Using time driven activity based costing system for customer profitability analysis: A case study in an accomodation company

Time Driven Activity Based Costing (TDABC) is a system which simplifies Activity Based Costing by removing the need for time consuming managerial interviews and employee surveys that are proneness to error and expensive to upgrade. The method needs only two parameters as the cost of supplying resources to activities and the time required to perform these activities. TDABC provides an organization with many benefits in understanding the differences between the total amount of time needed to carry out activities, and the actual amount of time available given current resources. The method also evaluates cost of unused capacity which could be used for the capacity management. In addition, the new system can easily be maintained and updated and makes it possible to determine the cost of the activities in a more accurate and effective way. The aim of this study is to apply customer profitability analysis in an accommodation company and to determine the differences between traditional ABC and the TDABC. In this framework, descriptive and experimental case studies were applied in a hotel, existing cost system and customer profitability analysis of the hotel were defined using descriptive case study; and then with an experimental case study, it was shown how the time driven activity costing affected the analysis results. Key Words: Time Driven Activity Based Costing, Customer Profitability Analysis, Customer Focused Approach, Tourism Industry