TDABC for Cost Management and ERP Integration

The assignment delves into the benefits of using TDABC as a cost management tool, highlighting its advantages over traditional ABC methods. It emphasizes TDABC's ability to predict future costs based on historical data, making it valuable for incorporating information from Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM) systems. The document argues that TDABC can help managers overcome challenges associated with integrating data from these systems and make informed decisions about cost optimization.

Running head: ACCOUNTING FOR MANAGERS
Accounting for Managers
Name of the Student
Name of the University
Authors Note

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Table of Contents
Introduction......................................................................................................................................2
Depiction of the Clients firm...........................................................................................................2
Elaboration of the Time-Driven Activity Based Costing and its essentials....................................3
Differences between ABC, TDABC and Traditional costing system.............................................5
Whether the TDABC is appropriate for the Client company..........................................................7
Conclusion.......................................................................................................................................9

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Introduction
The size of the firm whether big or small is not the concern in the modern world of
business. What matters is that there should be clear comprehension among the managers
regarding the cost. It is essential to have and maintain a healthy understanding of the various
methods of costing since it will be helpful and better to locate the challenges that take place in
the trade (Hemmer and Labro 2016). This study that into consideration the TDABC and the
understanding of the special characteristics. The report further aims at the ways that will
ascertain the methods under which the TDABC will be different from the ABC model costing
and the Traditional methods of ABC costing. This study will further assess the costing system
that is associated with the implementation of the model in West farmers Ltd.
Depiction of the Clients firm
The West farmers Ltd. is known as one of the leading companies of Australia that is
associated with the construction of materials and in the areas of lime manufacturing. Adelaide
Brighton Ltd. is engaged with the process of manufacturing and supplying wide range of goods
concerned with constructing the infrastructure, processing of building materials throughout the
territories of Australia. The activities of the firm consisted of manufacturing, importation and
delivering cement, concrete, lime goods and premixed concrete. West farmers Ltd. has a wide
base of operational facilities that prompted the supply of materials to the customers. This
company organized a good production capacity in order to meet the demands of the customers
throughout the country (Campbell 2017). It allowed the organization to offer the supply of
packaged materials and the supply of the logistics in all the regions of Australia and Asia.

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Elaboration of the Time-Driven Activity Based Costing and its essentials
The Activity based methodology of costing is presently viewed and treated as a complete
method of costing (Kalpan et al. 2014). Therefore, the model suffers from an amount of criticism
for the approach that is being undertaken with several such of the ABC costing have stopped
using this method. The original procedure of ABC costing provides a greater system of costing.
The variety of products and services under the new model of Time Driven Activity based costing
method will have the capacity to incorporate a large amount of variations and complications by
offering an improved quality of information ignoring the restrictions linked with the scheme of
ABC costing. Modern day customers focus on the business inventions by generating and
providing a wide range of products that will offer their support to the large order and channels of
tracking the orders at various levels of technical support. As stated by Velasquez, Suomala and
Järvenpää, there is an increase in the maximum number of consumers (Mörtl and Schmied 2016).
These consumers need an appropriate management of customer data along with the
administration of the profit generated by them.
The method of ABC costing has attracted the concentration of different costing
methodology among the products that varies from the upper limit, custom and standard products.
TDABC system helped in offering better information regarding the earnings and the frequency
of profits by demonstrating the differences in the cost method among the customers that has
lower demand and ease of service than the ones that has greater demand with the preferences of
complex customer (Armitage, Webb and Glynn 2016).
Based on the time required in performing the activity of the method of TDABC is able to
recognize the sum of every unit or procedure together along with the allocation of cost to the
resource group. It has been noted, that the demand for TDABC can guess the amount of

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resources that have been released (Phan, Baird and Su 2017). TDABC method of costing has
been successful in capturing the various characteristics of activity through the time equation that
usually takes time as per the activity. The TDABC method of costing is therefore observed as the
function of diverse features. Following are the characteristics of the Time Driven Activity Based
Costing:
 The initial characteristic of TDABC costing is easily comprehendible and makes the
model accurate.
 The model of TDABC assists in offering visibility during the process of utilization
capacity.
 Time Driven Activity Based Costing method drives the cost into the operation, orders and
thorough processing of customers, materials and orders (Cooper 2017).
 TDABC runs on a monthly basis to trace the economies of the present business functions.
 The model of TDABC combines an effective way with the information that is available
from the ERP and the customer relationship management that makes the system of
TDABC vibrant.
 The model of TDABC is helpful in guessing the resources of demand. It will enable the
organization in making the budget for resource capacity in respect of the anticipated
ability to order and complication.
Differences between ABC, TDABC and Traditional costing system
In the current situation, the system of TDABC helping in offering variations of the ABC
model due to the ability of easy execution of the purposes that is needed to manufacture goods
and services that are sold in the market. Traditional system of costing assigns the product

