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

Francis Danomah

doi:10.7176/jrdm/76-01

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

Highlights

The continuous development in world trade depends on the efficiency of trade support structures such as the logistics services
Time-Driven Activity-Based Costing (TDABC) model in concept Cost management has been evolving from a traditional approach, mainly focused on operating cost allocation and product costing to a most complete analysis of organization’s cost structure, value analysis and strategic cost management
Activity-Based Costing (ABC) systems and more recently Time-Driven Activity-Based Costing (TDABC) systems are especially important in this context

Summary

Introduction

The continuous development in world trade depends on the efficiency of trade support structures such as the logistics services. Despite logistics integral role in supporting commercial activities, there has generally been a low level of cost efficiency research focus on trade practitioners by scholars. As global logistics trends continue to grow due to innovation, consumers have gained great attentiveness in door-to-door logistics services and other much convenient ways to procure goods. The function gives most businesses the ability to focus on their core tasks rather than manage their total supply chain, keeps them highly competitive within their markets. These outsourced functions become the core business for logistics service providers (LSP)

Methods

Results

Conclusion