Journal Of Business And Management Studies - Myassignmenthelp.Com

Question: Discuss about the Journal Of Business And Management Studies. Answer: Introduction Every organization wants to increase its productivity and manage the time and resources taken by each activity. Nestle Company is one of them who always want to improve its productivity and profit. Nestle is known as the largest company of food and beverages and a well-known brand recognized across the world. This report is going to be prepared in order to identify whether the Time-Driven Activity-Based Costing (TDABC) will be suitable for the process and function of the business. The report will provide the brief description of the Nestle Company along with the model of Time-Driven Activity-Based Costing (TDABC) and its features. Further, the report will differentiate between the Activity-based Costing (ABC), Traditional Costing, and Time-Driven Activity-based Costing (TDABC). Company Profile Nestle is an international company dealing in the sector of food and beverages. Headquarter of the company is in Vevey, Switzerland. It is known as the worlds biggest company of food, evaluated by metrics and revenues, since 2014. In 2014, the company was ranked on No. 72 by the Fortune Global 500 and in 2016; it was ranked on No. 33 in the Forbes Global 2000 which involve the list of biggest companies. The product line of Nestle includes breakfast cereals, Maggie, baby food, tea and coffee, medical food, ice cream, confectionery, bottled water, snacks, pet foods, dairy products and frozen food (Nestle, 2018). Twenty-nine brands of Nestle have yearly sales over CHF1 billion, comprising Nesquik, Maggie, Nespresso, Vittel, Nescafe, Stouffers, and Kit Kat. Company operates in 194 countries with 447 factories, and 330,000 employees. Nestle company is the major shareholder of worlds biggest company of cosmetics i.e. LOreal. Purpose of Nestle The purpose of Nestle is improving the life's quality and contributing to a better and improved future. They want to contribute in shaping a healthier and better world by encouraging society to have better and healthier lives. This is their way to contribute to society and fulfill their corporate social responsibilities and confirming the success of the company for long-term (Nestle, 2018). Values of Nestle The values of Nestle are imitated by their way of pursuing business; they always follow and respect the rules and regulation implemented by the government. They always give equal respect to the people with whom they work. Strategy of Nestle In today's scenario nutrition act as an important aspect of everyone's life. The strategy of the Nestle Company is focused towards delivering various benefits to every individual through the products and services they offer. The company is working hard from last 150 years and now they have succeeded in attaining the top position by anticipating and understanding the society needs, and constantly familiarizing themselves to grab the presented opportunities (Nestle, 2018). The fast-changing expectations and needs of the society reconfirm the strength of our wellness, health and nutrition strategy. The world is at the point of change. The rapidity, strength and the range of change are extraordinary. The digital disturbance is redesigning the whole industry, relations with the companys retailers and suppliers, and customers. Technology and science developments are providing opportunities to the Nestle Company in order to play a major role in considering the challenges faced by the society. In the world there are millions of people who do not receive proper nutrition, it the duty of Nestle Company to help them and provide proper solutions (Nestle, 2012). Strategic Roadmap Of Nestle Source [https://www.nestle.com/aboutus/strategy] Time-Driven Activity-Based Costing (TDABC) The Time-Driven Activity-based Costing (TDABC) method is a new technique which is introduced for overcoming the problem with Activity-based Costing. Activity-based Costing (ABC) has supported many organizations in recognizing necessary opportunities of profit and cost enhancements by re-presenting the loss-making customer relationships, procedure developments on the shop floor, less cost of the design of the product, and modernized product diversity (Ayvaz and Pehlivanli, 2011). The method provides probable large scale opportunities for the companies. Luckily, the explanation is now conceivable by a method which is named as time-driven activity-based costing (TDABC). This method has helped many companies who have implemented this method in their system. In this new method, management of the company can directly evaluate the demand of the resources obligatory by every activity, deal, service, product or transaction rather than first allocating the cost of the resource to the activities and then to customers or products (Basuki, 2014). For every resources group, estimation is required only for two parameters: per unit cost of delivering capacity of resources and the unit time consumption of capacity of resources by customers, products, and services. At the same time, the Time-Driven Activity-based costing or (Time-Driven ABC) offers precise rates of cost-driver by permitting unit times to be projected even for multifaceted, particular dealings (Kaplan and Amderson, 2007). Assessing the per time unit cost of capacity- As an alternative to measure the time spent by the