The Role of Integration Between Target Costing and Time-Driven Activity-Based Budgeting Techniques in Managing Time and Cost and its Reflection in Achieving Competitive Advantage
, e | 30 nov 2023
Pubblicato online: 30 nov 2023
Pagine: 187 - 208
DOI: https://doi.org/10.2478/fman-2023-0014
Parole chiave
© 2023 Salah Mahdi Jawad Al-Kawaz et al., published by Sciendo
This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International License.
Today’s contemporary business environment is characterized by rapid developments, steady fluctuations, intense competition, globalization of the markets, and ever-growing technological development. Likewise, the customers or the consumers too have evolved a long way while today’s businesses are thriving to meet the fluctuating requirements of the consumers, their growing needs, expectations for high-quality products/services and customization of the products/services at affordable costs. However, it is not possible for the economic units to achieve success if they follow traditional systems and approaches in the field of cost and administrative accounting. This is attributed to the fact that these systems fail to provide adequate information at the right time that helps the economic units to achieve the desired success and ensure it is sustainable. Due to intense competition, the ability of the economic units to generate revenue has become limited. This drawback helped the economic units to focus on the profitability issues and the demand for high-quality products from the customers. Likewise, the economic units also started strategizing sustainable policies to delivery products/services at a faster rate within affordable costs, so as to stay long in the market.
The units also ensure that time alone does not contribute to the pricing of the products, which is an important, basic, and an effective factor to be in the market. The above-mentioned strategies help in reducing the costs on a long-term basis. This results in increased profits and planned implementation of the activities, so that the optimal planning of time and manpower saves the costs as much as possible. On the other hand, these activities must compromise the quality perspectives. In this background, it has become imperative to search for a modern strategic technique in the field of cost and administrative accounting that is not only consistent and performance oriented, but also in harmony with the developments expected. Such techniques include target costing (TC) and time-oriented activity budgeting (Bhimani, et al., 2008; Burns, et al., 2013; Edmondes, et al., 2008).
TC technique is an important customer-based product development technique in which the pricing decisions are made based on market conditions. When deciding the price of a product, the competitors’ product prices and their types are considered. This way, the economic units can decide the cost of a certain product, called target cost. If TC technique has to be successfully implemented, appropriate information is required to achieve cost and time management, which, in turn, helps the economic units achieve competitive advantage. Time-driven activity-based budgeting technique (TDABB) is used to accomplish this objective. This technique allocates the cost on the basis of optimal consumption or exploitation of the products and the time required for product development. So, TC and TDABB techniques can be integrated together to decide the costing methods of a product appropriately (Kaplan and Steven, 2004; Bengü, 2010).
The research problem is formulated in the following research questions:
Does the integration of TC and TDABB determine and fulfill the gap between the target cost and the current cost with its planned value correctly and appropriately? Does the integration of TC and TDABB manage cost and time appropriately and, as a result, achieve a competitive advantage for the chosen factory?
The aim of the current study is to clarify the role played by TDABB technique in providing integrated information about costs incurred upon optimal consumption of the resources and time taken for production activities. Further, the study also aims at applying the TC technique to enhance the production time and reduce the gap between the target cost and the current cost calculated using the TDABB technique.
The importance of this research is manifested in the need of economic units in general and the sample factory considered in this study in particular for modern accounting techniques that fulfill the rapid developments in business demands, continuous changes, and intense competition. This is because the traditional cost and accounting administration approaches cannot be relied anymore to fetch information on a dynamic basis for the economic units to survive, achieve, and sustain in business. So, the two most important dynamic techniques, target cost and time-based budgeting, are investigated in this study, while their roles in cost and time management toward competitive advantage are discussed in detail. This study analyzes the impact of integrating both the concepts at a laboratory of the General Company for Textile Industries, Hilla, Najaf factory, which exclusively manufactures men’s clothing.
Does the integration of TC and TDABB help the research sample factory to manage cost and time appropriately and, as a result, achieve a competitive advantage for the chosen factory?
Time limit: To achieve the research objectives, the study considered the data up to 2018.
Spatial limit: To validate the research hypothesis, the General Company for Textile Industries located in Hilla was chosen as the research community. Being a men’s clothing factory in Najaf, the company manufactures clothing products for men. It meets the requirements of local citizens, yet faces severe competition from global competitors due to open economy of the country and the competitors’ high-quality products at low prices.
In light of this approach, various means of data collection methods were relied upon to obtain the required data and information. Some of the data collection techniques used were visits and field coexistence in the factory, interviewing the officials and workers at the factory, and interviewing a few sales agents specialized in selling men’s suits, and secondary data such as accounting records, cost reports, and special time cards.
According to Ghosh (2013) and Bengü (2010), the TC technique was first introduced in Japan by Toyota in 1960s to reduce the cost of its products. In Japanese, the term Genka Kikaku is roughly translated into English as target costing. In 1980s, the TC technique was used as a comprehensive approach in the USA to determine the price of a product and manage the costs involved in its production since most of the American companies faced recession (Ansari, et al., 2009). Though Ellram (2002) and Alotaibi, et al., (2021) mentioned that the TC approach has long been in practice from 1960s, Japanese and Western accounting literature recorded this technique only in 1990s. The TC technique was published in Fortune magazine in the year 1991, and the magazine mentioned that this concept is a secret weapon of Japan.
Though multiple specific definitions are available for the TC technique, Lorino defined target cost as a set of calculation and administrative methods based on a main formula to improve the design of a product and its planning process, so as to achieve the equality and conformity of the estimated cost with its target cost (Al-Masoudi, 2008). Idowu (2014) defined the TC technique from a mathematical point of view as the estimation of a product’s cost by subtracting the target profit margin from the target selling price. Garrison, et al. (2018) defined target cost as the process of determining the permissible cost of a product or a service to achieve the target profit for the economic unit. This way, the product development team can be given the responsibility to design acost-effective product as per the target cost. Williams et al. (2018) defined TC as a customer-led process that focuses mostly on product design. The purpose is to produce a product, and its revenues must cover the costs related to it and make a profit.
Drury (2018) defined target cost by subtracting the target profit margin from the target selling price. Blocher et al. (2019) mentioned that target cost is applied in intense competitive environments since it is already determined based on the competitors. This way, the target profit can be achieved since the revenues cover the product’s expenses. Hilton and Platt (2020) defined target cost as an expected proactively determined long-term cost spent by the company to sustain in the market against its competitors.
Various stages are involved in the implementation of the TC technique according to the researchers such as Dury (2018), Horngren, et al., (2015), Muia (2012), and Datar and Rajan (2018).
