Managerial Accounting (Term Paper Sample)

Managerial Accounting Name Institutional Affiliation Professor’s Name Date Submitted Table of Contents TOC \o "1-3" \h \z \u Executive Summary PAGEREF _Toc505084230 \h 3Description of the Client PAGEREF _Toc505084231 \h 4Time Driven Activity Based Costing PAGEREF _Toc505084232 \h 4Features of TDABC PAGEREF _Toc505084233 \h 5Differences between TDABC and Traditional Costing Methods PAGEREF _Toc505084234 \h 7Traditional Costing Methods PAGEREF _Toc505084235 \h 8Suitability of the Method to the Client PAGEREF _Toc505084236 \h 9References PAGEREF _Toc505084237 \h 11 Executive Summary Time-driven ABC is responsible for the identification of the various capacities that every department allocates the resources over a given duration. In the instances whereby the demand for work in the multiple agencies tends to decrease, the method ensures that they can provide the necessary estimations. The technique is responsible for the capturing of the multiple characteristics portrayed by a given activity and thus establishing the function of the operation. The unit cost, as well as time incurred, are the most significant parameters to put in place with regards to the evaluation of the performance of the company. Therefore, establishing costs used assists the organization in the making better and informed decisions. Description of the Client The client is a successful financial firm interested in the understanding of better cost accounting methods that are crucial in the undertaking of the business opportunities. The main point of consideration is the evaluation of the best ways that are crucial on the preparation of the budget for the organization to cover for all the areas of operation that are necessary. The client requires the information regarding the costing technique that incorporates all the essential strategies that are crucial in the improvement as well as maintenance of the performance. The financial firm provides various financial training to other individuals by guiding them on the best techniques to put in place. Therefore, the report on the information in question is crucial in ensuring that the right decision choices are put in place in the long run. Time Driven Activity Based Costing Time-Driven Activity-Based Costing (TDABC) is becoming a popular method in the business world as most organizations are determined to find better ways to account for expenses. The strategy requires the incorporation of less amount of data as compared to the standard ABC. The most critical estimations to put under consideration include the resources as well as their costs and the units put in place to ensure the performance of the activities in question. Through the establishment of the criteria above, the computation of the costs incurred is much more straightforward as compared to other methods (Gervais, Levant, & Ducrocq, 2010). The provision of a time-based algorithm ensures that the organization gets the opportunity to incorporate it in other departments where necessary. As a result, it saves time incurred and reduces the costs that the management may is in the process. It requires less time and even fewer resources to implement and therefore becoming the preferable technique over the regular ABC model. A time-driven ABC is easy to estimate and install quickly and therefore providing the management with the appropriate opportunity to perform the required actions on time. It also assists in ensuring that the computation of the costs necessary for the firm and how they can make the needed improvements. The method is quickly updated and thus making it possible to reflect any changes encountered in the process. The order variety, as well as the costs of resources, are the significant derivatives to consider in this case. The method is successful because it can receive data from CRM and ERP systems thus enabling it to make the necessary changes at the appropriate time (Gervais, Levant, & Ducrocq, 2010). The performance of time-driven ABC can be validated through the integration of direct observation as a way of enhancing the better performance as outlined. The functionality of the strategy allows it to handle large transactions without any glitches encountered. Features of TDABC The method highlights any and all unused resources to ensure that the management reallocates them or finds out other means of using the money. The model also incorporates the aspect of exploiting time equations to attain various variations that are necessary for ensuring that they do not affect the customer behavior. The process is tie saving hence the production of fast results whenever required. Through this, the profitability of the organization improves and allows the management to have a better chance of allocating the resources. Firms that use the method have over time registered significant improvements in the profits. Therefore, the companies tend to benefit from the incorporation of the technique when necessary (Kaplan & Anderson, 2007). The approach allows the organizations to have a better insight into the usage of the resources and the time required to make the profits needed. Thus, TDABC is crucial in making sure that the management succeeds in the implementation of the better financial services when required. TDABC tends to side-step any challenges encountered through the use of ABC and other traditional costing methods. It overcomes the problems faced in the process of dealing with employee surveys as well as any estimations undertaken. The reason is that it just requires the data feed to provide the value to incorporate in certain situations (Kaplan & Anderson, 2007). Therefore, the determination of time spent on undertaking specific tasks and the invariability of the employees assist in making the resolution much better. In this method, the management always takes into account the incorporation of the idle time used. It is crucial to assist in the determination of the allocation process of the resources whenever required. The managers then receive the data from the computations, and as a result, they provide the way forward for the businesses. TDABC has played a significant role in helping many organizations in the identification of the cost as well as profit enhancement chances. The aspect is possible through the development of better customer relationships, improvement of the production process, designing products of high quality at low prices, increased variety of the products among others. The potential of the model on higher scales would result in the incorporation of high stakes for huge companies (Öker & Adıgüzel, 2016). The managers have the power to make estimations on the demands of a given resource as per each activity. Through this, it makes it possible to have a better understanding of the customer rather than the random allocations of the costs without determining the necessary benefactors. The order variety, as well as the costs of resources, are the significant derivatives to consider in this case. TDABC provides actual cost-driver rates as compared to the traditional methods. The process is vital in ensuring that specialized transactions take place with the aim of improving the performance of the company under consideration. In the estimation of the cost per time used in any unit, the managers undertake an evaluation of the practical resources to use as per the general provisions. Through this, the managers tend to have a better understanding of the most beneficial approaches that assist the organization in saving costs (Szychta, 2010). For instance, if the full capacity is between 90-95%, then the theoretical assumption should range around the same percentage for a better provision of accurate results. The managers determine the rates to use in compensation since the risks of any errors are close to zero. The technique also ensures that the managers use the functional capacity to make decisions regarding resources to use and the ones to allocate to other departments. Through this, it makes it possible to account for any losses that may be incurred and save on any extra profits whenever possible. Measuring the capacity of most resources takes place in the determination of the time available. Therefore, TDABC recognizes the measurement of other resources in other units. Thus, making it easy to establish the capacity of the organization and the practicability of any implications along the way. The managers have the obligation of making calculations with regards to cost per unit based on the item in consideration. After this, the determination of the cost per time unit concerning the supply of the resources in the organization takes place (Szychta, 2010). It is crucial to establish the time undertaken in the performance of the activities in question. Data collection usually takes place through observation or surveying the actions of the employees. Surveys are most helpful in large organizations since the representation of a large number of people may take time and a lot of resources. Differences between TDABC and Traditional Costing Methods The critical factor is the determination of the time it takes to perform one unit of a given activity. Through the distinction of the requirement, the management evaluates the accuracy of the information obtained through application in other areas of the business. It is vital to be precise so as not to misdirect the information provided along the way. In the computation of the cost-driver rates, two input variables are considered since they are accurate for the provision of the necessary estimations (Szychta, 2010). The standard costs obtained help in making the required recommendations with regards to the pricing of the new business. The customers have a right to know about any changes that might take place to determine the costs to incur in purchasing products from the organization. The rates in question are usually lower than the ones use...