Supply Chain Management and Costing

This assignment delves into the crucial relationship between supply chain management, costing strategies, and value engineering. It examines how concepts like lean manufacturing, target costing, and time-driven activity-based costing (TDABC) contribute to optimizing costs and enhancing overall business value. The role of collaborative supply chains and digital manufacturing trends is also considered.

Running head: MANAGERIAL ACCOUNTING
Managerial Accounting
Name of the Student:
Name of the University:
Author’s Note:
Course ID:

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Executive Summary:
The paper had an objective of evaluating the suitability Time-Driven Activity-Based Costing
System (TDABC) from the perception of a graduate consultant employed within management
consultancy organization. After the completion of this report, it is gathered that TDABC serves
as modern budgeting process which facilitates in easing the process of costing through
decreasing the requirement for surveying and interviewing the employees in allocating the
resource costs within the conducts before bringing them down within the cost objects. Moreover,
it is also revealed from the paper that TDABC system might work in alignment with consumer
relationship management system along with enterprise resource planning.

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Table of Contents
1. Introduction:................................................................................................................................3
2. Description of CSR Limited:.......................................................................................................3
3. Time-Driven Activity-Based Costing (TDABC) Concept and Features:....................................4
4. TDABC, ABC and Traditional Costing Systems Differences:...................................................5
5. Appropriateness of TDABC to CSR Limited:.............................................................................9
6. Conclusion:................................................................................................................................10
References:....................................................................................................................................12

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1. Introduction:
The report has an intention of evaluating the suitability of Time-Driven Activity Based
Costing System (TDABC) in the opinion of a graduate consultant used within the management
consultancy company. It is gathered that a key consumer of the consultancy company is CSR
Limited that is among the renowned manufacturing companies of the company (Balakrishnan,
Labro and Soderstrom 2014). The first part of the report pus a great emphasis on elaborating the
business conducts of the organization. The second part of the report deals with carrying out
detailed analysis of the characteristics and concepts of TDABC. The third section focuses on
explaining the differences between the TDABC, ABC along with conventional costing
processes. Additionally, the paper will also focus on evaluating the suitability of TDABC in case
it is implemented in CSR Limited.
2. Description of CSR Limited:
CSR limited Australia has its business that is involved in manufacturing and supplying of
building products all over New Zealand and Australia. The organization has its business
operations in four major segments including Glass, Aluminum, building products and properly.
Its building products encompass lightweight systems like central fiber cement and Cimentel
plasterboard (CSR.com.au. 2018). Glass business of the organization includes operations in
Viridian, an architectural glass provider along with a producer of float glass along with hard
coated performance goods. The business unit of Aluminum is associated with its interest within
Gove Aluminum Finance Limited that is deemed to attain an interest within Gove Aluminum
Finance Limited that has an interest within Tomago Aluminum Smelter.

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In this specific report, CSR Limited Australia is chosen within which the management
plans to employ TDABC in the company (Chen et al. 2015). The key products of the company
encompass quarry, asphalt, concrete, bricks, concrete placing, masonry, roofing, and hardwood
and softwood timber. The segment of this company is a major material and products supplier
used in commercial and residential construction within the engineering and roads markets.
3. Time-Driven Activity-Based Costing (TDABC) Concept and Features:
It is revealed that there are numerous concern associated with activity-based costing. In
order to deal with these issues, TDABC was developed fir this is cheaper, easier and increasingly
powerful in comparison to conventional ABC system (Kaplan 2014). In comparison to the same,
it is gathered that TDABC system facilitates in simplifying the process of costing through
decreasing the requirement for surveying and interviewing employees for allocating resource
costs within the business conducts before bringing them down within the cost objects. These cost
objects can be in the consumers, orders and products form.
TDABC model facilitates in cost of resources allocation within cost objects. This can be
carried out with support of a properly developed framework that needs to anticipated groups and
these might be attained without dealing with many difficulties (Kaplan et al. 2014). Therefore,
the major characteristics of TDABC encompass the aspects below:
TDABC is associated with computation of cost related with resource capacity supply. For
example, a department of CSR Limited might be taken into consideration that deals with
consumer order handling. In such process, the system of TDABC computes the cost
associated with supervision, resource personnel, occupancy, technology and equipment
offered to the process or department (Öker and Adıgüzel 2016). It separates overall cost

