In the classroom, activity-based costing (ABC) looks like a great way to manage a company's limited resources. But executives who have tried to implement ABC in their organizations on any significant scale have often abandoned the attempt in the face of rising costs and employee irritation. "Time-Driven Activity-Based Costing" is the solution to the problems associated with large-scale ABC implementation. In this book, Kaplan and Anderson offer a revised model where managers can estimate the resource demands imposed by each transaction, product, or customer, rather than rely on time-consuming and costly employee surveys. In their new model, Kaplan and Anderson focus on the two parameters managers need to estimate: how much it costs per time unit to supply resources to the business activities (the total overhead expenditure of a department divided by the total number of minutes of employee time available) and how much time it takes to carry out one unit of each kind of activity (as estimated or observed by the manager). Rather than endlessly updating and maintaining ABC data, this book with allow managers to spend their time addressing the deficiencies the model reveals: inefficient processes, unprofitable products and customers, and excess capacity. Kaplan and Anderson lead the discussion of Time-Driven ABC in the first seven chapters, followed by individual cases studies of actual implementations by Acorn consultants in diverse settings.
Pt. 1 The fundamentals of time-driven activity-based costing
1 The evolution of time-driven activity-based costing : introduction 3
2 Estimating process times : the role of time equations 23
3 Capacity cost rates : the practical issues 41
4 Implementing time-driven ABC models : launching a project 67
5 What-if analysis and activity-based budgeting : forecasting resource demands 85
6 Fast-track profit model : creating the new due-diligence process for mergers and acquisitions 107
7 Enhancing business process improvements : new applications for time-driven ABC 123
Pt. 2 Time-driven activity-based costing in action
8 Kemps LLC : handling product, distribution, and customer variety 151
9 Sanac logistics : time equations to capture complexity in logistics processes 165
10 Compton financial : using time-driven ABC to accomplish a profit turnaround 179
11 ATB financial : guiding profitable growth 197
12 Citigroup technology infrastructure division : financial strategies for managing IT as a business within a business 209
13 Global insurance company private client group : forecasting key employee staffing levels 219
14 Jackson State University : introducing business concepts into education 231
App. A Transforming unprofitable customers 245