In this stage, a product’s selling price is determined in such a way that it does not exceed the market price, while at the same time, target profit margin is achieved by the company (Tazegul and Kaygin, 2014). Baharudin and Jush (2015) mentioned that this phase decides the price of a product that a customer is willing to pay to obtain the product. Horngren, et al., (2015) stated that the target price is determined through one of the two ways. In the first method, the pricing is decided based on the value perceived by the customer, product’s functions, and the potential benefits for the customer. In the second method, it is decided by the price and functionalities of the competitors’ products.
Hergeth (2002) and Liu and Wang (2017) believed that target price determination is decided when a product is newly introduced in the market or already under trade. For the second option, an uncertainty exists since a few factors such as the product’s presence, market penetration, and the price of competitors are crucial. In case of a new product, it is critical since there is no baseline value available. So, based on the engineering and technical characteristics of a product and customer’s requirements and needs, the pricing is decided.
This phase can be defined as the amount of profit predicted by the economic units when selling a product in the market (Datar and Rajan, 2018). Hilton and Platt (2020) and Abbas et al. (2018) indicated that the target profit can be determined on the basis of either the cost percentage during the entry process (pricing on the basis of cost and a profit margin) or the target selling price percentage or a weighted profit rate for the past few years. Edmonds, et al., (2008) mentioned that a company’s policy and objectives, in planning its long- and medium-term profits, play a major role in determining the target profit margin.
The target cost is determined using the following equation:
The current product cost is calculated either in its estimated or actual form. Burns, et al., (2013) argued that the current cost can be appropriately determined using modern cost accounting techniques such as activity-based costing.
Target cost reduction is a measure of the difference between the target cost and the current cost as given below:
Datar and Rajan (2018) argued that the design team must bridge the gap between the target cost and the current cost or reduce it to the least possible.
Target reduction is executed by different tools and methods to reach the target cost. The most important methods, as per Burns, et al., (2013), are benchmarking, value engineering, and reverse engineering, which are explained in the upcoming sections.
The following tools are used to reduce or bridge the gap between the current costs and the target costs.
Benchmarking is defined as a continuous process in which the production of products and services and their implementation are compared against the best performance levels followed by similarly operating economic units (Horngren, et al., 2015). The comparative analysis results infer the best practices that can be applied in improving product quality and saving costs by avoiding mistakes (Slater, 2010).
Value engineering is defined as a systematic process of designing the products in which the functionality matches the customer expectations, incurring the least possible cost (Melo and Granja, 2017; Tazegu and Kaygin, 2014). Wild and Shaw (2010) defined value engineering process as a method to reduce labor costs and achieve the target cost, when the current cost is high. Kinney and Raiborn (2011) mentioned that the economic units thrive to reduce the costs, shorten the product life cycle, and improve the quality by value engineering process and best designs to achieve profits that, in turn, support its competitive advantage.
Reverse engineering, also called as dismantling analysis, is the evaluation of a competitor’s product to determine the product development areas in an economic unit, so as to reduce the costs associated with a product’s life cycle and the corresponding value chain processes. The information, retrieved about the products and their values, decides the success of this process. Based on this information, the success of an economic unit is decided by how it implemented the information in increasing the product’s value (Dury, 2018). The competitor’s products are analyzed for their functionality and design, their activities, production processes, and the associated cost (Datar and Rajan, 2018). Atkinson, et al., (2012) mentioned that disjointed analysis is executed by identifying the specifications and characteristics of a competitor’s product, so that the economic unit’s product can be matched through sufficient modifications.
Kaplan and Anderson (2007) mentioned that activitybased budgeting (ABB) was an established process before time-driven activity-based costing (TDABC) technique. However, the shift to the latter occurred due to TDABB’s multiple advantages compared to the ABB process.
TDABB is defined as a future plan that sets the policies of an economic unit by planning the control processes and determining the costs of the activities in line with the time equations (Kaplan and Anderson, 2004). Saban and Lark (2009) defined TDABB as a novel technique with increased accuracy with regard to expectations about resources and activities. It determines the relationship among them and identifies the time vectors and time of activities. Blocher, et al., (2019) mentioned that this model is used to prepare the budget as per the TDABC method. It functions inversely on the basis of estimates of the sales volume to determine the necessary resources for production and sales plans. Here, time equation is used to show different time-bound activities.
Adigüzel (2008) listed the following steps for implementation of the TDABB method:
Preparation of the sales and production forecast for the upcoming period based on dynamic time vectors as per the product or service Determination of different resource groups (departments and divisions) including the activities that consume those resources Forecasting the total costs of different resource groups including direct and indirect costs that correspond to the performance of the activities carried out by all persons involved in product/service delivery Energy requirement identification of different resources. Scientific and applied research indicates that 80% practical energy is required. Calculation of the planned energy cost rates, that is, unit time cost of each resource group (division or department), by dividing the total costs of each resource group (step 3) by the energy of each resource group (step 4) Preparation of time equations by setting the expected amounts of time vectors related to the activities performed and their events. The time equations for the budget period can be modified when different process improvements are involved to reduce the execution time or involvement of new activities. Calculation of the total cost planned for the resources to meet the demand for products/services by multiplying the planned cost per unit time (in minutes) for each resource group (step 5) by the time of each activity (step 6) Calculation of the cost of products or services by adding the direct costs to the indirect costs allocated to the departments
Palmar (2015) defines competitive advantage as the ability of the economic unit to generate greater value than expected from the resources it uses, and therefore, it means cost reduction or successful achievement of the focus strategy.
Baumann et al. (2017) define competitive advantage as the case in which the economic unit implements a strategy aimed at generating value that exceeds the value achieved by competitors and in a way that helps it survive and continue.
On the other hand, the concepts of cost management and time management should be established before clarifying the relationship between these variables. Cost management refers to the actions taken by managers to rationally satisfy their customers and keep a continuous control over costs (Bhımanı, et al., 2008). Kinney and Raiborn (2011) defined cost management as a set of formal methods used to plan and control the activities to control the costs in an economic unit to meet its financial goals and objectives. Datar and Rajan (2018) defined it as a set of procedures and activities executed by the managers to leverage the resources for achieving customer satisfaction, cost mitigation, and continuous monitoring. Blocher, et al., (2019) mentioned that cost management is the application of accounting information to strategize an economic unit in terms of financial information about costs and revenues, nonfinancial information about quality, customer preservation, and other key factors for the success of the economic unit.
