Five Myths About Time-Driven Activity-Based Costing: Sorting Through the Facts About Traditional and Time-Driven Costing Methodologies

Time-driven Activity-Based Costing (ABC) has been around for years and is a proven methodology - and in some ways it offers advantages over traditional ABC costing, even if it doesn't dramatically simplify the process of creating and managing models. But it should be considered complementary to, rather than a replacement for, traditional ABC. Traditional ABC is still a proven way to trace and causally assign costs, and identify cause-and-effect relationships. That means organizations should choose a costing solution that can comfortably accommodate both methodologies, and lets them combine cost driver types to match their unique activities and information requirements.