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Time-Driven Activity-Based Costing: A Simpler and More Powerful Path to Higher Profits
 
 

Time-Driven Activity-Based Costing: A Simpler and More Powerful Path to Higher Profits [Kindle Edition]

Steven R. Anderson Robert Kaplan
2.7 out of 5 stars  See all reviews (3 customer reviews)

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Product Description

Product Description

In the classroom, ABC looks like a great way to manage a company’s resources. But many executives who have tried to implement ABC on a large scale in their organizations have found the approach limiting and frustrating. Why? The employee surveys that companies used to estimate resources required for business activities proved too time-consuming, expensive, and irritating to employees.

This book shows you how to implement time-driven activity-based costing (TDABC), an easier and more powerful way to implement ABC. You can now estimate directly the resource demands imposed by each business transaction, product, or customer. The payoff? You spend less time and money obtaining and maintaining TDABC data—and more time addressing problems that TDABC reveals, such as inefficient processes, unprofitable products and customers, and excess capacity. The authors also show how to use TDABC to link strategic planning to operational budgeting, to enhance the due diligence process for mergers and acquisitions, and to support continuous improvement activities such as lean management and benchmarking.

In presenting their model, the authors define the two questions required to build TDABC:
1) How much does it cost per time unit to supply resource capacity for each business process?
2) How much resource capacity (time) is required to perform work for a company’s many transactions, products, and customers?
The book demonstrates how to develop simple, valid answers to these two questions.

Kaplan and Anderson illustrate the TDABC approach with a wealth of case studies, in diverse settings, based on actual implementations.

From the Back Cover

In the classroom, ABC looks like a great way to manage a company’s resources. But many executives who have tried to implement ABC on a large scale in their organizations have found the approach limiting and frustrating. Why? The employee surveys that these companies used to estimate the resources required for business activities proved too time consuming and expensive.

This book introduces time-driven activity-based costing (TDABC), an easier and more powerful approach for measuring cost and profitability that exploits the data now available from ERP systems. With TDABC, managers spend less time and money gathering and maintaining data and more time addressing the problems that TDAMC reveals—such as inefficient processes, unprofitable products and customers, and excess capacity.

The authors show how managers can build a TDABC system by answering two fundamental questions:

  • How much does it cost to supply resources capacity for each business process in our organization?
  • How much resource capacity (time) is required to perform work for each of out company’s transactions, products, and customers?

    Beyond illustrating the normal benefits from successful ABC implementations—such as enhancing the profitability of products and customers, managing capacity utilization, and improving process efficiencies—Kaplan and Anderson introduce innovative, new TDABC applications, including:

  • Linking strategic planning to operational budgeting
  • Enhancing the due diligence process for mergers and acquisitions
  • Supporting continuous-improvement activities such as lean management and benchmarking
  • Eliminating unnecessary complexity in supply chains
  • Optimizing staffing for key personnel

    The book illustrates the TDABC approach with a wealth of case studies in diverse settings, based on actual implementations guided by Acorn consultants. Featured organizations include Kemps LLC, Sanac Logistics, ATB Financial, Citigroup Technology Infrastructure Division, and Jackson State University.

    A vital new resource, Time-Driven Activity Based Costing gives you the tools and examples you need to maximize the value of your activity-based costing system.


  • Product details

    • Format: Kindle Edition
    • File Size: 3406 KB
    • Print Length: 288 pages
    • Publisher: Harvard Business Review Press (22 Feb 2007)
    • Sold by: Amazon Media EU S.à r.l.
    • Language: English
    • ISBN-10: 1422101711
    • ISBN-13: 978-1422101711
    • ASIN: B001GIPNT8
    • Text-to-Speech: Enabled
    • X-Ray:
    • Word Wise: Enabled
    • Average Customer Review: 2.7 out of 5 stars  See all reviews (3 customer reviews)
    • Amazon Bestsellers Rank: #396,718 Paid in Kindle Store (See Top 100 Paid in Kindle Store)
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    Customer Reviews

