A comparative study of activity-based costing and time driven activity based costing in customer profitability analysis: Travel agency case study

In the rapidly growing environment of global competition, companies have to know not only the product profitability but also the customer profit. Customer profit analysis, which is used for determining the amount of contribution made by customers to business profitability, provides significant information in their decisions for businesses to survive. The thing that should be considered in calculating customer profit analysis is accurate description of customer cost. Recently increasing calculation and measurement methods to provide accurate information are getting attention. Especially in recent years, Time Driven Activity Based Costing, which was developed considering the drawbacks of activity-based costing, is thought to produce more accurate information. The most important feature of Time Driven Activity Based Costing that prevents problems encountered in activity-based costing is that dynamically calculated cost can be reflected in operating cost and the cost of unused capacity can be decomposed. The use of time as the only cost carrier in Time Driven Activity Based Costing model makes it special compared to activity-based costing model.This study aims to present the effects of the new system on analysis results evaluating customer profitability analysis based on activity-based costing and based on Time Driven Activity Based Costing in a travel agency.