Time-Driven Activity-Based Costing

Time-Driven Activity-Based Costing (TDABC) is a method that helps organizations determine the true cost of their activities by estimating the time and resources needed to perform each task. Instead of allocating costs based on broad averages, TDABC assigns costs based on the actual time employees or equipment spend on activities. This approach provides a more accurate picture of costs, enabling better decision-making, process improvements, and resource management. It streamlines traditional activity-based costing by simplifying data collection, making it easier and more precise to measure how time and resources contribute to overall expenses.