Assignment - Managerial Accounting

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Added on 2020-05-16

Assignment - Managerial Accounting

Added on 2020-05-16

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Running head: MANAGERIAL ACCOUNTINGManagerial AccountingName of the StudentName of the UniversityAuthor Note

1MANAGERIAL ACCOUNTINGTable of ContentsIntroduction......................................................................................................................................2Description of client........................................................................................................................2Time Driven Activity Based Costing (TDABC).............................................................................3Description...................................................................................................................................3Features........................................................................................................................................4Differences.......................................................................................................................................5ABC vs. TDABC system.............................................................................................................5TDABC vs. Traditional Approach...............................................................................................6Suitability of TDABC......................................................................................................................7Conclusion.......................................................................................................................................8Reference List..................................................................................................................................9

2MANAGERIAL ACCOUNTINGIntroductionCost accounting has an important role within the organizations and especially in theorganizations that are linked to manufacturing businesses. The process includes theclassification, allocation, recording, summarizing and the evaluation of the differentopportunities that are present within the company so that the cost can be controlled. This resultsin keeping the costs low for the organizations and the increase in the profit level (Drury 2013).The companies like to apply the different systems of costing such as Activity Based Costing(ABC), the traditional method of costing system and the others that are present in the market. Inthe recent years, it can be seen that another method of costing that is Time Driven Activity BasedCosting (TDABC) has also emerged in the market, which is being adopted by the companies.The costing system that is traditional in nature is used mostly by the companies, as it is very easyand consumes less amount of time. Nevertheless, in the recent years, it was seen that theorganizations are facing problems in applying the traditional method of costing system. This ledto the development of TDABC in the year 2004 by Steven Anderson and Robert Kaplan so thatthe companies can remove the barriers that are present in applying the traditional method ofcosting and ABC (Kaplan et al. 2014). The main feature of this report is that it will help inanalyzing and evaluating the various features that are present in TDABC and the suitability of itto be implemented within the company. The report will also contain the features, description andthe contrasting between TDABC and ABC. Description of clientOne of the clients for the consultancy firm is Uggs-N-Rugs, which is a business thatmanufactures and sells ugg boots in Australia. The company was started in 1970 by Bronwyn

3MANAGERIAL ACCOUNTINGand Bruce McDougall and used to purchase the products and sell it. Later they found out that theboots were not of the best quality, which led them to manufacture the products. The companynoticed that there were many variances that were being used in the process of manufacturing.The founders decided to adopt and implement the TDABC within the manufacturing process sothat it can help in the identification of the negative variances and can be eliminated as well fromthe system. Time Driven Activity Based Costing (TDABC)DescriptionThe concept of TDABC has been used so that it can help the companies in overcomingthe difficulties that are present with the traditional method of costing system and in the ABC. Inthis process, it can be seen that the cost of all the resources that are used in the process ofmanufacturing are directly assigned by taking in to account two estimates that are 1) the time thatis required with respect to the production of the units and 2) the per unit cost based on time forsupplying the resources and the cost activities. The computation of the cost activities with theTDABC can be done by the six steps, which are as follows:1.The identification of the services and the activities2.The calculation of the costs that will be required for the entire groups of resources3.The time that is required in the computation of the groups of resources within theorganization4.The groups of resources has to be calculated5.The calculation of time has to be done for each of the activities that are present in themanufacturing process

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