USING TIME-DRIVEN ABC TO IDENTIFY OPERATIONAL IMPROVEMENTS: A CASE STUDY IN A UNIVERSITY RESTAURANT

A case study supports the idea that time equations can foster a detailed understanding of the work activities, which manifestly is very useful in identifying operational improvements. It may be argued that similar results could have been obtained with traditional ABC because estimates in minutes can...

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Bibliographic Details
Published in:Cost management 2012-03, Vol.26 (2), p.41
Main Authors: Everaert, Patricia, Cleuren, Geert, Hoozée, Sophie
Format: Magazinearticle
Language:English
Subjects:
Activity based costing
Boxes
Case studies
Colleges & universities
Costs
Customers
Employees
Meals
Restaurants
Online Access:Get full text
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Summary:A case study supports the idea that time equations can foster a detailed understanding of the work activities, which manifestly is very useful in identifying operational improvements. It may be argued that similar results could have been obtained with traditional ABC because estimates in minutes can always be recalculated to percentages when combined with information about driver volumes. However, because employees at the university restaurant flexibly perform all activities as needed, obtaining an accurate estimate of their percentage mix of time spent on a list of incoherent activities would be problematic. 'Furthermore, estimating standard volumes for drivers such as the number of meals served and the number of dished-up meal components is challenging in this service environment. Demand for the activities is fully dependent on the number of customers, which fluctuates between days, weeks, and months of the year. The time equations made it possible to focus on the essence (i.e., reducing the cost of serving meals to students in the restaurants) while maintaining the service level of offering a wide range of meal components per session.