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Customer profitability analysiswith time-driven activity-basedcosting: a case study in a hotel

Ilhan Dalci Eastern Mediterranean University, Famagusta, Turkey

Veyis Tanis Business Administration, Çukurova University, Adana, Turkey, and

Levent KosanSilifke Vocational Business School, Mersin University, Mersin, Turkey

Abstract

Purpose – The purpose of this paper is to show the implementation of customer profitabilityanalysis (CPA) using time-driven activity-based costing (TDABC), in a Turkish hotel.

Design/methodology/approach – A case study was conducted in a four-star hotel with 100-roomcapacity in the Çukurova region of Turkey. Interviews, direct observations, and documentationcollection were used to collect the data.

Findings – The results showed that some of the customer segments which were found unprofitableunder the conventional ABC method were determined profitable using TDABC. The case study alsorevealed the cost of idle resources devoted for front office, housekeeping, food preparation, andmarketing activities.

Research limitations/implications – Only a single hotel operating in Turkey is examined in thispaper. Further research should focus on implementing CPA using TDABC in other hotels in Turkey

and abroad.Practical implications – Based on the results of the study, the hotel management is better able tounderstand profitability of different customer segments and implement appropriate strategies.Moreover, the time equations of TDABC are considered to provide hotel management with anopportunity to better balance the capacities supplied in departments.

Originality/value – There is limited research relating to profitability analysis in service companiesin general and in the hotel industry in particular. Therefore, this paper is unique in the sense that itanalyzes the use of TDABC systems for CPA within a real case hotel.

Keywords Activity based costs, Profit, Customers, Hotels, Turkey

Paper type Case study

1. IntroductionCustomer cost information is essential for managerial decision making. Therefore,understanding true costs of serving specific customers is important in any organization.Companies that understand which customers are more profitable and which ones arenot, are armed with valuable information needed to make successful managerialdecisions to improve overall organizational profitability (Raaijet al., 2003). Cotton (2005)and Cooper and Kaplan (1991), also suggest that understanding how current customerrelationships differ in profitability enables managers to make better managerial

The current issue and full text archive of this journal is available at

www.emeraldinsight.com/0959-6119.htm

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Received 15 April 20Revised 1 September 200

22 October 2001 December 20

Accepted 13 December 20

International JournalContemporary Hospital

ManagemVol. 22 No. 5, 20

pp. 609-6q Emerald Group Publishing Limit

0959-61DOI 10.1108/095961110110537


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decisions. However, obtaining accurate information about customer profitabilitynecessitates the use of an appropriate costing system.

Customer profitability analysis (CPA) entails allocation of revenues and costs tospecific customers in a way that the profitability of individual customers can be

calculated. Owing to the increased size and organizational complexity of service firms,Kaplan and Narayanan (2001) state that understanding CPA is especially important forservice companies. Indeed, for service companies, CPA is more important thanproduction companies because the cost of providing a service is generally determinedby customer behavior. According to Zeithaml and Bitner (1996), the cost of finding andgaining a new customer in service companies is five times greater than the cost of retaining current customers. Therefore, successful implementation of CPA in order toretain profitable relationships with current customers is essential for servicecompanies. Moreover, Cotton (2005) asserts that the effective use of CPA enablesservice companies to increase customer satisfaction and boost profitability.

According to Cooper (1988), the use of activity-based costing (ABC) enhances thetraditional contribution margin approach and the quality of CPA. The ABC systemwas promoted by Cooper and Kaplan in the mid-1980s, as an alternative costingsystem to the traditional one, based on their experiences with some productioncompanies in the USA (Gunasekaran and Sarhadi, 1998). Subsequent studies dealt withthe deficiencies of traditional costing systems in automated production environments(Innes, 1999; Baird et al., 2004). The activity-based approach to overhead costs is anextension of the traditional volume-based costing that treats manufacturing overheadas a complex set of costs with multiple cost-drivers (Drake et al., 2001). Rotch (1990)points out that the conditions necessary for manufacturing firms to successfullyimplement ABC are necessary for service companies as well.