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overhead associated with the capacity of the cost driver, mainly the direct labour hours that are
needed to manufacture the product (Otley 2016).
An important element that origins the cost to take place is cost driver. For instance, direct
labour hours, machine hours and direct material hours that are included in manufacturing the
products. In the ABC method of costing, the cost occurred in manufacturing the products are
distributed for the activities that is essential to manufacture the item. On the contrary, the model
of TDABC helped in easy measurement of the efficiency of the products occupied in
manufacturing the product at a given level of capacity against the consumption (Cooper,
Ezzamel and Qu 2017). However, the cost equation helped in providing less costly system than
the traditional method of ABC costing.
The Time Driven Based Costing system is known as economical and reasonable than the
ABC method of costing (Mahal and Hossain 2015). The chief reason for this is that the methods
makes the method of costing easy and diminishes the instances of surveys that are used in the
method of ABC costing. The TDABC allocates the cost directly to the units of cost. The model
of transitional absorption costing helps in dividing the costs generated from the resources by
using the capacity cost to predict the requirement of resources for each unit of cost.
According to the words of Onat, Anitsal and Anitsal, the Time Driven Activity model
based on costing system needs time projections to route the orders of the consumers and it is not
compulsory that the cost should be equal. This is because of the fact that the TDABC projects in
innumerable times varying on the features of application by using the reproduction of variables
and equations. On the other hand, in ABC costing method the amount of cost drivers that were
used in distributing the cost activities is not considered and it is not considered or obligatory to
allocate he cost.

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The table stated below provides differences between the ABC, TDABC and Traditional ABC:
ABC Traditional ABC Time Driven Activity Based
Costing
The ABC method of costing
deals with various activities of
overheads that are identified.
The traditional method of
costing usually helps in
distributing the overhead cost
to every unit that is produced.
The Time driven activity based
costing method helps in
analyzing plenty groups of
resources.
The method of ABC helps in
distributing the overhead cost
to numerous activities with the
help of resource driver
The model predicts the
situations where the matrix of
quantity turns into the driver of
product overhead.
It projects the sum of overall
cost for every resource groups.
The ABC method of costing
distinguishes the cost driver for
each of the activities.
In the traditional method of
costing, the managers
distributes the cost of
production only to the products
(Leeet al. 2015).
It determines the practical
capability of every resource
group specially the available
working and training hours.
The ABC method settles on the
cost driver for every activity by
separating the total amount of
cost activity from the practical
amount of activity driver.
The system of traditional
accounting is not being able to
distribute the non-
manufacturing cost engaged
with the production of the
The method calculates the cost
of each unit of the resource
group by separating the
amount of cost to each unit of
the group through practical

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items particularly the
management expenditure.
capacity.
Whether the TDABC is appropriate for the Client company
When the model of Time Driven Activity Based costing is applied in the client’s firm of
West farmers Ltd. It can be observed that the model is simple and easy to comprehend. Further,
the model is effective and inexpensive compared to other models such as Traditional ABC and
ABC. The Time Driven Activity Based costing helped in making the costing system easy be
diminishing the need of survey and interview of all the employees.
The Traditional method of costing will help West farmer Ltd. in allocating the
cost resources to the activities that are related in driving them to the cost objects. A significant
consideration that can be drawn from the study is that the mechanism of TDABC will help West
farmer Ltd. in allocating the resources directly to the objects of cost by using a smart set of
framework in predicting the profit. The model will help in computing the cost that is required for
the supply of resource capacity (Santana and Afonso 2015). For instance, the department of
processing of the West farmer Ltd. on implementing the model of TDABC will be able to
determine the cost used in technology, supervision and resources.
The TDABC uses the rate of cost capacity in determining the departmental resource cost
in the cost unit by establishing the demand for the resource capacity needed by each cost objects
(Maiga, Nilsson and Jacobs 2014). Keeping in mind the example of customer order sub-division,
the model of Time Driven Activity based costing will be helpful for West farmer Ltd. in
estimating the time required for processing the orders of the customers.

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The Time Driven Activity Based Costing support in stimulating the original process that
is used in carrying out the work for West farmer Ltd. The Time Driven Activity Based costing
will be beneficial for West farmer Ltd. in capturing a large number of variations than the
conventional model of ABC without forming any demand for data storage, projections and
processing of materials (Sigüenza Guzmán, Van den Abbeele and Cattrysse 2014). West farmer
Ltd. implemented the TDABC and it will be able to sustain the difficulties instead of using the
imprecise model of ABC for the business activities.
The model of TDABC will help West farmer Ltd. in projecting the cost object with the
ease and in terms for transactions of each unit that is processed in the department. There is proof
of various companies that uses the ERP system for storing the data. These data varies from
packaging and delivering method (Adeleke et al. 2017). In relation with the West farmer Ltd, it
implemented the model of TDABC, which will help the company in storing the complex
business information in an efficient way for transactions that has a fluctuating nature. In the case
of West farmer Ltd. the TDABC helps in improving the complexity of time equation. As a result
of this, the TDABC Model will help West farmer Ltd. in gaining more number of varieties
without forming the exploding demand for estimates of storage, data and processing capabilities.
Conclusion
In the conclusion, it can be stated that this report has been presented by using the
TDABC method based costing. An organization like West farmer Ltd. will be able to grasp the
complexity instead of being forced to use the effortless and accurate model of ABC. The model
will allow the company to avoid the time consuming, costly and subjective activity of the
conventional ABC. The TDABC model at the preliminary stages estimated the historical data.

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Subsequently, its fundamental power is to help in predicting the future. Hence, the TDABC will
assist the managers in overcoming the crisis of incorporating the data is ERP and CRM system.

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