Journal of Accounting and Finance

Production Costs Recognition: Time-Based Methodologies

Steven Goad — 2024-11-15

This analysis presents a review of time-based costing methodologies: Time-Driven Activity-Based Costing (TDABC), Duration-Based Costing (DBC) and Program Accounting Costing (PAC). Cost accounting systems are crucial for businesses to allocate costs to make informed business decisions. TDABC, DBC and PAC are approaches in this domain, offering unique advantages and applications. The concepts, methodologies, advantages, and limitations of each approach are explored to provide insights into their suitability for different industries and organizational contexts. The analysis finds comparing Time-Driven Activity-Based Costing, Duration Based Costing and Program Accounting Costing are analogous methodologies with different applications relating to timing cost recognition and are like comparing triples wearing the same but different colored outfits.

Financial Statement Forecasting and Financing

Tom Arnold — 2024-11-15

Using a “plug” figure or “slack term” within a pro forma analysis is the standard method to allow a forecasted balance sheet to have assets equal to liabilities and equity. Seemingly, different types of plug values are demonstrated to be mathematically linked to each other. Further, by exploring cash as a plug figure, a solution emerges for a “target revenue growth rate” in which cash is not depleted. If a private equity venture can generate revenue growth above the target revenue growth rate, cash will accumulate and improve the return on the private equity investment.

The Value of Non-Value Activities

W. Terry Dancer — 2024-11-19

The essence of manufacturing is first an idea, then a facility, then the purchase of raw materials, then hiring of labor, then we turn on the electricity and transform raw material into our product. This essence gives a foundation we can build on. Many believe only value-added activities such as materials and labor add value to the product. However, others believe that activities such as inspections, machine setups, and even wait time adds value to the product. The premise of this paper is anything you are willing to pay for has value, even if it labeled a “so-called” non-value-added activity and buyers willingly pay for non-value added activities every time a product is purchased. The question becomes: “What is the value of Non-Value added activities?”