Historical development of costing approaches and implementing cost-effective activity based costing in the frame of industry 4.0

Nowadays, with the continuous development of technology, the national and inter-national competition of the companies has increased and companies have to increase their product and service diversity. With the decrease in the profit margins, companies have had to produce higher quality products and services with lower costs. Because of this decrease in labor costs included in production costs, energy use increased and indirect labor and depreciation costs also increased. With this increase in general production expenses, transfer of general production expenses to products and services has gained importance. As a result of all these changes in the production processes, the cost of unit goods has not started to give accurate results due to the fact that traditional accounting methods cannot adapt to the new order and this situation has caused loss in the enterprises. Businesses have become more sensitive to identifying and monitoring the sources of cost and started to look for cost systems where they can obtain more accurate cost information. The Activity-Based Cost System has helped businesses in this field and was first used in the 1950s. In addition to calculating the output cost, the Activity Based Costing System has been used as a method to assist management in strategic purposes. However, due to the complex nature of the Activity Based Costing System and the difficulties experienced in its implementation, Time-Based Activity Based Costing System has been developed as a costing system that is easier to update and implement, and most importantly provides more accurate cost information. Time-Based Activity Based Costing System takes into account the time factor as different from the Activity-Based Costing System. This calculation system also allows for the calculation of idle capacity. The resulting idle capacity costs are not distributed to products and services so that actual cost information is achieved. Nowadays, this new cost system, which can be easily integrated into the innovations brought by the Industry 4.0 systems, provides accurate information to enterprises.