The Time-Driven Activity-Based Costing

The Time-Driven Activity-Based
Costing1
The Time-Driven Activity-Based Costing
Student (Name)
Professor (Name)
College
Course
Date

The Time-Driven Activity-Based Costing2
Introduction
TPG Telecom is a limited liability company in Australia that provides networking and
telecommunication services to their customers. Their clients and customer have assisted them to
provide fast, cost-effective, suitable and secure communication services through their feedback
and suggestions. TPG offers various and distinct networking services to governmental bodies,
enterprises, individual users, and the wholesalers. A client who has been investigating the
budgeting of the company wants to apply TDABC costing system in his budgeting. His CEO has
recommended it because he understood its importance from a seminar that he had attended some
time back. I am supposed to determine whether the system will be suitable for our company's
budgeting. The company's budgeting is crucial because it can help boost the profits at minimal
costs.
Thesis
I have been employed by the TPG telecom limited company in Australia as a graduate
consultant. One of our clients is evaluating our budgeting system, and his CEO attended a
meeting that intended to educate them on the suitability of TDABC (Time-Driven Activity-based
Costing) on private companies and wants to access whether TDABC is suitable for TPG telecom
ltd company. My manager requires me to prepare and write a report for the client to determine
whether TDABC is ideal for the company or not. My report will cover a brief description of the
TDABC's client, a vivid TDABC description, and its characteristics, and its contrast from the
earlier costing systems and activity-based costing systems. I will research on several companies
that have implemented TDABC and determine whether its operations have been successful or
not. I will discuss the importance and the problems associated with TDABC and then based on

The Time-Driven Activity-Based Costing3
the discussion; I will conclude whether TDABC is appropriate for the client to use in his
budgeting or not. If the system is appropriate for the company's budgeting, then the company
will follow the correct methodology to implement it. If the system is not necessary, then the
company will discard it, and the client will have to rely on other methods to do his budgeting.
A description of the client
The TPG Telecom’s client name is Jonathan Kiplangat Agarwal. He is from Canberra,
the capital city of Australia. He has masters in Managerial accounting and works with the
company in budgeting and accounting field. He wants to evaluate our budgeting system, and he
wants to ty whether using the Time-Driven Activity-Based costing will work well with his
budgeting. His CEO wants him to use the TDABC because he recently attended a seminar that
educated them on the importance of using the TDABC system for budgeting. My manager wants
me to prepare a report for the client to determine whether the using TDABC is suitable for
evaluating our budgeting system or not. The aim of employing the TDABC will ascertain
whether the change in the budgeting system will increase the profitability. The budgeting will
also determine whether the costs of production of the company's goods and the value they gain
from sales bring any reasonable profits or not.
A description of TDABC and its features
The TDABC was first implemented by Acorn in 1997, applied it to his clients, and
several business enterprises. Acorn discovered that TDABC could be used more broadly than he
had thought. He did a case study and implemented the model in more companies as well as the
midsize companies (Kaplan and Anderson 2007). TDABC measures the profitability of
commodities at an individual level. It helps companies determine the unprofitability of their

The Time-Driven Activity-Based Costing4
customers and determines the value of resources spent in keeping the unprofitable customer-
business relationships. The means of measuring the profitability of customers gives a connection
between the satisfaction of customers and the enhancement of the financial performance. It also
records and measures the occurrences, the extent of the unprofitable customer relationships, and
the value of losses they cause. This track of good records helps the business enterprises to focus
on managing and keeping profitable customer relationships. Acorn discovered that if in business
enterprises implemented TDABC, it gives them better means of cost-effectiveness and increases
their profitability as well as giving them support to help them produce better quality products.
TDABC considers the time and costs drivers to determine the cost of products. Time affects the
prices a lot, for instance, in the labor sector. The amount of time laborers are given to complete
their work determines a lot the value of their production. If they have very little time to work
with, they are likely to produce lower quality products. Several factors are considered for every
driver of cost determinant. It examines the features of the activities that play a role in the
determination of the products' prices.
Ways in which TDABC is different from Activity-based costing and traditional
costing systems
TDABC is different from the conventional costing systems and the Activity-based
costing (ABC) systems in several ways. The ABC is the process of allocating the costs of goods
and services, duties, goals, and significant projects to the required resources. It involves
determining the actions that should be taken by those tasks and the acquisition of the resources
that will be used up by these projects (Levant and Zimnovitch 2013). ABC allocates the
overhead costs the percentage of the amount of the funds they will use. The ABC is different