According to Al-Obaidi (2011), time management is defined as the ability to plan and organize the work efficiently by setting goals, diagnosing the priorities, developing the solutions, directing and following up the workers to complete the tasks as per the schedule. Al-Mashhadani and Palmer (2015) defined time management as an integrated scientific concept that requires the effective investment of time. Mahdi (2017) mentioned that time management is an organized application of general strategies that require less effort to achieve efficiency in managing the activities and achieving efficiency in terms of time use. The concepts of cost and time management were correlated by Horngren, et al., (2015), who mentioned that the time required to develop new products is equal to the time required to generate those products and market them.
When designing and presenting a new product, the administration must analyze the costs and benefits of the product during its life cycle. Blocher, et al., (2019) mentioned that industrial economic units experience a major shift in the implementation of advanced manufacturing systems that respond quickly to the customer requirements, especially high-quality products, instead of mass production systems that incur heavy costs. The demand for high-quality products at an affordable cost and at a rapid speed is increasing. This phenomenon made the economic units to adopt strategies that commensurate with these changes and qualifies them to sustain in the market. This infers that time is not a stand-alone factor that contributes to the pricing of the products as an important, basic, and effective factor. However, it is considered as one of the means to reduce the costs in the long run, which, in turn, increases the profits.
Kaplan and Anderson (2007) and Al-Masoodi, et al., (2020) believed that time is the cost driver in terms of time-bound activities, that is, those activities in which the cost is decided based on time. Since this time-bound costing method creates issues, the tradeoff between cost and time must be considered to make decisions. Blocher, et al., (2019) mentioned that the amount of time must be specified by the economic units as the optimal time to implement the activities to ensure high quality at an affordable cost.
As discussed earlier, the integration of TC and TDABB techniques is an important step to achieve success in cost management, as shown in Figure 1. Both the techniques (TC and TDABB) can be integrated based on the application of a certain technique. The aim of the TC technique is to ensure cost management, production quality, and customer satisfaction in terms of price and functionality. This technique can achieve success based on the availability of appropriate information that helps in achieving the goals of rationalization and cost management. Such crucial information is provided by TDABB. This TDABB technique aims at allocating the costs on the basis of optimally consumed or exploited resources within the shortest time. The time vectors of the product’s activities and the cost of those activities are determined based on the time equations for each activity. So, a clear relationship between the two aforementioned techniques reflects the importance of integrating the techniques. Both TC and TDABB techniques can be integrated to answer the following questions:
How to reach the target cost according to the target price and target profit? TC technique How to reach the current planned cost based on the optimal use of resources? TDABB technique How to bridge the gap between the target cost and the current cost? Technical tools (TC) such as reverse engineering, benchmarking, and so on.
Figure 1.
The time horizon for studying the event.
(
As per the figure, the following steps are crucial in integrating TC and TDABB techniques.
Target cost determination is the first step in this process as mentioned by Edmonds et al. (2008), since it is a result of the difference between the target selling price and the target profit.
Product cost calculation is the second step and is executed by the TDABB technique. Yijuan and Ting (2017) mentioned that this step shows the ability to determine the costs of activities related to the product and the times of those activities to identify and exclude the idle activities and their costs and times.
After determining the target cost and the current cost, the difference between them is determined, that is, target reduction. This must be achieved to reach the cost of the product that achieves the target profit.
This step, which aims at achieving the target cost reduction and absorbing any difference between the current and target costs, is accomplished using the target cost tools (Berk, 2010). For this objective, all the cost elements of the product in value chain must be studied, so that any possible opportunity to reduce the cost can be identified. It can be in cost or time aspect and should not affect the quality of the product. Reverse engineering, benchmarking, and other such tools are available to accomplish this task. Accordingly, the importance of the role played by target cost and budgeting techniques can be understood in terms of time-oriented activity to manage both cost and time as competitive precedence. Though this is a theoretical assumption, the practical results are difficult to predict.
This axis focuses on time and cost management processes for the sample laboratory undertaken, that is, men’s suit, to enhance the competitive advantage.
As mentioned earlier, men’s suit product laboratory was taken as the research sample in this study. In general, the research topic is suitable for the laboratory and specific for the customer. The laboratory was selected due to its high selling prices compared to its competitors and to increase the intensity of the competition faced by the product from foreign products. The product contains several components that naturally reflect the performance of the departments that contribute to its production. Various departments work together to finish the product in its final form. This scenario enhances the possibility of applying TC and TDABB techniques toward time and cost management as competitive priorities. In addition, the cost system applied in the company suffers from criticism, and lack of cost and time management is the most important challenge. This is overcome by the application of two techniques to link the cost with time activities, so that the production events are correlated with the cost figures that finally help in determining the selling price of the men’s suit, instead of relying on the competitor’ prices in the market. Table 1 details about the cost and selling price of the men’s suit, that is, model 1121, for the year 2018.
The cost and price of selling men’s suit, model 1121, with rates and material exchange for the year 2018
(
| No. | Name of material | Measuring unit | Weighted price in dinars per unit of measurement | Exchange rate | Cost/Iraqi dinar |
|---|---|---|---|---|---|
| 1 | Width lining. 150 | Meter | 1100 | 1.7 | 1870 |
| 2 | Front sticker | Meter | 3230 | 0.9 | 2907 |
| 3 | Kanoujah | Meter | 2600 | 0.5 | 1300 |
| 4 | Tissue adhesive padding | Meter | 1620 | 0.25 | 405 |
| 5 | Pocket lining | Meter | 1525 | 1 | 1525 |
| 6 | Gauze | Meter | 3000 | 0.0133 | 40 |
| 7 | Prime 50 | Meter | 3000 | 0.0666 | 200 |
| 8 | Nonsticky, nonwoven filling | Meter | 1630 | 0.15 | 244.5 |
| 9 | Collar background | Meter | 2500 | 0.10 | 250 |
| 10 | Buttons size 23 | Number | 110 | 6 | 660 |
| 11 | Buttons size 32 | Number | 200 | 4 | 800 |
| 12 | Transparent threads | Meter | 10 | 30 | 300 |
| 13 | Normal threads | Meter | 0.8 | 45 | 36 |
| 14 | Ofir threads | Meter | 0.4 | 30 | 12 |
| 15 | Silk threads | Meter | 0.6 | 30 | 18 |
| 16 | Dukma house threads | Meter | 0.6 | 25 | 15 |
| 17 | Epaulets | Couple | 1500 | 1 | 1500 |
| 18 | Velcro duct tape for jacket | Meter | 95 | 1.5 | 142.5 |
| 19 | Ready kemar | Meter | 1550 | 1.32 | 2046 |
| 20 | Zipper | Number | 250 | 1 | 250 |
| 21 | Jengal | Number | 100 | 1 | 100 |
| 22 | Sensitive thermal paper | Meter | 750 | 0.5 | 375 |
| 23 | Marking paper | Meter | 800 | 0.5 | 400 |
| 24 | Mito bar | Number | 7 | 50 | 350 |
| 25 | Size and lab mark | Number | 150 | 2 | 300 |
| 26 | Care sign | Number | 150 | 1 | 150 |
| 27 | Kanoujah sticker | Meter | 1600 | 0.35 | 560 |
| 28 | Adhesive tape for the waist | Meter | 1024 | 1 | 1024 |
| 29 | Sleeve hole bar | Meter | 150 | 1.5 | 225 |
| 30 | Fabric | Meter | 7640 | 3.75 | 28,650 |
| 31 | Clothes hanger | Number | 250 | 1 | 250 |
| 32 | Plastic bag | Number | 100 | 1 | 100 |
| 33 | Suit bag | Number | 1530 | 1 | 1530 |
| Total cost of materials | - | - | - | 48,535 | |
| Spare tools | - | - | - | 2230 | |
| Other variable cost | - | - | - | 13,502 | |
| Total variable cost | - | - | - | 64,267 | |
| Labor cost | - | - | - | 102,204 | |
| Disappearance | - | - | - | 2009 | |
| Other fixed cost | - | - | - | 1000 | |
| Total fixed cost | - | - | - | 105,213 | |
| Manufacture cost | - | - | - | 169,480 | |
| Marketing and administrative cost (10%) | - | - | - | 16,948 | |
| Total cost | - | - | - | 186,428 | |
| Profit margin (10%) | - | - | - | 18,642.8 | |
| Men’s suit selling price | - | - | - | 205,070.8 | |
The stationarity test is a crucial step in analyzing time series data as it helps to determine if the statistical properties of the data remain constant over time. Stationary time series data is important because it allows for accurate forecasting and modeling, which is essential in various fields such as finance, economics, and engineering.
