Analysis of Article about Time Driven Activity Based Costing - Essay Example

The author argues that this approach is better since it can be applied even to complex transactions in a large company since more precise cost-driver rates can be determined due to unit times. Therefore, estimating the resource cost per unit for different variables such as cost per cubic meter or cost per megabyte can be ascertained.

In addition to this, the article presents the advantage of the new method over the traditional ABC by assuming that employees or machines do not always operate in full capacity thereby presenting a more realistic computation of costs. Because of this, the manager can make important decisions on maximizing the unused or unfulfilled capacity which may mean putting off capitalization to a later time until everything is fully efficient or productive. Another important argument that this article presents is that Time Driven Activity Based Costing can be updated.

This enables the management to review the costs according to existing conditions. In conclusion, the article corrected the common notion about the traditional ABC and shared a better model that is more useful, accurate, and practical which I can use someday.