Provides an easy introduction to time-driven activity-based costing (ABC) that students can create a simple profitability ABC model of order. Midwest time-driven ABC approach is based on two categories of parameter estimates. The first is the cost per hour of staff carrying out multiple tasks, such as order-entry operators and delivery personnel, desktop supplies. The second is the estimated time required for the employee to any kind of job (manual vs. electronic order … Read More »

Provides an easy introduction to time-driven activity-based costing (ABC) that students can create a simple profitability ABC model of order. Midwest time-driven ABC approach is based on two categories of parameter estimates. The first is the cost per hour of staff carrying out multiple tasks, such as order-entry operators and delivery personnel, desktop supplies. The second is the estimated time required for employees to perform any kind of task (manual vs. electronic orders, deliveries near vs. distant). Students apply the time-driven ABC model to five representatives to estimate profitability of orders to order based on a much more accurate representation of the cost of processing and delivery of orders. Stimulated a discussion of the actions, such as pricing and process improvements to improve the profitability of contracts and also how to report and manage the cost of unused capacity. A rewritten version of an earlier case.
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from
Robert S. Kaplan
Source: Harvard Business School
4 pages.
Release Date: 02 March 2004. Prod #: 104073-PDF-ENG
Midwest Office Products HBR case solution