Identifying operational improvements during the design process of costing system based on time-driven ABC (TDABC)

Abstract

Time driven activity-based costing is a new way to overcome the problems in the traditional ABC, where the first stage of the allocation of resources is removed and used resources are expressed by the time equations. The present research focuses on the behavioral aspects (staff public participation and leadership style) of system design and shows that how behavioral aspects can lead to operational improvements during the design process of time driven activity-based costing. In this study, two types of costing system are examined by reviewing and analyzing the case study used by Hozee and Bergman about setting up the costing system in various warehouses of a company in Belgium. In the first type, the participation of all members of the organization, especially at low levels, has led to discussions about the input parameters in the costing model and when this group discussions about costing data are driven by aware responsible (people-centered management style), operational improvement will be appeared. In the second type, the operational staff in the design process are not participated and are intimidated of the new costing system and have perforce implemented the system that finally no operational improvements have been reached. Hence, the findings of the research show that the staff public participation and appropriate management styles (Thoughtful leadership style - based on participation rather than absolute - authoritarian leadership style ) are unavoidable to achieve operational improvement during the design process of Time Driven Activity-based costing system, increase the chances of system success and finally lead to operational improvements.