The TDABB technique was applied for the study laboratory to determine its planned cost since the product cost involves the direct cost of production materials shown in Table 1. But the factory engineers expected a 1% increase in 2019 upon materials’ prices. So, the rest of the cost elements (labor cost and indirect industrial costs) were prepared in the budget as briefed herewith.
This step estimates the amount of sales and production for the year 2019. The interview data was collected from the factory officials from different departments (planning, follow-up, and sales departments) on product research, expected production in case of implementing technology such as balancing technique based on time-oriented activity (13,248 units), and so on. The analysis results confirmed that the factory aspires to reach this production since it was not achieved between 2003 and 2018. The application of the above techniques will help the factory to manage both cost and time and accordingly reduce these entities. This reflects in low selling price and increase in sales activities, so that the factory occupies a good competitive position in terms of men’s suits in the market.
In this stage, various resource groups were identified that included multiple departments and divisions related to the production of men’s suit in the sample factory.
The total cost for each resource group (departments and divisions) associated with the production of men’s suit in the factory is composed of direct and indirect cost elements. These elements correspond to the performance of the activities conducted by all the people. Tables 2 and 3 show the number of workers who fulfilled the planned production targets for the year 2019 and who were involved in the production of men’s suit from each group. The direct cost represents the salaries of the people working in the factory, whereas the indirect costs include all the industrial costs, except for direct materials and direct work.
The cost and price of selling men’s suit, model 1121, with rates and material exchange for the year 2018
(
| Divisions | Annual direct cost of the division official | Cost per minute | Annual direct cost to the worker | Cost per minute | Annual indirect cost | Cost per minute |
|---|---|---|---|---|---|---|
| Sewing the chest of the jacket and tying the kanoujah = 36 workers | 17,472,000 | 196.9697 | 7,872,000 | 88.7446 | 290,399,052 | 90.9389 |
| Preparation and sewing of sleeves = 10 workers | 19,428,000 | 219.0206 | 9,976,800 | 112.4729 | 86,495,932 | 97.5107 |
| Lining preparation = 14 workers | 22,633,440 | 255.1569 | 7,529,400 | 84.8823 | 86,375,266 | 69.5534 |
| Preparing the back and collar of the jacket = 10 workers | 18,698,784 | 210.7998 | 9,122,868 | 102.8462 | 116,201,521 | 130.9992 |
| Assembling the jacket and attaching the collar to the body = 22 workers | 21,806,544 | 245.8350 | 10,886,688 | 122.7305 | 177,370,599 | 90.8899 |
| Tying the sleeves = 30 workers | 14,792,040 | 166.7573 | 8,473,428 | 95.5248 | 185,303,052 | 69.6335 |
| Final sewing, finesse, cleaning, and packing of the jacket = 25 workers | 10,010,052 | 112.8478 | 7,943,304 | 89.5484 | 201,851,052 | 91.0223 |
| Sewing the chest of the pants = 17 workers | 11,073,300 | 124.8343 | 8,537,784 | 96.2503 | 134,926,599 | 89.4758 |
| Sewing the back of the pants = 29 workers | 8,485,848 | 95.6648 | 8,337,228 | 93.9893 | 215,677,860 | 83.8425 |
| Connecting the sides of the pants = 13 workers | 12,330,120 | 139.0030 | 9,674,340 | 109.0632 | 96,277,860 | 83.4910 |
| Tying the waist of the pants = 10 workers | 10,033,464 | 113.1117 | 8,232,000 | 92.8030 | 33,855,897 | 38.1673 |
| Seat stitching = 22 workers | 1,1225,460 | 126.5496 | 8,779,920 | 98.9800 | 99,373,074 | 50.9217 |
| Strengthening, cleaning, and packing the pants = 1 worker | 14,834,400 | 167.2348 | 8,454,960 | 95.3166 | 68,641,074 | 38.6911 |
The planned unit time cost (1 min) related to the service and administrative cost centers of the laboratory, the research sample for 2019
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| Cost center | Total cost 1 | Annual working hours | Number of annual minutes | Practical energy 80% | Cost per minute |
|---|---|---|---|---|---|
| - | 1 | 2 | 3 | 4 | 1 ÷ 4 |
| Technical affairs 85 workers | 595,088,816 | 157,080 | 9,424,800 | 7,539,840 | 78.9259 |
| Quality control 20 workers | 126,311,090 | 36,960 | 2,217,600 | 1,774,080 | 71.1981 |
| Transportation 23 workers | 159,872,139 | 42,504 | 2,550,240 | 2,040,192 | 78.3613 |
| Stores 24 workers | 160,983,862 | 44,352 | 2,661,120 | 2,128,896 | 75.6185 |
| Maintenance 26 workers | 169,403,000 | 48,048 | 2,882,880 | 2,306,304 | 73.4522 |
| Factory management 50 workers | 322,851,725 | 92,400 | 5,544,000 | 4,435,200 | 72.7930 |
In this step, the energy requirements of various resources for the selected period were determined based on the planned energy cost rates (in the next steps 2–5). As per the applied scientific research theory, the amount of practical energy required from the theoretical energy is 80%. Since the laboratory did not reach 80% work, it can be hypothesized that the transformation procedures consumed the energy. This acts as a reference to the technique’s ability for time management by reducing it through the adoption of practical energy without theoretical aspect. In addition, the results of the researchers’ interviews with managers, officials, and technical specialists from the factory reflect the possibility of reaching 80% energy, if modern cost management techniques are applied, including the TDABB technique.
