Capacity utilization analysis through time-driven ABC in a small-sized manufacturing company

Purpose - The purpose of this paper is to provide a case study about the capacity utilization analysis in a small-sized manufacturing company through the application of time-driven activity-based costing (TDABC). After a brief overview of development of the TDABC system, a detailed application of TDABC and capacity utilization analysis in a bakery is given. Design/methodology/approach - This paper is based on a case study about the application of TDABC in a small-sized Greek manufacturing firm. In the case study, time equations were developed for the supporting, operating and manufacturing departments and product costs determined based on the model. Capacity utilization analysis made through the application of TDABC system. Findings - The study shows that TDABC is more applicable in small-sized manufacturing companies because of their labor-intensive nature. In contrast to previous studies, authors argue that even in small firms simple excel sheets are not enough to capture the complexity of the time equations and business intelligence software and programming coding is required. Research limitations/implications - Although the fundamental structure of TDABC is the same for all companies there is no strict form of application. Practical implications - The practical implication of this paper is that each firm has unique characteristics that need to be reflected in the application of the TDABC model. Originality/value - This paper contributes by providing insights into cost accounting in SMEs. More specifically, this paper contributes to the TDABC literature regarding the application of the system in small and medium sized manufacturing firms.