CH5 - Time-driven Activity Based Costing

Thursday, June 06, 2013

2:28 PM

  1. Cost rate for each type of Indirect Resource
    1. All cost incurred to supply resource (machine, indirect labour, computer, factory space, truck, etc)
    2. Capacity supplied by resource (time or space supplied)

=> cost/time or space supplied


  1. Quantity of each Indirect Resource's capacity (time or space) used to produce each product or service.
    1. Identify the resources used to provide each product/service + quantity what s/b used



Better than Historical ABC:

  1. Easier to build and update model
  1. Identifies unused capacity + does not include this cost in allocations in allocations to products
  1. Use more sophisticated allocations using "time equations" that consider specific characteristics of product or services
    1. more pools, more denominators of time/space
    1. Better cause/effect relationships






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