    2.7 out of 5 stars
    2.7 out of 5 stars
    Most Helpful Customer Reviews
    5.0 out of 5 stars Comprehensive guide 25 Nov 2008
    By Rolf Dobelli TOP 500 REVIEWER
    Format:Hardcover
    Activity-based costing can provide important insights; however, it also can be complex and difficult to implement and sustain. Time-driven activity-based costing more straightforwardly uses time as the primary metric for assessing costs, since almost all costs have a time dimension. Robert S. Kaplan and Steven R. Anderson provide a thorough, if highly technical, introduction to time-driven activity-based costing. Chapter by chapter, they show readers how to estimate process times, calculate capacity cost ratios, and plan and implement a TDABC system. Their detailed case studies illustrate the benefits of this clear, sophisticated tactic for budgeting, cost management, process improvement, benchmarking and acquisition evaluations. getAbstract thinks their book will be important to any executive, manager or academician who must understand operational costs.
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    2.0 out of 5 stars Interesting concept, disappointing articulation 26 Aug 2009
    By Entropy
    Format:Hardcover|Verified Purchase
    I bought this title in support of a project I was recently working on. Although I think the idea is an interesting one, the feeling I consistently got was that this was a consultant trying to 'cash in' on the tail end of a money-spinning idea by publishing a book (and perhaps revive a flagging pipeline of assignments) under the flag of a famous professor, rather than providing a true understanding of the implementation of the concept.
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    0 of 4 people found the following review helpful
    1.0 out of 5 stars Beware. This is the wrong way to go 16 Oct 2007
    By Mr. Ross Maynard VINE VOICE
    Format:Hardcover
    Activity based costing, or any form of absorption costing, is the wrong way to go in any modern manufacturing organisation. The need for flexibility, product variety and speed of response to customer demand are not supported by ABC. Check out "Practical Lean Accounting" by Brian Maskell et al for a simpler means of accounting (without overhead apportionment) in the modern manufacturing environment. The lean accounting approach also provides much better support for decision making, pricing, budgeting, performance measurement and inventory (stock) valuation.
    Was this review helpful to you?
    Most Helpful Customer Reviews on Amazon.com (beta)
    Amazon.com: 4.4 out of 5 stars  10 reviews
    4 of 4 people found the following review helpful
    4.0 out of 5 stars A useful model for some businesses 24 Feb 2011
    By John Gibbs - Published on Amazon.com
    Format:Hardcover
    Activity-based costing was introduced in the 1980s to correct the inaccurate allocation of overhead from standard cost systems, but activity-based costing systems were expensive to build, complex to sustain, and difficult to modify, according to Robert Kaplan and Steven Anderson in this book. According to the authors, Time-Driven Activity-Based Costing is simpler, cheaper and more powerful.

    The authors' costing model assigns resource costs directly to resource objects. Firstly, a capacity cost rate is calculated for each department or process, being the total cost of the resources used by the department or process divided by the time available from the employees conducting the work. Secondly, an estimate is made of the demand for resource capacity that each cost object requires. This makes it very easy to see how much it costs to serve a particular customer, or how much excess capacity there is in a department.

    The value to a business in implementing a system of the type advocated by the authors will depend on the extent to which the activities of the business consist of standard processes and the extent of benefits gained from knowing the cost of serving individual customers. The system might be better suited to a manufacturing firm, in which the time taken for each process can be estimated accurately, than to a law firm, where the mysterious activities engaged in by attorneys might defy rational measurement.

    In my opinion the main value of the book is in the first few chapters where the principles of the system are explained. The last half of the book contains a number of case studies which are likely to be of interest only to those who have businesses similar to one or more of those described in the case studies.
    2 of 3 people found the following review helpful
    5.0 out of 5 stars Comprehensive guide 25 Nov 2008
    By Rolf Dobelli - Published on Amazon.com
    Format:Hardcover
    Activity-based costing can provide important insights; however, it also can be complex and difficult to implement and sustain. Time-driven activity-based costing more straightforwardly uses time as the primary metric for assessing costs, since almost all costs have a time dimension. Robert S. Kaplan and Steven R. Anderson provide a thorough, if highly technical, introduction to time-driven activity-based costing. Chapter by chapter, they show readers how to estimate process times, calculate capacity cost ratios, and plan and implement a TDABC system. Their detailed case studies illustrate the benefits of this clear, sophisticated tactic for budgeting, cost management, process improvement, benchmarking and acquisition evaluations. getAbstract thinks their book will be important to any executive, manager or academician who must understand operational costs.
    3.0 out of 5 stars Same wine new bottle 25 Aug 2013
    By Pedro L San Martin R - Published on Amazon.com
    Format:Kindle Edition|Verified Purchase
    TDABC is a method that rejuvenates old standards to include calculation criteria models Profitability and Cost Management. Good book, very good reference if you start your knowledge in EPM.
    5.0 out of 5 stars Great Book. 13 May 2013
    By David White - Published on Amazon.com
    Format:Hardcover|Verified Purchase
    I'm only a few chapters into it but it's been very helpful so far. I do cost accounting for a textile manufacturer so I have to use the examples in the book as a guide for what to do in the plants.
    4.0 out of 5 stars Improve your profits 17 Nov 2012
    By Ashok Thirwani - Published on Amazon.com
    Format:Hardcover|Verified Purchase
    Time linked ABC well presented with clarity on concept. The lessons are explained with best examples and easy to understand illustrations.
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