The Application of Time-Driven Activity-Based Costing In the Hospitality Industry: An Exploratory Case Study

By Bas Basuki, Mertzha Dwiputri Riediansyaf.

In managing a company, the management and the board need accurate information about operational cost structures and profitability in order to help them in the decision making processes. To provide accurate information, a cost calculation system is generally used to show how the company has allocated its resources to supply its products/services.

This paper looks at the application of Time Driven Activity-Based Costing (TDABC) in a service company. The cost object of this research is a Hotel and the Room Division that is the main source of the hotel’s revenue. Approximately 80% of the hotel’s revenue comes from room rent activity.

Both direct and indirect costs are recalculated using the TDABC method. The results from the TDABC are then compared to the results from the initial cost calculation method used by the company. This research shows that the TDABC method is applicable for Hotel services costing and also that the capacity cost rate can be more accurately and flexibly used in cost compilation.

Download PDF JAMARv12.1- TDABC in Hospitality Industry

 

About Prof Janek Ratnatunga 1129 Articles
Professor Janek Ratnatunga is CEO of the Institute of Certified Management Accountants. He has held appointments at the University of Melbourne, Monash University and the Australian National University in Australia; and the Universities of Washington, Richmond and Rhode Island in the USA. Prior to his academic career he worked with KPMG.