Journal International Production Economics -Myassignmenthelp.Com

Question: Discuss About The Journal International Production Economics? Answer Introduction Cost Accounting is a crucial aspect for the manufacturing companies as it helps the accountants in recording, classifying, analyzing, summarizing, allocating, and evaluating different types of course of action so that manufacturing costs can be controlled (Drury 2013). Two of the most used costing approach is Activity Based Costing and Traditional Costing Approach. However, for overcoming the step backs of these costing approaches, most of the manufacturing organizations are auditing Time Driven Activity Based Coasting (TDABC) as it is an effective costing system for the companies. In the year 2004, Robert S. Kaplan and Steven R. Anderson introduced this costing approach so that the companies can increase their production by minimizing the overall cost of production (Christ and Burritt 2015). The major objective of this report is to conduct an in-depth analysis on the various aspects of TDABC so that its suitability in the organizations can be examined. For this report, Australian Pa per Pty Ltd is taken into consideration. Description of the Client Australian Paper Pty Ltd started their business operation in 1938 and the company is well-known for its vertical integration. Australian Paper Pty Ltd is majorly involved in the production of paper, pulp, stationary products and stationary products. Apart from this, the company uses to produce different other products like printing papers, bag, sack, papers for office use, lightweight packages, industry papers, linerboard and cardboard cartoons. The provided situation states that CEO of the company is interested in changing the current costing system and wants to know the suitability of TDABC for their business (australianpaper.com.au 2018). Time Driven Activity Based Costing In the process of TDABC, the organizational managers use to make the direct assignment of cost human resources management with the cost objectives and they do this with the help of two estimates (Kaplan et al. 2014). They are 1) the assignment of cost per time unit for the supply of resource capacity to different cost activities; 2) effective estimation of required time units for performing the cost activities. In the process of TDABC, accountants use to follow six steps. They are Step 1) the proper identification of various cost activities and services 2) proper estimation of the total costs for every group of resource, 3) the proper estimation of the capacity of practical time for every group of resource, 4) right calculation of unit costs of every resource group; 5) to determine required estimated time to perform each cost activity, and 6) to multiply unit cost of each group of resource by the estimated time to perform each cost activity (McLaughlin et al. 2014). Organizational ac countants are required to follow these steps in TDABC. Features The process of TDABC has certain features and the following discussion shows the description of these features: In the process of TDABC, accounts do not face many difficulties in the assignment of cost to different kinds of production activities and thus, it leads to the easy and timely completion of tasks (ker and Ad?gzel 2016). Accountants do not face any difficulties in the integration of TDABC with the companies existing Enterprise Resource Planning (ERP) system and this process provides great boost to the overall production process. Under the process of TDABC, the production managers become able in the generation of timely report of the prediction process (French et al. 2013). It has been seen that the organizational managers become able to utilize the full production facility of the organizations and this aspect proves the superiority of TDABC than ABC and traditional costing. In the presence of TDABC, the accountants become able to make the correct forecast of the demand of required resources for manufacturing (ker and zyapici 2013). Organizational managers become able to make necessary changes in the existing costing model in a fast way with the help of TDABC and the overall process of not expensive. With the assistance of TDABC, organizational managers and accountants become able to acquire small but information about the production process and it helps in getting the solution of tricky problems (Siguenza-Guzman et al. 2014). Business organizations do not face any difficulty in the implementation of TDABC as it can be easily implemented in any kind of organizations. Differences The following discussions shows the major differences of TDABC with other two costing approaches. ABC vs. TDABC System The inception of ABC was done for encountering the inefficiencies and weak areas of the costing system under American Accounting Standards. The processes of ABC put large emphasis on the concept of what has been done in the costing system rather than what has been spent in the costing system (Emblemsvg and Bras 2012). Under the process of ABC, the main aim of the accountants is to identify the production capacity of each production department so that the effective allocation of cost can be done in each production department for achieving the cost objectives and to make sure that manufacturing departments get sufficient time for performing the costing activities. For this reason, a number of cost pools and a number of cost drivers can be seen in the ABC system (Schulze, Seuring and Ewering 2012). Cost pools refer to the total cost having association with the cost activities and cost drivers and it can have major impact of the production performance of the companies. However, the syste ms are different in case of TDABC. Under the process of TDABC, if decline in the demand of work in any production department can be seen, accounts can make effective estimation about the quantity of resource required for that department. Thus, it can be seen that the TDABC makes the managers in capturing different important characteristics of the cost activities with the assistance of time equation. In ABC, cost accountants directly assign the indirect costs other cost activities and cost objectives. Under ABC, cost accountants use to allocate the indirect expenses with the