• Mathias Vingaard Schütt
  • Anna Lynge Nielsen
Introduction. This project examined how time-driven activity-based costing could be built on the danish cost account system variabilitetsregnskabet and how activity-based management subsequently can be implemented to affect customer profitability. A simple fictional case will therefore be used to identify this profitability and suggest strategic ways to improve it, which will then be mirrorable for other companies.
Method. The thesis is made from a standpoint of the social action theory which is a part of functionalist paradigm described by Burrell and Morgan. Peer reviewed articles and book published by well-known and acknowledged publishers were conducted about the theoretical subject used in the project. This theory was then used in the fictional case to demonstrate an example of how the conducted theory can be used. It is hereby acknowledged that a generalization cannot be made on the fictional results, however conclusions can be drawn as a result of typographies according to the collected literature.
Analysis. The constructed case about the software company 3D-tech forms the basis for a analysis of an accounting system which can then be used to prepare a time-driven activity based model. The results of this model is then assessed and the customers are segmented on the basis of their revenues and allocated costs from sales- and service activities.
Results. The TDABC-model for 3D-tech shows a big variation in their customers. First of all there is a big difference in customer size based on revenue alone. But there is also a big difference in the demand for services and therefor a selection of strategic approaches are introduced and discussed. These focus on how to make non-profitable customers more profitable, retain important customers and the introduction of new customers in considerations with both non-monetary value and customer lifetime values.
Conclusion. The thesis ended up showing how a TDABC-model could use the registrations of cost in dimensions from variabilitetsregnskabet to aggregate indirect cost in cost pools which are homogenous in respect to variability and reversibility. These are then allocated to identified activities and then allocated to customers using time-equations. The model viewed a new perspective of the profitability of 3D-tech’s customers, making it possible to suggest ways to improve this further. The suggestions however should be thought of in connection to the fact that customers can provide value in other ways than profit, customers lifetime value is not necessarily indicated by a one year static picture and that terminating customers could have both pros and cons. Lastly it is suggested to consider implementing a portfolio program that can help sales- and service teams to prioritize appropriate customers and/or a long term loyalty program that can help maintain the most important customers.
Publication date2 Jun 2020
Number of pages78
ID: 333429516