scholarly journals Development a new costing structure using time driven activity-based costing for palm oil plantation

2021 ◽  
Vol 7 (1) ◽  
pp. 11-25
Author(s):  
Sri Nur Areena Mohd Zaini ◽  
Mohd Yazid Abu
Keyword(s):  
Palm Oil ◽  
Capacity Planning ◽  
Oil Industry ◽  
Activity Based Costing ◽  
Specific Sequence ◽  
Cost Rate ◽  
Practical Capacity ◽  
Unused Capacity ◽  
Capacity Cost ◽  
Idle Capacity

Palm oil is one of the world's most traded farming commodities. The Malaysian palm oil industry is without a doubt to the nation's pride. However, there are few problems currently happen in this plantation which are no establishment of time equation to interpret deviation of activities, the rate establishment did not properly illustrate the correlation between supplied resources and practical capacity, and the manager did not have a tool to monitor the unused capacity. The aim of this work is to develop a new costing structure for a better accuracy specifically at nursery. Time-driven activity-based costing (TDABC) was applied because it can effectively measure the time efficiency, accurately identifies the idle capacity and separately lists the used and unused capacity. It also provides more comprehensive understanding of practical resources and its associated costs while measuring processes and encouraging quality improvement. The plantation located at Pahang which has three main divisions and this work was focussing on nursery only. This work found that a precise process mapping for nursery was developed to understand their specific sequence which contributes to time equations. Subsequently, the total used capacity and capacity cost rate (CCR) for pre-nursery was successfully developed with 98220 minutes and 0.168 RM/minute respectively. Eventually, the manager can observe that actually the unused capacity was 37515.31 min which can be used to systematically develop the capacity planning on the pre-nursery.

scholarly journals Constructing a new cost structure using time-driven activity-based costing for replanting at palm oil plantation

2021 ◽  
Vol 7 (1) ◽  
pp. 55-69
Author(s):  
Sri Nur Areena Mohd Zaini ◽  
Mohd Yazid Abu
Keyword(s):  
Palm Oil ◽  
Capacity Planning ◽  
Cost Structure ◽  
Activity Based Costing ◽  
Cost Rate ◽  
Practical Capacity ◽  
Systematic Development ◽  
Set Up ◽  
Unused Capacity ◽  
Capacity Cost

The palm oil industry in Malaysia is undeniably the pride of the country. However, in this plantation there are currently few issues which do not set up a time equation to interpret the variance of activities, the rate setting did not illustrate the correlation between the resources provided and the practical capacity, and the manager had no tool in place to monitor the unused capacity. In order to increase precision in the field of palm oil plantation, this work aims to develop a new cost structure. Time-driven activity-based costing (TDABC) has been introduced because it allows time output to be efficiently assessed, the idle capacity accurately defined, and the unused capacity separately to be recorded. This provides an overview of functional tools and their associated costs as well as measurement methods and facilitates quality improvement. This work focused only on replanting field and the plantation located in Pahang. The maximum replanting capacity cost rate (CCR), with 288600 minutes and 0.106 RM / minute, was subsequently successfully developed. Finally, the manager can observe that 68358.45 minutes of utilized capacity could be used for the systematic development of replanting capacity planning.

scholarly journals case study on the determination of unused capacity using time driven activity-based costing for electronic component

2020 ◽  
Vol 7 (2) ◽  
pp. 74-85
Author(s):  
N.F. Zamrud ◽  
S.N.A.M Zaini ◽  
M.Y. Abu
Keyword(s):  
Time Allocation ◽  
Cost Estimation ◽  
Group Identification ◽  
Capacity Utilization ◽  
Electronic Component ◽  
Activity Based Costing ◽  
Cost Rate ◽  
Practical Capacity ◽  
Unused Capacity ◽  
Capacity Cost