cost objectives with the help of various cost drivers. However, under the process of TDABC, the cost accountants get great assistance in assigning cost and time based on the cost objectives. In both the cases of TDABC and ABC, cost accountants are required to follow six steps for the cost computation. These are the main differences between TDABC and ABC (Plank 2018). TDABC vs. Traditional Costing Approach TDABC has less simple system as compared to the traditional cost system. It can be seen that TDABC operates in the presence of complex costing system where the costing operations of traditional costing is much simple (Banker and Byzalov 2014). The requirement of various cost objectives and resources can be in the traditional costing approach so that different cost activities can be evaluated. However, in TDABC, various cost activities are dependent on the cost objectives for the purpose of cost evaluation. It needs to be mentioned that the adoption of TDABC can be seen in the companies having large amount of overheads and large number of miscellaneous products. Companies always require highly accurate and reliable method for cost management. Under the process of traditional costing, sometime cost accountants become unable in the correct calculation of production cost due to the presence of single overhead pool. In addition, cost accountants use the random allocation of cost objective s based on the machine hour or labor hour (Rieckhof, Bergmann and Guenther 2015). However, there is not any system of random allocation under the process of TDABC. Cost accountants determine the total production cost after completing the production process in traditional approach; but under TDABC, cost accounts use different parameters apart from production in the determination of the cost of production like feedback of the customers and others. Most importantly, it needs to be mentioned that the implementation of TDABC in the organizations helps in the lowering of production cost so that production can be increased and TDABC does this in more accurate manner than traditional costing system. Suitability of TDABC The following discussion establishes the reasons for the suitability of TDABC in the production operations of Australian Paper Pty Ltd: The implementation of TDABC provides the cost accountants with effective idea about different cost activities of the companies. All these ideas or insights are largely helpful in the process of strategic decision-making process so that the manufacturing process can be run in the best possible manner. The absence of TDABC makes the cost accountants unable in judging the effects of individual cost activities on the profitability of the companies (Mortaji, Bagherpour and Mazdeh 2013). TDABC helps in the distinction between capacity used and capacity supplied. The operations of TDABC to calculate the time required for continuing different production activities, to make them connected with the cost objectives provides the managers with effective idea for the management of production cost, and they become able to effectively use the unused capacity. Apart from this, it becomes clear for the companies to determine the places that require extra workload (Sarokolaei et al. 2013). With the assistance of TDABC, cost accountants become able to integrate ERP system with the costing system and thus, companies become able to follow every order transactions related to the production process of the companies. Apart from this, makes the cost accountants beneficial by showing the processes related with the distribution of to each customer so that the scope to empower the portability can be increased (Oklu et al. 2015). TDABC provides the managers with small but important cost information that play an integral part in the process of effective decision-making. In addition, cost accounts become able to recognize the complex cost operations in the companies (Schulze, Seuring and Ewering 2012). The presence of TDABC make the managers in the identification of opportunity costs so that efficiency of the manufacturing process can be increased and production capacity can be increased. There is always scope of improvement in the process of TDABC for the manufacturing operations of the companies. From the above discussion, it can be seen that TDABC makes the production process of the companies from different aspects. With the implementation of TDABC, Australian Paper Pty Ltd will be able in the reduction of total production cost so that production output can be increased that leads to higher profitability. In addition, the cost accountants of Australian Paper Pty Ltd will be able to gain proper insight about the cost activities so that they can be integrated with the cost objectives. In addition, the management of the company will be able to undated the system of TDABC as per the increase or decreased in the production quantity. Most importantly, the managers of the company will be able to make easy integration of ERP system with TDABC. Conclusion The above discussion indicates towards the multi benefits of the implementation of TDABC in the manufacturing companies. It can be seen that the cost accountants need to follow six specific steps in the calculation of cost under TDABC. The earlier discussion depicts that the process of TDABC differs from ABC and traditional approach from different aspects. The superiority of TDABC over ABC can be seen as the implementation of TDABC can be done in any kind of organization irrespective of size and type. In addition, the correct calculation of cost can only be done under the techniques of TDABC. Organizational managers can allocate the total cost in the cost activities in an effective manner with the help of the techniques of TDABC. As per the above discussion, TDABC helps the management of the companies in making effective strategic decisions. Thus, from the above discussion, one can conclude that Australian Paper Pty Ltd will be largely beneficial from the implementation of TDABC. References Australian Paper. (2018).What we do - Australian Paper. [online] Available at: https://www.australianpaper.com.au/about-us/what-we-do/ [Accessed 24 Jan. 2018]. Banker, R.D. and Byzalov, D., 2014. 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