The ABC approach assumes that products or customers generate activities, and theactivities consume resources (Cooper, 1988). ABC is based on a two-stage allocation

process. First of all, the costs of resources are allocated to the activities using first-stagecost drivers, and then the costs of activities are apportioned to cost objects by means of volume and non-volume related drivers (Cooper, 1990). That is, the activity costs areallocated to the cost objects based on the relevant cost drivers (i.e. number of machinehours, number of setups, number of design specifications, and number of customervisits). The cost drivers are linkage between activities and cost objects (Cooper, 1988,1990; Cooper and Kaplan, 1992). The rise of ABC has led to the understanding that notevery customer consumes the same level of activities and resources. Moreover,resources that particular activities consume are measured in terms of cost driver units.This is due to the fact that, while traditional cost systems rely on arbitrary costallocations of overhead costs, ABC classifies cost pools according to the activities (unit,batch, product, and facility levels) performed within the organization (Kaplan and

Cooper, 1988). Understanding the hierarchical levels of the costs of ABC enablesmanagers to better understand cost causation, and hence make better decisions. Thus,with ABC, managers are better equipped to understand which customers are profitableand which ones are not (Kaplan and Cooper, 1998). Additionally, according to Cooperand Kaplan (1992), the use of ABC by organizations has led to increased profitability.

Despite the fact that the ABC system can be a sufficient costing method, it has somedrawbacks. First, due to complexity of the activities performed within organizations,ABC may take too much time to be implemented (Kaplan and Anderson, 2004). Second,

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when activities, that contain more than one subtask with different cost drivers, areintensified, ignoring that complexity may result in the misallocation of the costs. Third,since the ABC system needs to be updated regularly, it becomes too costly tore-interview and re-survey people engaged in the activities (Kaplan and Anderson,

2004). The downsides of traditional ABC system alerted Kaplan and Anderson tointroduce a new costing method called time-driven ABC (TDABC) system to addressthe above-mentioned limitations. However, using TDABC in order to bring solutions tothe problems of conventional costing systems does not mean that ABC should becompletely abandoned. Proponents of TDABC argue that it removes time-consumingand costly interviews and surveys which have been a major barrier to theimplementation of a traditional ABC system, as well as it allows cost driver rates to becalculated based on the practical capacity of the resources supplied (Kaplan andAnderson, 2007b).

Under a traditional ABC system, the costs of activity-cost pools, are apportionedamongst cost objects using activity drivers (Kaplan and Cooper, 1998). On the otherhand, under a TDABC system, these costs are allocated to the cost objects on the basis of time units consumed by the activities (Kaplan and Anderson, 2004). The TDABCapproach requires identifying resources needed to perform the activities, as it is doneunder a traditional approach. It also requires time needed to perform the activities andthe practical rather than the theoretical capacity of the resources supplied. Theoreticalcapacity equals the theoretically available working minutes, whereas practical capacityis expressed as the amount of time that employees can work without idle time (Kaplanand Anderson, 2007a). The practical capacity of the resources excludes the time thatemployees spend on activities (such as having a rest and taking a break) which areunrelated to actual work performance. Two important aspects of a TDABC system are:estimating the practical capacity of the resources supplied and the cost of theseresources. Dividing the total cost of resources supplied by the practical capacity yields

the cost per time unit. Then,the time needed for performing the activities is multiplied bythe cost per time unit in order to assign the costs to products or customers. With the helpof the time equations of TDABC, the time needed to perform an activity can be estimatedwithout any need to continually re-interview people. These time equations can includemultiple time drivers if an activity is driven by more than one driver. Obviously, theTDABCapproach, with its time equations, makes it possibleto know how many minutesthat staff members spend on activities in a particular time period. Therefore, the timeequations of TDABC can provide larger transparency than a traditional ABC system.With TDABC, it is also possible to pinpoint which customers consume the largestamount of time and resources (Kaplan and Anderson, 2004).