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from the capacity of time that is present from workers carrying out the departmental work
in attaining the capacity rate cost.
TDABC system is related with employing capacity cost rate for bringing up the costs
related with the department’s resources to the cost objects through anticipating the
demand of resource capacity that is vital for every cost object (Paolucci and Sacile 2016).
Considering the above-mentioned department, TDABC needs an anticipation of time
required for processing a specific order for customer. For this reason, it is not vital for
TDABC system in addressing every consumer requirement. Rather, it facilitates the
estimated time it differs relied on particular demands for certain orders. Such orders
might be automated or manual orders, global orders, and expedited orders along with
orders for fragile goods along with orders associated with new consumers not attaining
any present credit record. For this reason, this system initiates the real procedures used in
conducting work all through the company. Conversely, this might restrict increased
complexities along with differences in contrast to conventional ABC system devoid of
generating high demand in association with data anticipations along with processing and
storage abilities (Rosemann 2014). Hence, by means of TDABC it can be simper for CSR
Limited in including differences rather than being manipulated to employ simplified and
inappropriate ABC System in the budgeting process.
4. TDABC, ABC and Traditional Costing Systems Differences:
TDABC and ABC system emerged in the year 1980 and Robert Kaplan is deemed to be
the founder of such systems. It is evacuated that the conventional costing system was incapable
to distribute overhead in a better manner and it is not that capable to recognize the profitable
consumers. This is an important cause behind the emergence of the two above models. In

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addition, activity cost measurement serves as a vita function in comparison to the organization.
Conversely, ABC along with TDABC systems attained the ability for computing total consumer
profitability (Teece 2014). This can facilitate in attaining advantages for the companies through
gathering reliable and suitable information through cost driver realization. Certain cost drivers
also includes the following:
The quantity drivers, conversely, such drivers cannot be totally accurate regardless of
lesser expenses
The duration drivers having decreased accuracy and expenses
The intensity driver with increased accuracy and high expenditures
For this reason, the major differentiation points among conventional costing,
TDABC and ABC systems as explained under:
Thus, the main points of differences between conventional costing, ABC and TDABC
systems are discussed briefly as follows:
Traditional costing system:
There are several manufacturing companies in the recent years that employ conventional
costing system for allocating manufacturing overhead within the manufactured units (Thomas
and Gilbert 2014). The users of this system anticipate that the volume metric serves as a key
driver of expenses related with manufacturing overhead. In such system, the accountants
consider cost allocation of manufacturing just to the products. The traditional system of
accounting does not consider non-manufacturing cost. This is related with manufacturing of a
product like administrative costs. The companies employ this costing system majorly within
external financial reports as value is offered for total sold cost of goods.

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Conversely, conventional system of costing serves as an obsolete costing system as the
manufacturing companies are associated with employing computers and machines for attaining
high production (Tyagi et al. 2015). The machines along with computers outdate such system for
it is involved in employing direct labor hours for calculating costs. This result in improper cost
allocation for the direct labor hours is not an appropriate cost driver which can be included in the
total product expense. Moreover, if the companies employ this specific system this can result in
improper management decisions as it is not capable to consider certain non-manufacturing
expenses.
ABC system:
ABC system facilitates in offering a proper insight regarding the product cost, conversely
the organizations employ it basically as a supplemental system based on costing. This is relied on
certain apportionment employed within the system are different from bases employed within
conventional accounting system. Moreover, the ABC system makes sure that all the activities are
related with manufacturing of a product associated with activity cost distribution. The allocated
cost to all the activities is further apportioned within the necessary products for total production
activity (Emmett and Crocker 2016).
The major benefit of such system might be considered with respect to increased costing
accuracy. The organizations allocate costs to just the products that is needed for the necessary
production activity. Such system decreases product costs allocation that is not that important.
Certain other advantages that is considered by the ABC system is cost interpretation for internal
management, ability to facilitate benchmarking and improved understanding of expenses related
it the overhead. The emergence of ABC system in the company needs additional resources.

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Conversely, this might be a limitation for the companies those have decreased amount of funds.
Lastly, there can be fewer users that might misinterpret certain information through employing
such specific system.
Time-Driven Activity-Based Costing (TDABC) system:
TDABC system served as a vital improvement in comparison to ABC system. This is due
to the fact that this system considers some advantages that might not be offered by ABC system
and these advantages are explained below:
TDABC system might be in alignment with the consumer relationship management
system along with enterprise resource planning (Emmett and Crocker 2016).
The system might not have increased transaction amount within faster processing time
through using the ERP system.
This system offers notifications to employees regarding the unused resources for
facilitating the management to act in a better manner.
In addition, the system employs easy time projections for decreasing the requirement of
developing subjective interview along with survey technique for elaborating all the cost
drivers.
TDABC model offers a suitable insight regarding the ability in consideration to time
units.
Lastly, TDABC system might be generated devoid of starting a suitable ERP system for
evaluating the associated expenses.

