The Implementation of the Time-Driven Activity Based Costing Model In the Manufacturing Companies

This research studies and compares the results of implementation of traditional absorption costing model and time-driven activity based costing model(TDABC) in order to calculating the cost of products and services in the Pasargad Polymer company. The fundamental hypothesis of this paper states that the implementation of TDABC model presents more relevant results than traditional absorbtion costing in the above mentioned company. The data has been collected by library and field research methods. Then the collected data were placed in the two models and the results of data processing were analyzed. The results show that the traditional absorption costing model over allocates overhead costs to the higher volume products and services and overstates the cost of these products and services accordingly. But the TDABC model, the simplified one of traditional activity cased costing model, modifies the over and under overhead allocation by utilizing the time equations and drivers and reports the cost of products and services properly.. The TDABC also measures the idle capacity and its cost and can help the managers in evaluating the performance of company's departments.