Research conducted on the analysis of costing systems, in the service industry ingeneral and the tourism industry in particular, is very limited. There has also been

little innovation regarding cost accounting practices in the hospitality industry (Potterand Schmidgall, 1999). Fay et al. (1976) demonstrated the use of conventional costingsystems in the hospitality industry. Nordling and Wheeler (1992) implemented CPA inthe Hilton Hotel in Las Vegas. However, analysis of the activities in allocating theoverhead costs was not completed in that study. Although the use of ABC in theapplication of CPA in the hospitality industry has attracted little interest, there hasbeen detailed research about costing practices in tourism enterprises after 1999. In acase study conducted in a hotel by Noone and Griffin (1999), activities were determined

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at macro and micro level and the cost of these activities were assigned to specificcustomers using ABC. Raab and Mayer (2003), surveyed restaurant controllers in theUSA and they found that the use of ABC was almost non-existent in the restaurants.They also discovered that the use of ABC could be appropriate for the restaurants due

to the characteristics inherent in the restaurant industry. Raab et al. (2005) tested amodel for ABC in a buffet style restaurant in Hong Kong. Raab and Mayer (2007)analyzed how menu engineering (ME) can be integrated with ABC to determinewhether or not the integration of ME with ABC can boost the profitability of a dinnerbuffet in a restaurant in Hong Kong. Ultimately, Raab et al. (2009) appliedactivity-based pricing in a restaurant setting. The findings of that study show thatABC could be used by restaurant managers to better analyze the cost structure of theirrestaurants.

Nevertheless, there are many issues, relating to cost and management accountingpractices in the hospitality industry, that deserve research attention (Pellinen, 2003;Dittman et al., 2008). Several researchers as mentioned above have advocated the use of ABC in the hospitality industry. However, the costs of activities have not beenanalyzed using TDABC in the hospitality industry even though this method has beenapplied in other industries. Pernot et al. (2007) used a case study in a university to showhow to use a TDABC system for inter-library services. They argue that TDABC canimprove the cost management of all library services because it enables librarymanagers to take appropriate actions to reduce the time needed for specific requests of library customers. Everaert et al. (2008) described a case in a distribution company andshowed that ignoring the complexity of activities containing more than one subtaskwith different time drivers, resulted in a misallocation of 54 percent of the costs whenthe traditional ABC system rather than a TDABC approach was used. In a recentstudy, Demeere et al. (2009) showed how to implement a TDABC model for fiveoutpatient clinic departments through a case study. They uncovered that the use of a

TDABC system provided the healthcare managers and physicians with valuableinformation which assisted them in operational improvements, making profitabilityanalysis for departments, and deciding on future investments.

The general aim of this paper is to show the implementation of CPA with TDABC ina hotel operating in the Çukurova region in Turkey. The case hotel is located in the cityof Mersin. The city of Mersin is important for the region’s economy because tradeamong Turkey, the Middle East, and Europe takes place through the Mersin Port.Therefore, most of the businesspeople conducting business through the Mersin Portprefer to stay in the hotels which are located in the city. Thus, hotels have significantimpact on the economic development of the Çukurova region. In that respect,implementing CPA successfully for accurate and effective managerial decision makingis important for the managers of the hotels located in this region.

2. The case study and research designThis study adopted both convenience and purposive sampling techniques to select theresearch sample (Altinay and Paraskevas, 2008). One of the co-authors of this studypreviously worked for the hotel to have experience during his summer holidays. Thus,he knew the managers and asked for permission to conduct a research of this kind.He met the hotel’s managers for a preliminary discussion and he realized that thecase hotel was measuring customer profitability by using a traditional ABC system.

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Then, he explained to the managers the benefits of conducting this case study in theirhotel. The managers of the hotel accepted to give permission for the research with acondition that, due to confidentiality reasons, the hotel’s name should not be disclosedin the paper. This request was taken into account and the researchers commenced the

study in the hotel and concluded it within one year.The physical and environmental information about the hotel is as follows: it is a

four-star hotel operating with 100 rooms in the Çukurova region in Turkey. The hoteloperates at an annual occupancy rate of 60 percent. In addition to a banqueting hall,steam bath, meeting room, bar, and business centre facilities, various other serviceswhich are suitable for four-star hotel standards are also offered in the hotel. The casehotel employs 53 personnel (one general manager, one assistant general manager, fourfront office clerks, seven housekeepers, 30 restaurant staff, two marketing personnel,three bartenders, two accounting personnel, and two human resource managers).