Nowadays, demand for magnetic components are increasing from customer to support technological needs. It is important for the producer to incorporate an accurate cost estimation to decide the best price to gain better profits. However, actual costing structure is ignored the potential of time equation and capacity cost rate to measure the unused capacity from the resources allotment. The objective of this work is to determine the unused capacity in term of duration and cost in the manufacturing of electronic component using time-driven activity-based costing (TDABC). The method was developed using seven stages which are resources group identification, estimate cost of resources supplied, practical capacity estimation, capacity cost rates calculation, time equation development, determine time estimates for each sub-activity and estimate capacity cost required. As a result, in sub-activity-1, the unused time was 246,156.29 minutes which needs to be re-examined so that maximum time for productivity can be achieved and the unused capacity of cost was MYR 623,804.93 which conveys the message of wastage at the workstation. In sub-activity-3, the amount of unused time and cost was -596,400 minutes and MYR -7,006,252.43 respectively. The negative value demonstrated that the operators are overworked than normal time allocation. In sub-activity 9, the amount of unused time was -596,400 minutes and MYR -7,006,252.43 for unused cost probably the job scopes were taking more time than it should to be completed. Therefore, by applying the TDABC method, the capacity utilization and time efficiency can be clearly viewed.

scholarly journals Implication of time equation in mature and immature area of ramp using time driven activity-based costing

2020 ◽  
Vol 4 (2) ◽  
pp. 36-39
Author(s):  
S.N.A.M. Zaini ◽  
M.Y. Abu
Keyword(s):  
Quality Improvement ◽  
Palm Oil ◽  
Capacity Utilization ◽  
Oil Production ◽  
Oil Products ◽  
Activity Based Costing ◽  
Comprehensive Understanding ◽  
Practical Capacity ◽  
Unused Capacity ◽  
Idle Capacity

Malaysia currently accounts for 28% of world palm oil production and 33% of world exports. Being one of the biggest producers and exporters of palm oil and palm oil products, Malaysia has an important role to play in fulfilling the growing global need for oils and fats sustainably. In recent times, few problems have actually happened in this plantation which are difficult to establish a time equation for analyzing the variation of activities, the rate establishment is unsuitable to display the connection between resources supplied and the practical capacity and the manager does not have a method for monitoring capacity usage and unused capacity. The aim of this work is to develop the time equation of mature and immature area at ramp for a better accuracy. Time driven activity-based costing (TDABC) is implemented because the time is successfully measured, the idle capacity is correctly determined and the capacity used and the unused capacity are differently listed. This work considers a data in 2017 to develop the solution. This work found that in the mature area from the available capacity utilization, ramp has high unused capacity with 67492.80 min which means the resources should be forecast properly in future. Meanwhile in the immature area, ramp has closest value to the practical capacity with 6667.20 min and RM5667.12 which indicates the company properly utilizes their resources. Therefore, TDABC provides more comprehensive understanding of practical resources and its associated costs while measuring processes and encouraging quality improvement.

scholarly journals COMPARATIVE STUDY: ACTIVITY BASED COSTING AND TIME DRIVEN ACTIVITY BASED COSTING IN ELECTRONIC INDUSTRY

2020 ◽  
Vol 4 (1) ◽  
pp. 68-81
Author(s):  
N.F. Zamrud ◽  
M.Y. Abu
Keyword(s):  
Cost Allocation ◽  
Service Level ◽  
Activity Based Costing ◽  
Electronic Industry ◽  
Product Complexity ◽  
Cost Rate ◽  
Activity Cost ◽  
Economic Reality ◽  
Unused Capacity ◽  
Capacity Cost

