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Traditional Costing System & TDABC

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Added on  2020-05-28

Traditional Costing System & TDABC

   Added on 2020-05-28

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Running Head: Business Management1Business Management
Traditional Costing System & TDABC_1
Business Management2Executive summary:This report highlights the various aspects of the time-driven activity based costing, and it alsostates the suitability of this costing method in the private organizations of Australia. For thepurpose of understanding the suitability, we choose the case study of BHP Billiton. TDABC isconsidered as simple method which eliminates the requirement of surveys and interviews for thepurpose of allocating the resources costs to the activities. This model overcomes theshortcomings of the original model of ABC and assigns the resource costs directly to the costsobject. Contents
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Business Management3Introduction:....................................................................................................................................4About BHP Billiton:........................................................................................................................5TDABC & its features:....................................................................................................................5How TDABC is different from ABC & traditional costing systems:..............................................7TDABC & ABC:..........................................................................................................................7Traditional costing system & TDABC:.......................................................................................8Suitability of TDABC for BHP Billiton:.........................................................................................9Conclusion:....................................................................................................................................11References:....................................................................................................................................11Introduction:Various factors are present which impose pressure on the organizations to provide good servicesat lower cost and some of these factors are, increase in demand of digital services, high cost incontext of information, slowdown in economies, etc. For the purpose of dealing with theseconditions, managers of organizations must increase and improve their knowledge of costbehavior and also understand the involvement of different costs in the organization (Gonzalez,2014). Time-Driven Activity-Based Costing (TDABC) is the technique of cost managementwhich helps the organization in developing accurate cost information related to differentactivities conducted in the organization. It is necessary to conduct research on the suitability ofthe TDABC in private organizations.
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Business Management4It is very difficult for organizations to implement the traditional model of ABC because thismodel includes high cost related to interview and survey of people and it is very difficult tomaintain and update this model because of its complexity level. On the other hand, TDABCconsider only two parameters that are unit cost of supplying capacity and the time required forperforming any transaction and activity (Basuki & Riediensyaf, 2014). This report defines the suitability of the TDABC in the private organizations of Australia, and forthis purpose we choose BHP Billiton Plc. Structure of this report includes the short description ofthe client, detail description of TDABC and its features, difference between TDABC and ABC,and whether TDABC is suitable for BHP Billiton Plc. Lastly, paper is concluded with briefconclusion. About BHP Billiton:BHP is considered as leading Resource Company of the World. This company mainly engagedin extracting and processing of minerals, oil and gas. Almost 60000 employees are employed bythe organization, primarily in Australia and USA. Products of the organization are soldworldwide. Global headquarter of the organization is situated in the Melbourne, Australia. BHPBilliton conducts its operation under Dual Listed Company structure and it has two parentcompanies that are BHP Billiton Limited and BHP Billiton Plc., and this organization is operatedas single economic entity which is referred as BHP. BHP is run by a unified Board andmanagement.The main aim of this organization is to create value for long-term shareholders through thediscovery, acquisition, development and marketing of natural resources. For this purpose,organization develop the strategy, and strategy of this organization includes own and operate
Traditional Costing System & TDABC_4

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