Our study in the case hotel started in September 2006 and ended in September 2007.The data presented in this case study represent real figures gathered throughout theone-year period. All the data presented in this study are expressed in US$. The costdata were compiled during a three-month (September, October, and November) periodin 2006. In order to compile consistent data regarding the time spent on the activities,needed for deriving the time equations used in the TDABC model, we observed theactions of the personnel while they were performing the tasks several times duringthe year of 2007. Additionally, we conducted follow-up interviews during the last threemonths of the study in 2007 in order to verify and validate the accuracy of the data. Bycomparing the results we obtained at different times, we computed the average timesfor each of the activities. Moreover, documentation was collected from financial reportsin order to gain a rich description of the hotel’s costing system and to understand howmanagers implement CPA. All of the above-mentioned case study applications wereconducted with the following theoretical background and literature.

A qualitative research strategy was used as the most appropriate method for a casestudy of this kind because case studies are often associated with qualitative researchdesign even though they can be conducted with both qualitative and quantitativeresearch methods (Yin, 1994). According to Ryan et al. (2007), Lee (1999) and Yin (1994),case studies provide the researchers with an opportunity to understand the nature of accounting systems which are currently used in practice. Moreover, case studies couldbe used to explore the application of new procedures. As suggested by Yin (1994), casestudies investigate a contemporary phenomenon in its real-life context and more thanone case can be conducted at a time. Since the main purpose of our study was tounderstand the costing system currently applied and to evaluate the applicability of TDABC in a hotel setting, the case study method was deemed to be the most appropriatemethod to gain in-depth understanding of the hotel. In the study, a descriptive case study

was first used in order to explicate the accounting system currently used in the casehotel. Then, we used an experimental case study method in order to evaluate theapplicability of the new costing system (TDABC) in the hotel.

We used qualitative research methods for gathering data regarding the costingmethod currently used by the hotel’s accountants, activities performed in the hotel, unittimes needed for performing the activities, and detailed costs of these activities.Semi-structured interviews that lasted between 45 minutes and one hour with thepersonnel of the hotel (i.e. general manager, general assistant manager, cost accountant,

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receptionists, housekeepers, marketing personnel, and waiters), direct observations, anddocumentation collection were used as data-collection methods. Semi-structuredinterviews were chosen because they enable the researchers to understand the issues indepth (Bryman and Bell, 2007). The interviews were conducted based on a detailed

interview schedule that was agreed upon with assistant general manager of the hotel.The interviewees were asked closed-ended as well as open-ended questions on issuesrelating to main activities performed in the hotel, the tasks performed by each staff member, type of costs incurred, and the customers of the hotel. The purpose of thoseinterviews was to clarify how staff members performed their tasks and how muchtime (in terms of minutes) they spend on performing these tasks. Direct observationswere also used to examine the activities while the staff members physically perform thetasks. As suggested by Tharenou et al. (2007), observations are important tools forunderstanding the procedures. In that respect, we conducted observations in order toensure that the data gathered through interviews accurately reflected the real timeexperiences of the employees. After each visit to the relevant department, we wrote upnotes in order to analyze the nature of the activities. We also documented the tasks

performed by the staff members. All the interviews were recorded on tape, and the dataobtained through these interviews were filed. We transcribed all tapes and notes andread the transcripts several times in order to make thorough activity analysis. The costdata were obtained from the cost reports documented by the accounting department. Weused the cost reports to get an insight into the costing system currently employed by thehotel’s cost accountants (Tables I and II).

We also utilized job descriptions in reviewing the tasks. In addition, we analyzed theannual reports of the hotel in order to analyze revenues generated from accommodationand other revenue generating areas, especially food and beverage spending. Wedeveloped time equations using the data concerning the tasks and unit times needed toperform these tasks. Based on the time equations that we formulated and the cost dataprovided by the accounting department, we allocated the costs to customer segmentsusing TDABC. Ultimately, we computed profitability figures for the customersegments using TDABC and compared TDABC results to the ones found under theconventional ABC, as presented in Tables V and VI.

Customer segments of the case hotel The implementation process for CPA started with scrutinizing the current customersegments (groups) of the case hotel. The customers of the hotel were determined asfollows:

. Group 1. This group includes managers of local and foreign companies. Thegreatest share (48 percent) in the sales mix belonged to this group of customers.These customers generally utilized accommodation and food and beverage

services.. Group 2. This customer group constitutes customers brought to the hotel by the

travel agents operating both in internal and external markets. That group hadthe second highest sales mix percentage (19 percent). The customers clustered inthis group utilized accommodation and food and beverage services.