employees, for this the managers will firstly identify the practical capacity of the supplied resources as a percentage of hypothetical capacity. There are numerous ways to identify this. According to the thumb rule, it can be easily assumed that applied capacity is 80 to 85% of hypothetical full capacity. Therefore, if a machine or employee is ready to do the job of 40 hours for per week, then its applied capacity for per week is 32 to 35 hours. Accessing the unit time of events- After calculating the per time unit cost of delivering assets to the activities of the business; managers then determine the time consumed by a unit of each activity. These figures can be attained by direct observation or by employees interviews. There is no requirement of the surveys, even though employees survey might help in big organizations. It is necessary to strain, however, the matter is not the time spend by employee completing an activity but the time taken to finish one unit of particular activity. Once, again accuracy is not dangerous; bumpy accuracy is enough (Kaplan and Anderson, 2007). Driving the rates of the cost drivers- The rates of the cost-driver can be computed by multiplying the variables i.e. two input variables, it is just has been projected. Examining and reporting costs- The managers of the company are permitted by the time-driven activity-based costing that their cost can be reported on a continuing base in a mode that discloses the activitys cost and time spent on those activities. Updating the model- The Time-driven activity-based costing (TDABC) method can be updated by the managers of the company to show variations in operating circumstances. In order to add more activities in a department, there is no need for personnel interview, they can just guess the required unit time for every activity. The rates of the cost-drivers can also be updated by the managers. Time Equation to Capture Complication It has been assumed simply that every order or transaction of a specific type are similar and need the same time duration to process. But Time-Driven Activity-Based Costing doesnt ask for this explanation. It can accommodate the difficulty of real-world processes by integrating time equations, a different and attracting characteristics that allows the method to imitate how order and action characteristic which affects the time of processing (Kaplan and Anderson, 2006). Time equation highly simplifies the assessing procedure and creates a far more precise cost model which will make the possibility of consuming traditional ABC techniques. The key point is that the transaction can simply become complex, management of the company can normally recognize how they are becoming complicated. The variable elements that influence most of the activities can frequently state and classically record in the information system of a company. Features of Time-Driven Activity-Based Costing (TDABC) Time-Driven Activity-based Costing (TDABC) is less expensive and can be easily installed in the functioning of the business and can also be maintained properly. There is no need to make additional expenses in this method. Multiple time driver methods are implemented in this new method which will hold the complexity of the Nestle Company in an improved way. With the support of Time-Driven Activity-based costing the costing process becomes simple because it supports the organizations management in eliminating events like interviews and survey and use applicable and significant information. Organizations can enhance their system of cost management by explaining their process capacity and application of cost and effectiveness of the orders, customers or products. Time-Driven Activity-based Costing method is different because it uses time equation in which the consumption of time is evaluated on each activity. This new approach identifies the opportunities for the competencies of the process and supervision of capacity. Time-Driven Activity-based Costing (TDABC) method is an exact and profit making method because it is fast and simple to construct. Difference between Time-Driven Activity-Based Costing (TDABC) and Activity-Based Costing (ABC) Time-Driven Activity-based Costing (TDABC) Activity-based Costing (ABC) A method which simplifies the process of costing by removing the employees survey and interview needs for assigning the activities with resources cost is known as Time-Driven Activity-based Costing (TDABC). Activity-based costing or Traditional ABC is considered as a methodology which recognizes the activities of an organization and allocates the cost to every activity along with the resources to every service and product as per the genuine consumption by each (Johnson, 2018). Under the time-driven activity-based costing (TDABC) the maximum priority is given to the time driver for assigning a cost to every services and product (Hooze and Hansen, 2014). Under Activity-based costing (ABC) maximum priority is given to cost drivers for assigning a cost to every product and service (zyrek and Din, 2014). Difference between Time-Driven Activity-Based Costing (TDABC) and Traditional Costing Time-Driven Activity-based Costing (TDABC) Traditional Costing The method which assists in identifying the capacity of each department and allocates the cost of the capacity of integrated resources over the cost object maintained on the required time element in order to start an activity is known as