By the 1980s, Traditional Cost Accounting (TCA) is no longer reflecting the current economic reality due to distorted information about the profitability of their orders, products, and customers. In addition, Activity-based Costing (ABC) is a costing method originally developed to overcome the shortcoming of TCA method in the era of rapidly increasing product complexity and diversification. However, it is not universally accepted because it ignores the potential for unused capacity which will be beneficial for forecasting. The objective of this work is to compare the advantages of ABC and Time-driven Activity-Based Costing (TDABC) by analyzing the features towards costing sustainment. The work begins by collecting data at electric electronic industry located at Pahang and the product selected is a magnetic inductor. ABC focuses on the costs inherent in the activity based products to produce, distribute or support the products concerned. TDABC uses time equation and capacity cost rate (CCR) to measure the unused capacity with respect to the time and cost. This work has successfully compares the methodology between ABC and TDABC in electronic industry. The item such as stages for cost allocation, determination of drivers, action taken for an additional activity, cost consideration for implementation, system building, system update, information given from each method, transparency, overestimation of cost, differentiation of service level, oversimplification of activities and capacity forecast and planning. It concludes that both have their strength according to the industry needs.

scholarly journals Application of the TDABC model in the logistics process using different capacity cost rates

2016 ◽  
Vol 9 (5) ◽  
pp. 1003 ◽  
Author(s):  
Paulo Afonso ◽  
Alex Santana
Keyword(s):  
Cost Model ◽  
Deep Understanding ◽  
Activity Based Costing ◽  
Cost Rate ◽  
Study Results ◽  
Unused Capacity ◽  
Logistics Process ◽  
The Cost ◽  
Capacity Cost

Purpose: The understanding of logistics process in terms of costs and profitability is a complex task and there is a need of more research and applied work on these issues. In this research project, the concepts underlying Time-Driven Activity Based Costing (TDABC) have been used in the context of logistics costs.Design/methodology/approach: A Distribution Centre of wood and carpentry related materials has been studied. A multidisciplinary team has been composed to support the project including the researchers and three employees of the company responsible for accounting, logistics and warehousing. The design and implementation of the costing model asked for a deep understanding of the different tasks and processes that should be considered. Accordingly, a TDABC model for the logistics function was developed.Findings: The cost model presented here is supported on a series of time equations designed for the logistics function which allow the analysis and discussion of costs and profitability of different cost objects namely, products, clients, distribution channels, processes and activities. The cost of unused capacity and the effectiveness of logistics processes are also highlighted in this model.Research limitations/implications: In a case study, results and implications cannot be directly or immediately generalized. Nevertheless, the proposed time equations and cost model can be easily adapted to explain other types of logistics functions and it gives the foundations or other TDABC models with more than one capacity cost rate.Practical implications: The TDABC model developed in this case study can be used in similar cases and as a basis for the analysis of logistics costs in other logistics processes. Furthermore, managers can rely on the proposed approach to analyze products’ profitability and logistics cost structure. Originality/value: In this case, different capacity cost rates were computed in order to reflect appropriately the logistics function which was presented in two different processes: internal logistics and distribution. These processes have specific resources allocated and should be measured differently. This is in line with Kaplan and Anderson (2004, 2007) who have suggested a more complex TDABC model with more than one capacity cost rate for these situations.

scholarly journals Assessment the capacity utilization of mature and immature area of replanting using time driven activity-based costing

2020 ◽  
Vol 4 (2) ◽  
pp. 7-11
Author(s):  
S.N.A.M. Zaini ◽  
M.Y. Abu
Keyword(s):  
Palm Oil ◽  
Capacity Utilization ◽  
Activity Based Costing ◽  
Time Efficiency ◽  
Unused Capacity ◽  
Internal Transport ◽  
Idle Capacity

Malaysia is currently the world’s largest exporter of palm oil although it is the second-largest producer of the oil after neighboring Indonesia. There have recently been few concerns on this plantation which are hard to detect in order to understand the variance in the operations, and the rate setting is inadequate to outlined the relation between the resources supplied and the capacity in operation, and the manager has no system to track the usage of the capacity and unused capacity. The aim of this work is to assess the capacity utilization of mature and immature area at replanting for a better accuracy. Time driven activity-based costs (TDABC) is used because time efficiency can be calculated effectively. Furthermore, it also can precisely evaluate idle capacity and separately listing the resources being used and not used. This work considers a data in 2017 to develop the solution. This work found that in the mature area from the available capacity utilization, chipping has high insufficient capacity with RM-1931518.08, planting seedlings has high insufficient capacity with -805173.84 min and internal transport has high waste cost with RM45771.30. Meanwhile, in the immature area, planting seedlings has high insufficient capacity with -566934.84 min and RM-1621433.64, manuring has unused capacity with 66763.50 min and internal transport has high waste cost with RM29667.47.