. Group 3. These customers represent people holding managerial positions ingovernment-owned institutions. This customer group used accommodation andfood and beverage services and had a 10 percent share in the total sales mix.

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C o s t c e n t e r s

T o t a l

c o s t s ( $ )

C o s t d r i v e r

C o s t

p o o l

r a t e

F r o n t

o f fi c e

H o u s e k e e p i n g

M a r k e t i n g

F o o d

p r e p a r a t i o n

B e v e r a g e

p r e p a r a t i o n

B a n q u e t i n g

D e p r e c i a t i o n

1 5 6 , 6 6 0

D i r e c t

$ 9 , 2 6 0

$ 2 8 , 5 0 0

$ 1 6 , 4 0 0

$ 3 8 , 4 0 0

$ 2 6 , 7 0 0

$ 3 7 , 4 0 0

P e r s o n n e l

2 6 5 , 2 8 1

D i r e c t

$ 3 4 , 4 0 4

$ 6 8 , 9 4 5

$ 2 6 , 2 8 8

$ 9 0 , 2 9 1

$ 2 2 , 8 4 8

$ 2 2 , 5 0 5

E n t e r t a i n m e n t

1 7 7 , 1 0 6

D i r e c t

$ 1 7 7 , 1 0 6

F o o d a n d b e v e r a g e

4 0 3 , 2 1 3

A c t u a l u s a g e

$ 1 1 4 , 7 4 7

$ 1 7 8 , 4 6 6

$ 1 1 0 , 0 0 0

C l e a n i n g a n d l a u n d r y

2 8 2 , 0 7 6

L a u n d r y a n d

c l e a n i n g h o u r s

$ 1 2 . 2 4 2 8 /

h o u r

$ 1 6 8 , 6 5 6

$ 3 3 , 5 1 1

$ 4 4 , 5 0 4

$ 3 5 , 4 0 5

2 3 , 0 4 0 h o u r s

1 3 , 7 7 6 h o u r s

2 , 7 3 7 h o u r s

3 , 6 3 5 h o u r s

2 , 8 9 2 h o u r s

S t a t i o n a r y

3 , 8 4 0

A c t u a l u s a g e

$ 2 , 0 3 1

$ 4 4 6

$ 8 8 6

$ 4 7 7

T e l e p h o n e

9 , 4 1 5

D i r e c t

$ 6 , 5 9 0

$ 2 , 8 2 5

M a r k e t i n g

5 4 , 9 7 7

D i r e c t

$ 5 4 , 9 7 7

E n e r g y , b u i l d i n g

d e p r e c i a t i o n a n d i n s u r a n

c e

2 2 1 , 2 3 5

A r e a

$ 5 0 . 7 4 2 /

s q u a

r e

m e t e

r

$ 1 1 , 8 5 0

$ 8 4 , 2 3 1

$ 3 4 , 0 9 6

$ 4 9 , 0 2 7

$ 4 2 , 0 3 1

4 , 3 6 0 s q u a r e

m e t e r s

2 3 3 . 5

s q u a r e

m e t e r s

1 , 6 6 0 s q u a r e

m e t e r s

6 7 2 s q u a r e

m e t e r s

9 6 6 . 2

s q u a r e

m e t e r s

8 2 8 . 3

s q u a r e

m e t e r s

H u m a n r e s o u r c e s

8 3 , 0 0 0

E s t i m a t e d

$ 1 1 , 6 2 0

$ 4 2 , 3 3 0

$ 9 , 9 6 0

$ 1 0 , 7 9 0

$ 4 , 9 8 0

$ 3 , 3 2 0

p e r c e n t a g e o f

t i m e

1 4 %

5 1 %

1 2 %

1 3 %

6 %

4 % ( c

o n t i n u e d )

TableCosts allocated

customer groups undtraditional AB

(allocation of costs activity-cost pool

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A c t i v i t i e s

T o t a l

G r o u p 1

G r o u p 2

G r o u p 3

G

r o u p 4

G r o u p 5

G r o u p 6

G r o u p

7

G r o u p 8

F r o n t o f fi c e

T

o t a l c o s t ( $ )

