Key Aspects of Building and Application of Time Equations in Costs Calculation
Economic Horizons, 16 (3), 253-264
12 Pages Posted: 15 Jan 2016
Date Written: 2014
Addition to capacity cost rate the key parameter of Time-Driven Activity Based Costing - TDABC is the required time for the realization of each business activity. The mentioned time in accordance with the methodology TDABC is calculated using the time equations. Therefore, the total time required for the realization of certain business activity is obtained by adding the normal (standard) time and the additional time required for performing the modified forms of the same activity. The aim of the paper is to analyse the role and importance, but also various aspects of the building of the time equations from the perspective of organizational and methodological preparation for the realization and functioning of TDABC. The research results show that application of time equations leads to the increased accuracy of calculation of costs and product cost, reduces complexity of organizational and methodological preparation for the implementation and functioning of TDABC system, i.e. enables the realization of more effective and efficient costs calculation.
Keywords: calculation of costs, Time-Driven Activity Based Costing, capacity cost rate, time equations, time drivers
JEL Classification: M41, M49
Suggested Citation: Suggested Citation