Robustness To Cost Errors And Diversity In Resource Sharing In Time-driven Activity-based Costing

The accuracy of cost analysis directly affects a firm to improve the cost and correct the process of production or service. However, the indirect cost is so difficult to tracing its origin directly but easy to produce deviation, a wide deviation will directly affects the manager’s decisions. So in the different background of resource allocation, deviation will lead to the different cost errors eventually. Thus, it’s crucial to analyze the total cost deviation caused by different measurement errors and the costing system’s robustness under the different resource sharing patterns, use scientific cost accounting methods to build measurement errors analysis model.From the perspective of the cost accuracy, it finds that these studies are general research on ABC errors and there was not detailed research on resource sharing under some specific production environments. So this article considers to choosing a more accurate cost accounting method, Time-driven activity-based costing, to build a theoretical model that analysis cost errors in the consideration of production or service environment. It will provide a reference to the effects of resource allocation environment on different errors and cost precision for managers.This article mainly used the mathematical model, analysis method, comparison method. First, the mathematical model of cost accounting based on Time-Driven Activity-Based Costing was established(matrix form). Secondly, the error analysis model of the cost was established considering some hypothesis. By setting the resource cost consumption in the firm production or service environment, we could examine how resources are to be shared. Finally, the total cost error under different resource sharing way and the stability of the cost system were analyzed. We could obtain the following conclusions:The diversity in resource cost consumption are not always able to increase or decrease cost precision and system stability. For each factor, they depend on certain parameters ratio. Therefore, it is particularly important to focus on the key parameter characteristics of the key resource pool.The effect of the diversity in practical capacity consumption on total cost error caused by the measurement error existing in cost is the same as the effect caused by the aggregation error existing in resource pool.According to the existing conclusion, the thinner the activity is not divided, the better the activity is. It will cause the flux of the error. But we should be aware of the significance of operation time refining and decomposition in the key resource pool. Rather than a key resource pool operation time doesn’t break down.