Implementing time driven activity based costing (TDABC) in micro, small and medium enterprises (MSMES): a case study in the textile industry

Abstract

The high level of competitiveness of the textile industry emphasizes the need for micro, small and medium enterprises (MSMEs) in this sector to have tools that facilitate their cost management. Hence, this research analyzes the application of Time-Driven Activity-Based Costing (TDABC) in a textile case study to determine if it is an appropriate costing system for MSMEs. The applied methodology had a mixed approach with a descriptive scope and used a case study design. The TDABC method used allowed to analyze the production of three textile lines with three operational processes and nine sub-processes. The results of the analysis showed that unitary production costs increased from 2% to 75% for some garments, implying that traditional costing generated underestimations. The contribution of this work is a new approach for creating time equations based on the variation of components, the design of garments, whose modularity adapts to the dynamics of textile industry.