1 2 5 , 1 0 5

3 5 , 6 1 9

4 1 , 4 6 8

8 , 7 3 0

2 6 , 1 9 2

1 0 , 9 1 3

2 , 1 8 3

N

o . o f a r r i v a l s

1 7 , 9 9 3

5 , 1 2 3

5 , 9 6 4

1 , 2 5 6

3 , 7 6 7

1 , 5 7 0

3 1 4

C

o s t d r i v e r r a t e ( $ )

6 . 9 5 2 9

H o u s e k e e p i n g

T

o t a l c o s t ( $ )

5 7 9 , 2 0 8

2 7 8 , 0 2 0

8 4 , 9 3 4

9 0 , 4 1 4

4 8 , 0 5 8

6 8 , 9 9 0

5 , 7 9 2

N

o . o f n i g h t s

3 1 , 3 9 0

1 5 , 0 6 7

4 , 6 0 3

4 , 9 0 0

2 , 7 6 7

3 , 7 3 9

3 1 4

C


1 8 . 4 5 2 2 5

M a r k e t i n g

T

o t a l c o s t ( $ )

1 2 4 , 4 5 0

9 3 , 8 6 3

5 , 2 1 4

1 5 , 0 4 2

8 0 2

1 , 2 0 3

5 0 1

7 , 8 2 5

N

o . o f c u s t o m e r v i s i t s

2 , 4 8 2

1 , 8 7 2

1 0 4

3 0 0

1 6

2 4

1 0

1 5 0

C


5 0 . 1 4 0

F o o d p r e p a r a t i o n

T

o t a l c o s t ( $ )

3 8 1 , 3 4 9

1 5 6 , 2 7 8

5 8 , 3 6 4

3 2 , 4 1 2

4 0 , 9 6 9

9 0 , 2 3 6

3 , 0 9 0

N

o . o f c o v e r s

6 7 , 6 5 2

2 7 , 7 2 4

1 0 , 3 5 4

5 , 7 5 0

7 , 2 6 8

1 6 , 0 0 8

5 4 8

C


5 . 6 3 6 9 2

B e v e r a g e p r e p a r a t i o n T

o t a l c o s t ( $ )

4 1 3 , 7 8 2

4 1 3 , 7 8 2

B a n q u e t i n g

T

o t a l c o s t ( $ )

4 6 8 , 2 4 1

4 6 8 , 2 4 1

T o t a l ( $ )

5 6 3 , 7 8 0

1 8 9 , 9 8 0

1 4 9 , 5 6 8

1 1 5 , 2 1 9

1 7 0 , 9 4 1

4 6 9 , 4 4 4

1 1 , 5 6 6

4 2 1 , 6 0 7

Table ICosts allocated

customer groups undtraditional AB

(allocation of costs activity-cost pools

customer group

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. Group 4. These customers are “walk-in” customers coming to the hotel withoutmaking reservations. This customer group used accommodation and food andbeverage services and had a 12 percent share in the total sales mix.

. Group 5. Professional sport clubs coming to the city of Mersin to play footballmatches constitute this group. Customers in this group stayed in the hotel for oneor two days and had a 10 percent share in the total sales mix.

. Group 6. This customer group comprises people who organize parties andwedding ceremonies in the hotel. Customers in “group 6” received catering andentertainment services and did not stay overnight in the hotel.

. Group 7. These customers come to the hotel to participate in wedding ceremoniesand parties and stay in the hotel for just one night. This group had a 1 percentshare in the total sales mix.

. Group 8. Customers who come to the hotel only for bar and entertainmentservices are clustered in this group. These customers do not stay overnight in thehotel.

Activities performed in the case hotel In the case hotel, we identified six general activities. Each of these activities comprisesseveral subtasks (sub-activities). These activities and the related subtasks are:marketing (making calls to customers in order to arrange visits, giving information viae-mail or fax, making customer visits, advertising, and making promotional campaigns),front office (reservation and information, check-in and check-out, meeting andwelcoming customers, settling customers in the rooms, opening customers’ accounts,controlling customers’ spending, accompanying customers when they are leaving, andclosing customers’ accounts), housekeeping (cleaning the rooms, making beds,vacuuming, and replenishing linens), food preparation and service (taking orders,preparing the kitchen for breakfast, lunch, and dinner, cooking, preparing and serving

breakfast, lunch, and dinner, cleaning the kitchen and the restaurant), beveragepreparation and service (preparing the bar for beverage service, servicing the beverages,carrying out entertainment activities, and cleaning), and banqueting (makingpreparations for catering events such as wedding ceremonies, parties, and meetings).

