ACTIVITY-BASED MANAGEMENT (ABM), STRATEGIC MANAGEMENT, TIME-DRIVEN ACTIVITY-BASED COSTING (TDABC)
 
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