In this step, the planned cost of the energy unit (time) is calculated for each department or division associated with the production of men’s suit by dividing the total direct and indirect costs incurred upon the performance of the activities in the production of the product by the practical energy (calculated in steps 2–4) represented by the necessary working hours for each department or division, either related to the production centers or service and administrative centers.
Table 2 discusses the results of the planned unit time cost (average energy cost) analysis, represented by 1 min for the divisions associated with product manufacturing, included under the production centers of the factory. Table 2 shows that 1-min cost was calculated by dividing the annual direct costs of the division official or the worker who performed the activities or the indirect costs by the annual practical capacity which is calculated as given below.
For the direct cost of the division official or per worker = (7 working hours per day × 22 days per month after excluding holidays × 60 min/h) × 12 months annually × 80% = 88,704 min Annual operational capacity related to indirect costs = (7 working hours per day × 22 days per month after excluding holidays × number of department workers × 60 min/h) × 12 months annually × 80%.
The following calculations illustrate the process of calculating cost per unit time (1 min) planned for the Division of Sewing, the Jacket Bottom and Tying the Kanoujah:
Planned unit time (minute) cost for a division official planned annual direct cost of the division official ÷ annual operation capacity = 1,742,000 dinars ÷ 88,704 min = 196.9697 dinars/min. Planned unit time (minute) cost per worker = planned annual direct cost of the worker ÷ annual operational capacity = 7,872,000 dinars ÷ 88,704 min = 88.7446 dinars/min. Planned indirect cost per unit time (minute)= planned annual indirect cost ÷ annual operational capacity = 290,399,051.8 dinars ÷ 3,193,344 min ((7 h worked per day × 22 days per month × 36 workers × 60 min/h) × 12 months per year × 80%.) = 90.9389 dinars/min.
Table 3 shows the results of the planned unit time (1 min) cost calculation process related to service and administrative cost centers.
The researchers collected the data through field visits and cohabitation at the factory site. The time vectors of the events of these activities and the parties responsible for each event were defined as required for production operations to reach the planned production level for the year 2019. These values were assembled into cost complexes based on the amount of time required for the so-called time vectors. Then, time equations were prepared for each amount. The time equations were then applied to the activities of each production division. The formulae for the jacket chest sewing section and kanoujah tying section are as follows: planned time (in minutes) for the division of sewing the jacket chest and tying the kanoujah = 33.58 (receipt and transfer of raw materials and stitching).
Planned time (in minutes) for the division of sewing the jacket chest and tying the kanoujah = 33.58 (receipt and transfer of raw materials and stitching).
It represents the total planned time spent by the workers in jacket chest sewing section and knot tying sections including receipt and transportation of the raw materials + sewing.) + 1.8 (receipt of the work order, order of materials) + 0.9 (planning, design, mold evaluation and preparation, work order) + 0.5 (document signature) + 1.25 (examination of work done) + 1.2 (maintenance) + 1 (transfer of completed work to the jacket assembly division).Likewise, the time equations were prepared for the rest of the divisions.
Likewise, the time equations were prepared for the rest of the divisions.
In this step, the planned unit time cost (minutes) for each resource group (computed in section 2.5 (A) and (B) and shown in Tables 2 and 3) is multiplied with each time activity (calculated in section 2.6 according to the application of time equations) to determine the total planned cost of the required resources. The resultant value denotes the planned operating cost (labor + indirect industrial costs) for each production division. Table 4 shows in detail the planned operating cost of the jacket bottom sewing and kanoujah bonding divisions. Likewise, the planned operating costs of the rest of the divisions in production were calculated and the results are as follows.
The planned operating cost of the sleeves preparation and sewing division = 4908.8157 dinars. The planned operating cost of the lining preparation division = 4193.5635 dinars. The planned operating cost of the jacket back and collar preparation division = 6304.1554 dinars. The planned operating cost of the division of assembling the jacket and tying the collar with the body = 7532.9720 dinars. The planned operating cost of the hull bonding division = 5099.2134 dinars. The planned operating cost of the final sewing division and the fineness, cleaning, and packing of the jacket = 9216.1624 dinars. The planned operating cost of the trousers front sewing division = 7570.4277 dinars. The planned operating cost of the trousers back sewing division = 6336.1580 dinars. The planned operating cost of the division for attaching the sides of the pants = 3671.7667 dinars. The planned operating cost of the trouser waist banding division = 4920.9818 dinars. The planned operating cost of the seat sewing division = 2897.3643 dinars. The planned operating cost of the strengthening, cleaning, and packing division for the trousers = 2694.4994 dinars.
The planned operating cost of the jacket-breast stitching and the knot tying divisions for the year 2019
(
| No. | Activity | Activity event time, (min) | Cost per unit time, (dinar/min) | Operating cost |
|---|---|---|---|---|
| - | 1 | 2 | 3 | 3 × 2 |
| 1 | Receiving and transporting raw materials + sewing | 33.58 | 179.68341 | 6033.7686 |
| 2 | Receipt of work order and material order | 1.8 | 287.90862 | 518.23548 |
| 3 | Planning, designing, and evaluation of the template + preparation of work order | 0.9 | 78.9259 | 71.03331 |
| 4 | Document signature | 0.5 | 75.6185 | 37.80925 |
| 5 | Check the work done | 1.25 | 71.1981 | 88.997625 |
| 6 | Maintenance | 1.2 | 73.4522 | 88.14264 |
| 7 | Convert the work done | 1 | 78.3613 | 78.3613 |
| Total | 6916.3482 | |||
Represents the direct and indirect planned unit time cost of the factor (88.7446 + 90.9389) from Table 2.
Represents the direct and indirect planned unit time cost of the division administrator (196.9697 + 90.9389) from Table 2.
After calculating the planned operating costs for all the divisions, the planned cost of the whole product was calculated by adding the planned cost information of various research groups and the input materials (the plant engineers expected a 1% increase in the prices of materials for the year 2019 than in 2018) and the planned operating cost of every division to extract the planned manufacturing cost with each division’s marketing and administrative costs. The final planned cost of the men’s suit product is shown in Table 5.
