The ABC-paradox: is Time Driven ABC relevant for small and Medium sized enterprises (SME)?

Research output: Working paperResearch

Abstract

Several articles suggest that Activity Based Costing (ABC) has failed to succeed in practical use. It is even argued that we have an ABC-paradox. Activity Based Costing has won theoretically in nu-merous articles in journals, through books, being included in all major Business Accounting text-books and in curriculum at most business schools. But ABC is not used very much by the compa-nies. Especially in small and medium enterprises ABC is rarely implemented. This is primarily due to two things: First, the ABC model is too difficult to implement. Second, the data foundation for the model is not available in the required quality in the ERP systems used by the businesses. In this article we will explore ways of overcoming these two related problems. We will explore these issues particularly in relation to small and medium enterprises. Through a theoretical analysis and practical implementation in a medium sized manufacturing company we will analyse whether it is possible to create a satisfactory decision making foundation using a TDABC as a less complex cost model in the company.
We have analysed our way to the conclusion that compared to ABC, the TDABC model provides the management with a number of pragmatic solutions that can be used in small and medium enter-prises.
Translated title of the contributionABC-paradokset: er Time Driven ABC relevant for små og mellemstore virksomheder (SMV)?
Original languageEnglish
Place of PublicationAalborg
PublisherDepartment of Business and Management
Number of pages25
ISBN (Electronic)9788791646485
Publication statusPublished - Dec 2011

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