Time driven activity based costing method and a case study in a manufacturing business

Time-driven activity-based costing (TDABC) is a method which considers the necessary time for making activity and that is developed in order to correct conventional activity based costing's (ABC) deficiences. Only two data are needed in this method. The first one is amount of resource needed to perform the activities. The second one is about how long time we make this activity. The most important feature of this method which distinguishes from traditional costing is that unused capacity can be calculatedSince the time and resources required to perform the activity are known by the TDABC method, the unused capacity can be calculated by subtracting the time required to perfom the activity from total time. For the TDABC method requires less variance according to the conventional ABC method, facilitating the application and updating of this method. The aim of this study is to apply the TDABC method in a furniture manufacturing enterprise and determine the costs according to the TDABC method. In this study, the case study was carried out and the costs of the products produced in furniture business were calculated by using TDABC method. As a result of the study, the unused capacity cost was calculated by using the TDABC method, these costs were not loaded on the product lines and the accurate costs of the products were found.