Assessing Financial Efficiency with Time-Driven Activity-Based Costing (TDABC) Model: Evidence from International Trading Companies

Abstract

The allocation of indirect cost associated with a particular service in the most accurate way gives many different options. Understanding logistics process in terms of cost and profitability is a complex task, and there is need to more research in such bases. Traditional costing systems are not able to determine accurately the cost of different cost objects once based mainly on volume measures for costing allocation. With traditional cost systems giving inaccurate results as operations change, there is the need for organizations to implement modern costing annalistic models which can easily be integrated in cases of update on cost drivers or expenditure. In this paper, theories underlying Time-Driven Activity-Based Costing (TDABC) model have been used in a form of case study stimulation to examine how overhead cost can be properly allocated in organizational departments. The author attempts to implement the generic steps of the TDABC cost model as presented by Kaplan and Anderson in a case study to measure the financial efficiency of a logistics procumbent company based in china with clients mostly based in Africa.Traditional costing systems are not able to determine accurately the cost of different cost objects once based mainly on volume measures for costing allocation

Keywords: efficiency; TDABC; capacity costs; outsourcing; logistics procurement, international trade, Logistics Service providers, Fourth-party logistics service providers (4PL)

DOI: 10.7176/JRDM/76-01

Publication date:June 30^th 2021