The planned cost of men’s suit in the men’s clothing factory in Najaf for the year 2019
(
| Divisions | Material cost 1 | Operating cost 2 | Manufacturing cost 1 + 2 = 3 | Marketing and administrative cost 10% = 3 × 10% = 4 | Total 3 + 4 |
|---|---|---|---|---|---|
| Sewing the chest of the jacket and tying the kanoujah | 12,574.51 | 6916.3482 | 19,490.8482 | 1949.0848 | 21,439.9330 |
| Preparation and sewing of sleeves | 4933.852 | 4908.8157 | 9842.6657 | 984.2666 | 10,826.9323 |
| Lining preparation | 3454.23 | 4193.5635 | 7647.7635 | 764.7763 | 8412.5398 |
| Prepare the back and collar of the jacket | 7001.324 | 6304.1554 | 13,305.4754 | 1330.5475 | 14,636.0230 |
| Assembling the jacket and attaching the collar to the body | 308.055 | 7532.9720 | 7841.0220 | 784.1022 | 8625.1242 |
| Tying the sleeves | 350.9756 | 5099.2134 | 5450.1884 | 545.0188 | 5995.2072 |
| Final sewing, finesse, cleaning, and packing of the jacket | 462.587 | 9216.1624 | 9678.7424 | 967.8742 | 10,646.6167 |
| Sewing the chest of the pants | 6342.88 | 7570.4277 | 13,913.2277 | 1391.3228 | 15,304.5504 |
| Sewing the back of the pants | 5964.059 | 6336.1580 | 12,300.2080 | 1230.0208 | 13,530.2288 |
| Connecting the sides of the pants | 828.70510 | 3671.7667 | 4500.4717 | 450.0472 | 4950.5189 |
| Tying the waist of the pants | 4536.9211 | 4920.9818 | 9457.9018 | 945.7902 | 10,403.6920 |
| Seat stitching | 359.5612 | 2897.3643 | 3256.9243 | 325.6924 | 3582.6168 |
| Strengthening, cleaning, and packing the pants | 1902.8413 | 2694.4994 | 4597.3394 | 459.7339 | 5057.0734 |
| Total | 49,020.35 | 72,262.429 | 121,282.78 | 12,128.2779 | 133,411.06 |
(6944.76 fabric + 50.5 translucent thread + 12.12 silk thread + 606 buttons + 12.12 button threads + 1212 front adhesive + 1313 kanoujah + 207.05 fabric adhesive padding + 878.7 pocket lining + 25.25 gauze + 202 priming + 141.4 nonwoven, nonstick padding + 202 paper thermal + 202 labeling paper + 565.6 kanoujah tape).
(3472.38 fabric + 5.05 plain thread + 666.6 buttons + 50.5 transparent thread + 512.07 front adhesive + 227.25 sleeve hole tape).
(1888.7 lining + 50.5 sheer threads + 1515 epaulets).
(6944.76 fabric + 6.06 regular thread + 50.5 transparent thread).
(252.5 collar cuffs + 5.05 regular thread + 50.5 transparent thread).
(143,925 jacket tapestry + 5.05 regular threads + 202 mito tapes).
(8.08 ofir thread + 303 size mark + 151.5 care mark).
(5787.3 fabric + 252.5 zippers + 101 ginkgo + 202 label papers).
(5787.3 fabric + 176.75 thermal paper).
(105.545 nonwoven, nonstick insert + 5.05 plain thread + 6.06 thread count silk + 50.5 sheer thread + 661.55 pocket lining).
(2066.46 readymade waist + 1034.24 adhesive tape + 1212 adhesive frontal + 202 textile adhesive filling + 15.15 gauze + 7.07 regular thread).
(151.5 mito tape + 202 buttons + 3.03 normal thread + 3.03 button thread).
(4.04 ofir threads + 252.5 hangers + 101 nylon bags + 1545.3 bags).
From Table 5, it can be inferred that the cost of a men’s suit product was finalized at (133,411.06) dinars if budgeting technique was applied on the basis of time-oriented activity. At the same time, the cost was 186,428 dinars according to the cost system applied in the factory. This denotes that the contemporary cost management system reduced the cost up to (53,016.94), though the raw materials’ cost increased by 1%. This cost reduction occurred only as a result of technical ability of the (TDABB) model to manage the time period of the activities and their events and its dependence on practical energy rather than theoretical energy.
Hence, the role played by this technique has been established in reducing the costs incurred at men’s clothing factory, Najaf, which, in turn, helped in achieving a competitive advantage for the factory under study. In addition to the cost reduction, the TDABB technique also provided valuable information that helped the factory to take appropriate decisions. The upcoming section deals with the application of TC technique to complete the rest of the integration procedures between the TC technique and the TDABB technique.
In the first axis, the factory was able to save time and reduce cost by applying the balancing technique.
In this axis, the integration approach between the two mentioned technologies was studied to enhance the factory’s ability in terms of cost management as a competitive precedence and reach the maximum possible reduction.
It is important to know the selling prices of the competitors and other similar products to set a price for the product undertaken. So, local markets were surveyed to know the selling prices of the product, that is, men’s suits. Further, the researchers conducted interviews with the marketing department officials in the factory. The results of these interviews and the survey are shown in Table 6. The results show that the Turkish men’s suit of origin is one of the most competitive products in this product range due to high demand, excellent design, the attractive fabric for the customer, as well as the its different colors and sizes. It also has a reasonable selling price for the customer. Therefore, due to the multiplicity of categories of Turkish products offered in the market, the average target selling price of the men’s suit in the Turkish market was taken as 76,000 dinars.
Selling prices of men’s suits similar to the manufacturer’s men’s suit product, research sample
(
| No. | Competitor product name | Selling price (in dinars) |
|---|---|---|
| 1 | Men’s suit of Turkish origin – first class | 100,000 |
| 2 | Men’s suit of Turkish origin – second class | 70,000 |
| 3 | Men’s suit of Turkish origin – third class | 58,000 |
| 4 | Men’s suit of Chinese origin – first class | 55,000 |
| 5 | Men’s suit of Chinese origin – second class | 50,000 |
| 6 | Men’s suit of Chinese origin – third class | 35,000 |
| 7 | Men’s suit of Italian origin – first class | 95,000 |
| 8 | Men’s suit, Italian origin, mohair fabric – second class | 92,000 |
| 9 | Men’s suit of Italian origin, mohair fabric – third class | 85,000 |
The research sample factory seeks to achieve a profit margin in the range of 10%–30%. So, the minimum profit margin was chosen, that is, 10% of the target selling price, due to intense competition in the market against global brands. Therefore, the target profit is determined as follows:
The target cost is determined by subtracting the target profit from the target selling price of the men’s suit product.