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5. Appropriateness of TDABC to CSR Limited:
As per the above evaluation of TDABC system along with comparison with two other
models, it might be gathered that TDABC model is suitable for CSR Limited in Australia. The
cause is that such system offers increased visibility for ability effectiveness along with
employing the capability to evaluate demands of future resource (Cooper 2017). CSR Limited is
dealing with high rivalry within Australia with Adelaide Brighton Cement and abroad. For this
reason, it requires bringing down its production cost. TDABC system facilitates the company in
experiencing competitive advantages through apportioning support or indirect cost in a manner
which can be reflected by the suitable overview of resource consumption along with its needs
from the behalf of consumers and services offered by the company. CSR Limited can manage
resources in a better manner through decreasing its expenses that might facilitate in sustaining
competitive pricing structure (Emmett and Crocker 2016). Per unit transaction cost of the project
along with consumer viewpoints can result in efforts for decreasing these expenses devoid of
sacrificing pricing and quality changes relied on such expenses.
Moreover, it is vital to consider the process provided by TDABC on online services in
comparison to the ones offered by means of traditional channels impacting management
decisions. For online services, CSR Limited’s management might attain cost-based information
that encompasses increased indirect expenses like website operations and designing, research and
development from being a traditional employee with increased amount of labor (Edmonds et al.
2016). Conversely, the per unit expenses might be drastically lesser in case of online services
because of increased market reach that is attained by an online service provider. The physical
and geographical locations might have decreased limitations on it. The management of CSR
Limited might employ decreased over unit service cost for offering suitable and completive

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costing for online cement and line products. For this reason, TDABC model might facilitate the
company in maintaining cost of offering online services in contract to cost of offering it by
means of traditional channels. This can facilitate the management in service determination to be
traditionally offered and the ones that are to be offered online (Fullerton, Kennedy and Widener
2014).
In addition, such system offers the management with a better insight regarding overhead
expenses as it offers an elaborated information regarding conducts associated with offering
traditionally offered along with online services. For this reason, CSR Limited might be capable
in taking decisions for enhancing customer base, decrease costs along with improving services.
This system serves as a platform offering important and meaningful information to the
managers promptly and devoid of costs (Hines 2014). Rather than considering the business type,
the model offers superior and cot-efficient information associated with the cost. This might be
deemed superior considering the ABC model. Therefore, implementation of TDABC in CSR
Limited might facilitate in decreasing the production cost, increasing revenue base along with
enhancing competitive advantages within the industry.
6. Conclusion:
After the completion of this report, it is gathered that TDABC serves as modern
budgeting process which facilitates in easing the process of costing through decreasing the
requirement for surveying and interviewing the employees in allocating the resource costs within
the conducts before bringing them down within the cost objects. Moreover, TDABC system
might work in alignment with consumer relationship management system along with enterprise
resource planning. Moreover, it is also analysed that TDABC model is highly suitable for CSR

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Limited. The major cause is that such system offers increased visibility for capacity efficiencies
along with usage with the ability for anticipating demands of future resource.

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References:
Balakrishnan, R., Labro, E. and Soderstrom, N.S., 2014. Cost structure and sticky costs. Journal
of management accounting research, 26(2), pp.91-116.
CSR.com.au., 2018. Homepage | CsrLimited. [online] Available at: https://www.CSR.com.au/
[Accessed 6 Jan. 2018].
Chen, D., Heyer, S., Ibbotson, S., Salonitis, K., Steingrímsson, J.G. and Thiede, S., 2015. Direct
digital manufacturing: definition, evolution, and sustainability implications. Journal of Cleaner
Production, 107, pp.615-625.
Cooper, R., 2017. Target costing and value engineering. Routledge.
Emmett, S. and Crocker, B., 2016. The relationship-driven supply chain: creating a culture of
collaboration throughout the chain. CRC Press.
Edmonds, T.P., Edmonds, C.D., Tsay, B.Y. and Olds, P.R., 2016. Fundamental managerial
accounting concepts. McGraw-Hill Education.
Fullerton, R.R., Kennedy, F.A. and Widener, S.K., 2014. Lean manufacturing and firm
performance: The incremental contribution of lean management accounting practices. Journal of
Operations Management, 32(7), pp.414-428.
Hines, T., 2014. Supply chain strategies: demand driven and customer focused. Routledge.
Kaplan, R.S., 2014. Improving value with TDABC. Healthcare Financial Management, 68(6),
pp.76-84.

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Kaplan, R.S., Witkowski, M., Abbott, M., Guzman, A.B., Higgins, L.D., Meara, J.G., Padden,
E., Shah, A.S., Waters, P., Weidemeier, M. and Wertheimer, S., 2014. Using Time‐Driven
Activity‐Based Costing to Identify Value Improvement Opportunities in Healthcare. Journal of
Healthcare Management, 59(6), pp.399-413.
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manufacturing company. Journal of Corporate Accounting & Finance, 27(3), pp.39-56.
Paolucci, M. and Sacile, R., 2016. Agent-based manufacturing and control systems: new agile
manufacturing solutions for achieving peak performance. CRC Press.
Rosemann, M., 2014, July. Proposals for future BPM research directions. In Asia-Pacific
conference on business process management (pp. 1-15). Springer, Cham.
Teece, D.J., 2014. A dynamic capabilities-based entrepreneurial theory of the multinational
enterprise. Journal of International Business Studies, 45(1), pp.8-37.
Thomas, D.S. and Gilbert, S.W., 2014. Costs and cost effectiveness of additive
manufacturing. NIST Special Publication, 1176, p.12.
Tyagi, S., Choudhary, A., Cai, X. and Yang, K., 2015. Value stream mapping to reduce the lead-
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pp.202-212.