Abstract
Background: South African small and medium enterprises (SMEs) are struggling to survive because of limited resources and access to low-cost funding. It may be beneficial for SMEs to focus on cost management within their organisation to mitigate the impact of inflationary pressure and high-cost funding. Published literature provides evidence that time-driven activity-based costing (TDABC), leaning on the theory of constraints (TOC), can be implemented successfully at SMEs within different industries. Furthermore, it was demonstrated how TDABC can be effective when evaluating product cost for a wide, but fixed, product range. There is, however, no generic framework available in extant literature on how to implement TDABC effectively at SMEs. Aim: The purpose of the study was to devise a framework for SMEs with resource constraints to be able to implement TDABC without exhausting limited resources. Setting: A case study at a manufacturing SME specialising in custom products was employed. Methods: The generic steps for TDABC as described in published literature were adapted for the manufacturing SME where the case study was conducted. Results: The study found that it was practical to implement TDABC at a manufacturing SME by extrapolating the cost data from a single product which harnesses all the key activities in the factory. The TDABC costing data were sufficient for analysis of unused capacity and over-expenditure, hence providing information to consider in profitability enhancement and to support the TOC. Conclusion: The proposed framework for TDABC implementation at SMEs revises the generic framework suggested in literature by focusing on key products only and consolidating activities.
Highlights
The prospects of survival for small and medium enterprises (SMEs) in South Africa appear to be unfavourable. Olawale and Garwe (2010:729) suggest that up to 75% of SMEs in South Africa do not survive in the long term
The current study focused on implementing time-driven activity-based costing (TDABC) at a manufacturing SME, specialising in custom products using minimal resources
The research confirms the findings from published literature that TDABC implementation should be adapted where constraints exists, especially for SMEs and other resource-constrained settings (Balakrishnan et al 2015; Fladkjaer & Jenson 2011; Ganorkar et al 2018; Somapa et al 2012; Souza et al 2010; Stouthuysen et al 2014)
Summary
The prospects of survival for small and medium enterprises (SMEs) in South Africa appear to be unfavourable. Olawale and Garwe (2010:729) suggest that up to 75% of SMEs in South Africa do not survive in the long term. There will be external factors outside the control of the typical entrepreneur, it may be beneficial for SMEs to focus on managing costs within their organisation, thereby mitigating the impact of high-cost funding and inflationary pressure. It may be beneficial for SMEs to focus on cost management within their organisation to mitigate the impact of inflationary pressure and high-cost funding. Published literature provides evidence that time-driven activity-based costing (TDABC), leaning on the theory of constraints (TOC), can be implemented successfully at SMEs within different industries. It was demonstrated how TDABC can be effective when evaluating product cost for a wide, but fixed, product range. There is, no generic framework available in extant literature on how to implement TDABC effectively at SMEs
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
