Development of a real-time TDABC model for production activities : A case study at a manufacturing company

Sammanfattning: Allocating the right amount of indirect cost associated with a specific product or service offers many different options and there is no right or wrong answer to it. At the end of the day, a cost model is only as good as the organization perceives it to be. Today, an increasing number of companies are taking advantage of what the Industry 4.0 has to offer, making use of their own data in particular. In this study, we examine the possibilities of Time-Driven Activity-Based Costing (TDABC) in conjunction with a data-rich manufacturing environment. The research is conducted as a case study at the Swedish startup battery manufacturing company Northvolt. The case study is two folded. Initially, a qualitative exploration of how TDABC with real-time activity data can be developed in a manufacturing company will be conducted. Following, the outcome of a TDABC model which utilized real-time activity data instead of estimated values will be examined through simulation. The study incorporates important findings from previous studies in terms of how much workers are actually overestimating their performances in most cases. The overestimation is one of the largest problems when it comes to TDABC, and it is due to the subjective belief that a worker is actually producing more than he/she actually is. With this in mind, this case simulation showed that Northvolt could possibly improve cost allocation by up to 4% from production cost in the part of the production under investigation by utilizing realtime data instead of overestimated values.