Application of the Light TDABC model to select the most profitable products (Case study: Hamvatan dairy products company)

Subject Areas : Management Accounting

Mehran Javadpour ¹ , Mohsen Hamidian ²

1 - Department of Accounting, South Tehran Branch, Islamic Azad University, Tehran, Iran.
2 - Department of Accounting, South Tehran Branch, Islamic Azad University, Tehran, Iran

Received: 2018-06-17 Accepted : 2018-09-11 Published : 2019-06-22

Keywords: Rule 20-80, Pareto principle, Time Driving Activity-Based Co, Light Time Driving Activity-Ba,

Abstract :

The revolution that generated the first and second generations of activity-based costing models, ABC and TDABC, in calculating the cost of finished goods, has made it a great help for decision makers. The traditional cost models, because of the lack of attention to the causal relationship between indirect costs and its causative factor, cause a lake of proper allocation of these costs to products, based on the activity-based costing models, by causally causing the causal relationship between the costs and the factors causing it, They are an effective step in calculating the cost, but the lack of attention to the revenue of products in these models destroys the power of managers to classification of the most profitable products. The third-generation of activity based costing, Light TDABC, eliminates the problem. In order to carry out research, Hamvatan dairy products company was selected in 1395. By calculating the cost and operating profit using traditional models and TDABC, and then calculating the ratio of operating profit to sales and comparing the results obtained through the statistical model of the t-test, the two dependent societies concluded that between the teraditional and Light TDABC models, There is a significant difference in operating profit to sales. Subsequently, by classifying the products, we identified the most profitable products in accordance with the parrot principle.The revolution that generated the first and second generations of activity-based costing models, ABC and TDABC, in calculating the cost of finished goods, has made it a great help for decision makers. The traditional cost models, because of the lack of attention to the causal relationship between indirect costs and its causative factor, cause a lake of proper allocation of these costs to products, based on the activity-based costing models, by causally causing the causal relationship between the costs and the factors causing it, They are an effective step in calculating the cost, but the lack of attention to the revenue of products in these models destroys the power of managers to classification of the most profitable products. The third-generation of activity based costing, Light TDABC, eliminates the problem. In order to carry out research, Hamvatan dairy products company was selected in 1395. By calculating the cost and operating profit using traditional models and TDABC, and then calculating the ratio of operating profit to sales and comparing the results obtained through the statistical model of the t-test, the two dependent societies concluded that between the teraditional and Light TDABC models, There is a significant difference in operating profit to sales. Subsequently, by classifying the products, we identified the most profitable products in accordance with the parrot principle.

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