A Case Study on the Un-Used Capacity Assessment Using Time Driven Activity Based Costing for Magnetic Components

2020 ◽  
Vol 6 (1) ◽  
pp. 18-39
Author(s):  
Areena Zaini ◽  
Haryantie Kamil ◽  
Mohd Yazid Abu
Keyword(s):  
Historical Data ◽  
Manufacturing Sector ◽  
Type I ◽  
Activity Based Costing ◽  
Cost Rate ◽  
Continuous Innovation ◽  
Magnetic Components ◽  
Alignment Process ◽  
Capacity Cost

The Electrical & Electronic (E&E) company is one of Malaysia’s leading industries that has 24.5% in manufacturing sector production. With a continuous innovation of E&E company, the current costing being used is hardly to access the complete activities with variations required for each workstation to measure the un-used capacity in term of resources and cost. The objective of this work is to develop a new costing structure using time-driven activity-based costing (TDABC) at . This data collection was obtained at E&E company located at Kuantan, Pahang that focusing on magnetic component. The historical data was considered in 2018. TDABC is used to measure the un-used capacity by constructing the time equation and capacity cost rate. This work found three conditions of un-used capacity. Type I is pessimistic situation whereby according to winding toroid core, the un-used capacity of time and cost are -14820 hours and -MYR2.60 respectively. It means the system must sacrifice the time and cost more than actual apportionment. Type II is most likely situation whereby according to assembly process, the un-used capacity of time and cost are 7400 hours and MYR201575.45 respectively. It means the system minimize the time and cost which close to fully utilize from the actual apportionment. Type III is optimistic situation whereby according to alignment process, the un-used capacity of time and cost are 4120 hours and MYR289217.15 respectively. It means the system used small amount of cost and time from the actual apportionment.

scholarly journals A Case Study on the Un-Used Capacity Assessment Using Time Driven Activity Based Costing for Magnetic Components

2021 ◽  
Vol 9 ◽  
pp. 32-53
Author(s):  
N.N.N.M. Kamil ◽  
S.N.A.M. Zaini ◽  
M.Y. Abu
Keyword(s):  
Historical Data ◽  
Manufacturing Sector ◽  
Type I ◽  
Activity Based Costing ◽  
Cost Rate ◽  
Continuous Innovation ◽  
Magnetic Components ◽  
Alignment Process ◽  
Capacity Cost

The Electrical & Electronic (E&E) company is one of Malaysia’s leading industries that has 24.5% in manufacturing sector production. With a continuous innovation of E&E company, the current costing being used is hardly to access the complete activities with variations required for each workstation to measure the un-used capacity in term of resources and cost. The objective of this work is to develop a new costing structure using time-driven activity-based costing (TDABC). This data collection was obtained at E&E company located at Kuantan, Pahang that focusing on magnetic component. The historical data was considered in 2018. TDABC is used to measure the un-used capacity by constructing the time equation and capacity cost rate. This work found three conditions of un-used capacity. Type I is pessimistic situation whereby according to winding toroid core, the un-used capacity of time and cost are -14820 hours and -MYR2.60 respectively. It means the system must sacrifice the time and cost more than actual apportionment. Type II is most likely situation whereby according to assembly process, the un-used capacity of time and cost are 7400 hours and MYR201575.45 respectively. It means the system minimize the time and cost which close to fully utilize from the actual apportionment. Type III is optimistic situation whereby according to alignment process, the un-used capacity of time and cost are 4120 hours and MYR289217.15 respectively. It means the system used small amount of cost and time from the actual apportionment.

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