Article Analysis Essay Example | Topics and Well Written Essays - 500 words - 2

Article Analysis - Essay Example According to this method of costing, there are only two parameters needed : the cost of time per unit of supplying resource capacity and the unit times of consumption of resource capacity by products, services, and customers. The author argues that this approach is better since it can be applied even to complex transactions in a large company since more precise cost-driver rates can be determined due to unit times. Therefore, estimating the resource cost per unit for different variables such as cost per cubic meter or cost per megabyte can be ascertained. In addition to this, the article presents the advantage of the new method over the traditional ABC by assuming that employees or machines do not always operate in full capacity thereby presenting a more realistic computation of costs. Because of this, the manager can make important decisions on maximizing the unused or unfulfilled capacity which may mean putting off capitalization to a later time until everything is fully efficient or productive. Another important argument that this article presents is that Time Driven Activity Based Costing can be updated. This enables the management to review the costs according to existing conditions. Kaplan, R. Anderson S. ( 2005 ) Rethinking Activity Based Costing,excerpt from "Time-Driven Activity-Based Costing," Harvard Business Review, Vol. 82, No. 11, November 2004.Retrieved from http://hbswk.hbs.edu/item/4587.html on May 10,