The target cost of the men’s product = target selling price - target profit = 76,000 – 7600 = 68,400 dinars
To achieve target reduction in the cost of men’s suit, the current product cost must be determined and compared with the target cost. This way, the budgeting technique is applied on the basis of time-oriented activity as addressed in the previous axis. This is a part of the procedure toward an integrated approach between this technique and the target cost. The cost of the men’s suit product stands at 133,411.06 dinars.
Target reduction in the cost of the men’s suit product is determined by comparing the product cost (calculated by applying the TDABB technique)) (step C) with its target cost (step D) as follows: amount of target cost reduction = product cost (calculated by applying TDABB technique) – product target cost = 133,411.06 – 68,400 = 65,011.06 dinars
In this step, the targeted cost reduction of men’s suit product (calculated by applying the TDABB technique) is achieved to reach the target cost. As discussed earlier, reverse engineering or disassembled analysis is adopted in this step to achieve the (additional) targeted cost reduction of the product.
The rationale behind the selection of this technique is that multiple components of the product must be focused. Further, it is important to collect huge information on the competitor’s products (men’s suit of Turkish origin). As per the analytical results, a set of differences has been found between the competing product and the men’s suit product manufactured by the research sample laboratory. Table 7 shows these differences in terms of nature of the materials involved in the production process, components involved, and different rates.
A comparison between the exchange rates of direct materials used in the production of men’s suits for the factory and the competing product
(
| No. | Subject name | Factory men’s suit | The men’s suit for the Turkish competitor | ||
|---|---|---|---|---|---|
| - | Component | Subject | Exchange rate | Subject | Exchange rate |
| 1 | Width lining 150 | Tetron canvas 150 cm wide | 1.7 m | Nylon crepe fabric | 1.5 me |
| 2 | Front sticker | Light gauze 150 cm wide with adhesive granules added | 0.9 m | Light gauze 150 cm wide with adhesive granules added | 0.5 m |
| 3 | Kanoujah | Thick, coarse cloth made of animal hair | 0.5 m | Light fabric tetron | 0.40 m |
| 4 | Tissue adhesive padding | Thick, coarse canvas 150 cm wide | 0.25 m | Translucent fabric 0.90 cm wide | 0.15 m |
| 5 | Pocket lining | Soft tetron fabric or coarse coastal cloth, strong type | 1 m | Regular type satin cloth | 0.5 m |
| 6 | Gauze | Japanese type thick adhesive | 0.0133 m | Gecke light adhesive | 0.01 m |
| 7 | Prime width 50 | Tape used to strengthen the shoulder | 0.0666 m | Tape used to strengthen the shoulder | 0.05 m |
| 8 | Nonsticky, nonwoven filling | Padding placed in the sides of the jacket to strengthen | 0.15 m | Use leftover fabrics to make fillings | - |
| 9 | Nape collar | Woolen cloth, width 90 cm | 0.1 m | Polyester or satin fabric 150 cm wide | 0.10 m |
| 10 | Buttons size 23 | Good-quality fiberglass | 6 count | Normal quality plastic | 6 count |
| 11 | Buttons size 32 | Good-quality fiberglass | 4 number | Normal quality plastic | 4 number |
| 12 | Transparent threads | Soft yarns used for the inner side of the pants | 30 m | Soft yarns used to cuff the pants | 20 m |
| 13 | Normal threads | Natural threads of cotton, linen, or wool | 45 m | Synthetic yarns of nylon or polyester | 15 m |
| 14 | Over threads | Regular linen-like yarn used in trousers | 30 m | Regular linen-like yarn used in trousers | 20 m |
| 15 | Silk threads | Rayon | 30 m | - | - |
| 16 | House of buttons threads (Dukma) | Good-quality soft touch yarn | 25 m | Normal coarse yarn | 10 m |
| 17 | Epaulets | Sponge covered with transparent fabric | 1 pair | A sponge that is covered with excess fabric or its cover is of the same lining as the jacket and is sewn into the jacket from the inside so that the shoulders are equal | 1 pair |
| 18 | Ribbon wrapped around the jacket | Double-sided adhesive tape for reinforcement | 1.5 m | Single-sided adhesive tape for reinforcement | 1 m |
| 19 | Waistband ready | Fabric-coated thick paper tape | 1.32 m | White raw fabric in the form of beams, free of filling | 1.25 m |
| 20 | Zipper | Thick fabric with metal wire to close the zipper | Number 1 | Thick fabric with nylon cord to close the zipper | Number 1 |
| 21 | Hanger | Hanger fixed to the collar from the inside, used for hanging | Number 1 | Hanger fixed to the collar from the inside, used for hanging | Number 1 |
| 22 | Sensitive thermal paper | Double-sided adhesive, of a strong adhesive type, is used on the ends of the feet of the pants and the ends of the sleeves of the jacket, preventing the lining from slipping out | 0.5 m | One-sided tape of the weak adhesive type to give flexibility and freedom to open it and make measurements smaller and larger | 0.25 m |
| 23 | Marking paper | Thick cardboard paper used as separating template | 0.5 m | Light-type cardboard paper | 0.25 m |
| 24 | Mito bar | Paper numbering tape | Number 50 | Paper numbering tape | Number 30 |
| 25 | Size mark | A small piece of cloth with the size of the suit, the country of origin, and the name and mark of the lab affixed to it | Number 2 | A small piece of cloth with the size of the suit, the country of origin, and the name and mark of the manufacturer on it | Number 2 |
| 26 | Care sign | Bag with three spare components (fabric, buttons, regular thread) | Number 1 | Bag with three spare components (fabric, buttons, regular thread) | Number 1 |
| 27 | Kanoujah sticker | Cloth fixing glue | 0.35 m | Cloth fixing glue | 0.25 m |
| 28 | Waist tape | Thick paper material with resin added | 1 m | Transparent paper material with resin added | 0.60 m |
| 29 | Sleeve hole tape | A tape that gives the appropriate texture to the pit and prevents it from sagging | 1.5 m | A tape that gives the right texture to the sleeve hole and prevents it from sagging | 1 m |
| 30 | Fabric | First class Indian fabric | 3.75 m | Turkish cloth | 2.75 m |
| 31 | Clothes hanger | Relationship to the type of plastic | Number 1 | Relationship to the type of plastic | Number 1 |
| 32 | Plastic bag | Nylon bag for suit packing | Number 1 | Nylon bag for suit packing | Number 1 |
| 33 | Suit bag | Fabric and long zipper | Number 1 | Fabric and long zipper | Number 1 |
Table 7 clarifies that some of the components included in the product under study are identical to local producers and the Turkish competitor. Some of the products are not originally used by the competitors, such as silk threads and nontextile, nonadhesive padding. The Turkish product competitors used fabric waste instead of these. Difference in terms of production methodology is also found between the product under study and its competitors, such as the zipper, usage of nylon crepe fabric in jacket lining, light tetron fabric in kanouja, and satin fabric in jacket lining. The Turkish competitors used fabric waste to make fillings or manufacture readymade beams or to line pockets and wrap the epaulettes sponge, while this is not applied in the research product under study.