Time-Driven Activity-based Costing (TDABC). The assigning of production overhead to services or products depending on the volume metric like production machine hours or direct labor hours is known as Traditional Costing (Accounting Coach, 2018). The Time-Driven Activity-based Costing (TDABC) method is very capacity sensitive and evaluates the activitys standard cost with the support of standard rates. The traditional costing method allocates indirect cost provisional to the volume. It results in products cost overvaluation with high volume; on the other side services or products become underrated which are of less volume (Houghton Mifflin Harcourt, 2016). The new approach is cost saving as it does not involve more cost in its installation and implementation, along with this it includes all different features of a particular activity. Traditional costing method takes other cost drivers into account that might be able to increase the cost of the item (Wilkinson, 2013). Reason for why Time-Driven Activity-Based Costing is suitable for Nestle Company The Nestle Company involves various departments in its function of the business who implement various procedures and activities for appreciating the productivity and growth of the business. This new approach is created for this type of organization so that the management can handle every activity and function. Time-Driven Activity-based Costing (TDABC) is cost saving and easy to implement. Therefore, this method will not disturb the budget of Nestle Company. This method is an improved version of Traditional Activity-based Costing and it supports company in guessing the basis demand of every single customer, product and procedure with the support of necessary time to attain the events and the cost unit time capacity. Conclusion In the conclusion, it can be suggested that Time-driven Activity-based Costing (TDABC) is an effective technique or method which estimates the time and cost of the activities implemented in an organization. This new approach is suitable and appropriate for Nestle Company because it will help them in increasing their businesss productivity. Along with this it is an inexpensive method and can be easily installed. As Nestle is the leading company in the sector of food and beverages, therefore, it is important for the company to have an improved and enhanced costing system. The above report has explained in detail about the model of Time-Driven Activity-based Costing and its features along with the brief description of the Nestle Company. The report has also identified some dissimilarity between the Time-Driven Activity-based Costing (TDABC) and Activity-based Costing (ABC) and the differences between Time-Driven Activity-based Costing (TDABC) and Traditional Costing. References Accounting Coach, 2018, Traditional costing definition, Accessed on: 12 January 2018, Accessed from: https://www.accountingcoach.com/terms/T/traditional-costing Ayvaz, E., and Pehlivanli, D., 2011, The Use of Time Driven Activity Based Costing and Analytic Hierarchy Process Method in the Balanced Scorecard Implementation, International Journal of Business and Management, 6(3), pp. 146-158. Basuki, B., 2014, The Application of Time-Driven Activity-Based Costing In the Hospitality Industry: An Exploratory Case Study, JAMAR, 12(1), 27-42. Hooze, S., and Hansen, S.C., 2014, A Comparison of Activity-based Costing and Time-driven Activity-based Costing, Accessed on: 12 January 2018, Accessed from: https://calhoun.nps.edu/bitstream/handle/10945/47751/Hansen-A-Comparison_2014-08.pdf?sequence=1 Houghton Mifflin Harcourt, 2016, Activity-Based vs Traditional Costing, Accessed on: 12 January 2018, Accessed from: https://www.cliffsnotes.com/study-guides/accounting/accounting-principles-ii/activity-based-costing/activity-based-vs-traditional-costing Johnson, R., 2018, Traditional Costing Vs. Activity-Based Costing, Accessed on: 12 January 2018, Accessed from: https://smallbusiness.chron.com/traditional-costing-vs-activitybased-costing-33724.html Kaplan, R.S., and Amderson, S.R., 2007, Time-driven activity-based costing, Accessed on: 12 January 2018, Accessed from: https://fenix.tecnico.ulisboa.pt/downloadFile/3779580640677/HBR-Time-Driven%20Activity-Based%20Costing.pdf Kaplan, R.S., and Anderson, S.R., 2006, Time-Driven Activity-Based Costing, Accessed on: 12 January 2018, Accessed from: https://hbswk.hbs.edu/item/time-driven-activity-based-costing Kaplan, R.S., and Anderson, S.R., 2007, Time-driven activity-based costing, US, Harvard Business School Press. Nestle, 2012, Nestl in society, Accessed on: 12 January 2018, Accessed from: https://www.nestle.com/asset-library/documents/library/documents/corporate_social_responsibility/nestle-csv-full-report-2012-en.pdf Nestle, 2018, About the product, Accessed on: 12 January 2018, Accessed from: https://www.nestle.in/brands/mpn/ceregrow/about-the-product Nestle, 2018, About us, Accessed on: 12 January 2018, Accessed from: https://www.nestle.com/aboutus Nestle, 2018, Strategy, Accessed on: 12 January 2018, Accessed from: https://www.nestle.com/aboutus/strategy zyrek, H., and Din, Y., 2014, Time-driven activity based costing, International Journal Of Business And Management Studies, 6(1), pp. 97-117. Wilkinson, J., 2013, Activity-based Costing (ABC) vs Traditional Costing, Accessed on: 12 January 2018, Accessed from: https://strategiccfo.com/activity-based-costing-abc-vs-traditional-costing/