The factory engineers opined that in spite of these variations in specifications against the Turkish men’s suit product, cost reduction is the primary goal. As per Table 7, the product must be developed according to customer requirements, market needs, less cost, and so on. The exchange rates of the production components of the factory product, the research sample, and the Turkish competitor product varied heavily and this phenomenon reflected in their prices. Moreover, it is clear that the Turkish competitor focused on the raw materials and its components with light weight, which is the most preferred factor among customers. However, the product from the factory under study had heavy weight. Light weight shoes of the competitors were preferred by the customer in a sequence (3–4–6–9–19–28) as shown in Table 7, since its weight is lower than the weight of the suit of the sample research factory.
The purchase prices of the raw materials should be determined based on whether the raw materials were procured locally or imported. If the factory reconsiders its purchase offers submitted to it, it can obtain raw materials at low prices. This is the reason behind different prices of some materials before and after the modification of the suit components as shown in Table 8.
Table 8 clarifies that the cost of the components got reduced by up to 28,347 dinars (i.e., 43.6% of the target cost reduction), which accounts to 65,011.06 dinars yearly. Therefore, it is necessary to modify the specifications of the men’s suit product for the factory as per the Turkish men’s suit product specifications to realize the advantage of price reduction. This cost reduction further reduces the marketing and administrative costs since they are calculated up to 10% of the original value. So, the total cost reduction achieved was by 31,181.7 dinars (i.e., 48% of the targeted cost reduction) by modifying the specifications of men’s suit product according to the specifications of Turkish competitor product.
Both the axes clearly demonstrate the effect of integrating both the budgeting techniques on the basis of time-oriented activity (TDABB) and TC. The outcomes also reflect on the time and cost management of the men’s suit product in the research factory under study. This finding supports the factory in terms of achieving a competitive advantage. Thus, the research hypothesis has been proven, that is, the integration of TC and TDABB helps the research sample factory in time and cost management as competitive precedence efficiently and effectively than the application of each technique separately.
The application of TDABB contributed to managing the time of product-related operations. The application of TC contributed to cost reduction of the raw materials. The flow of the results retrieved from the application of two mentioned techniques confirms the correct formulation of the integration approach between them as shown in Figure 1.
The customer-oriented corporate environment has assumed a prominent role Because of fierce rivalry, rapid technical advancement, and other factors. Value addition has thus become standard practice for research site manufacturers to survive in this cutthroat climate.
The customer-oriented corporate environment has assumed a prominent role Because of fierce rivalry, rapid technical advancement, and other factors. Value addition has thus become standard practice for research site manufacturers to survive in this cutthroat climate. The TDABB technique, one of the most important cost accounting techniques, helps in the production of men’s suit product under study, in terms of cost vector development, calculation of the time required for complete activities, calculation of cost, optimal time management, and finally competitive advantage. The TDABB technique provides more reliable information by identifying the idle energy and avoiding its implementation into the product. This helps in achieving energy optimization and also determines the cost share of resource groups. Managers can rely on the TDABB technique to achieve effective control and management of the resources by adopting the principle of cause and effect in assigning and distributing the cost of resource groups to departments and production divisions. The TDABB technique helped the factory to determine the total cost of men’s suit product to be 133,411.06 dinars. The actual cost calculated was 186,428 dinars. Thus, the TDABB technique reduced the cost up to 53,016.94 dinars. Reverse engineering (deconstructed analysis) was used in this study, while it helped in changing the strategies to reduce the cost according to the competitor’s product cost analysis. According to the target cost technique, the estimated cost of the men’s suit for the research sample lab was higher than the target cost by 65,011.06 dinars, which represents the reduction in the targeted cost. The reverse engineering tool found different specifications between the men’s suit of the research sample laboratory and the Turkish men’s suit. So, based on the Turkish competitor’s product specifications, the specifications of the research sample factory product were changed, which resulted in the reduction of costs up to 31,181.7 dinars. The TDABB technique can be integrated with other modern cost techniques like the TC technique due to its comprehensiveness. The TC technique depends on determining the current cost (either in estimated or actual form) calculated from the budgeting technique on the basis of time-oriented activity. The output of TDABB technique becomes the inputs of TC technique, and this is the essence of the integration between the technologies. When TDABB and TC techniques were integrated, it produced a significant change in the management of time and cost. This was evident through the optimal exploitation of the resources of the economic unit and the allocation of the cost for those resources as per the time required to perform activities by various departments and divisions of the laboratory. This resulted in a competitive advantage for the factor under study. The most reliable factor about the application of TDABB technique is time, since time is one of the main success factors for the economic unit, which was under pressure to fasten the performance of various activities, so as to the meet the objectives.
The TDABB technique must be extensively employed in textile units and economic units since it can help in implementing developments and bringing changes to the contemporary business environment, as it depends on practical energy than the theoretical energy.
The current research article established the necessity for the application of an advanced cost and accounting management system, so that the time and costs of the resource groups are leveraged the best to manufacture the final product with fairness and credibility.
Optimal utilization of the resources and energy policies for each department in the factory must be ensured. Further, the information provided by the TDABB technique to determine the capacity of the resources must be leveraged.
Competitor analysis is important to know the advantages of competitor products, so that it can be reciprocated by the factory to meet the customer’s requirements and demands.
The current study results support the integration of TDABB and TC techniques since it has played an important role in time and cost management, achieved a competitive advantage, and helped the factory to make appropriate decisions.
Cost-reduction culture can be cultivated among employees through self-motivation and rewards programs, so that wastage can be reduced.
Interdepartmental activity tracking and quality management practices within the departments must be followed to find out the strengths and weaknesses of the economic unit and enhance the strengths and submit proposals to address the weaknesses, so as to get rid of them.
Opinions from employees, marketing professionals, and team managers must be taken into account to achieve the targeted cost reduction and continuous improvement in production and other processes.