Allocation of costs to the customer groups under traditional ABC In the case hotel, costs were initially totaled in cost centers along with their dollar value(Table I). These cost centers were: personnel, stationary, telephone, marketing(advertising, promotion, billboard, and customer visit costs), accounting and finance,human resource, administrating, energy (electricity and heating costs), storing (rent,air conditioning, and insurance costs), cleaning and laundry, purchasing, repair andmaintenance (material and personnel costs), entertainment, food and beverage (costof foods and beverage used for restaurant, bar, and catering events), and depreciation.Then, the costs which were directly associated with particular activities were imputedto relevant activity-cost pools. The direct costs that the accountants of the hotelidentified were: depreciation costs of equipment, furniture, and fixtures that are used inparticular departments, personnel costs, and telephone costs. On the other hand, thecosts not directly related to the activities were allocated to the activity-cost pools bymeans of relevant cost drivers. The activity cost-pools were: front office, housekeeping,marketing, food preparation, beverage preparation, and banqueting.

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According to traditional ABC literature (Cooper, 1990; Kaplan and Cooper, 1998),facility-sustaining costs (i.e. accounting, finance, human resource, training, andadministrating costs) should be attributed to the activity centers rather than be traced toindividual customers. Since facility-sustaining costs cannot be determined as specific

costs for particular customers in the case hotel, these costs were first apportioned to theactivity-costpools. Then, fromthe activity-costpools they wereallocated to the customergroups. This approach is also consistent with the ABC literature. Since it is difficultto determine appropriate cost drivers and relevant consumption rates for the costsof these types, they were apportioned to the activity-cost pools according to somerelevant pattern of usage. For allocating the costs of general support activities such asadministrating, accounting and finance, and human resource, “the estimated percentageof total personnel time spent for different departments” was used as an allocation base.Information about the time that the personnel, who are engaged in the general supportactivities, spent for different departments were not documented in the case hotel.Therefore, allocation of these costs was based on staff estimates of the time they spent oneach department.

For storing the goods, a 120-square meter warehouse was rented next to the hotelbuilding. The costs (rent, air conditioning, and insurance costs) gathered in the “storing”cost center were allocated to the activity-cost pools based on the “amount of floorspace occupied in the warehouse”, which was measured in terms of square footage.On the other hand, the costs of the “purchasing” cost center were allocated using the“number of purchase orders” as an allocation base. The costs gathered in the “repairand maintenance” cost center were allocated based on the “actual maintenance timespent”. Information about the “maintenance time” was documented by the accountingdepartment.

The stationery and food and beverage costs were allocated according to actual usageof stationary materials and food and beverage goods. The actual usage of these

resources was documented and maintained by the accounting department. The laundryand cleaning costs (i.e. costs of personnel, depreciation cost of laundry machine, and costof cleaning materials) were apportioned among activities according to “number of cleaning hours spent”. As can be seen in Table I, a major part of the cleaning costs wereallocated to the “housekeeping” activity because the laundry personnel take the mosttime to wash and clean the linens of the rooms.

On the other hand, depreciation and insurance costs relating to the hotel buildingwere combined with energy costs in the same cost center (because these costs wereallocated using the same cost driver) and they were allocated to the activities based onthe “amount of floor space” that each department (restaurant, front office, banquetinghall, rooms, bars, and disco) occupies. The entertainment costs were directly imputed tothe “beverage preparation” activity. Likewise, the costs (advertising, promotion,

personnel, and customer visit costs) which were gathered in the “marketing” cost centerwere directly assigned to the “marketing” activity (Table I).

In allocating the indirect costs to the activities, cost pool rates were used (somenumbers in Table I were rounded to the nearest dollars therefore the numbers representapproximate figures). For example, the total amount of “purchasing” costs was dividedby 662 orders (which is the total number of orders made during the study period) in orderto calculate a cost pool rate of $250 ($165,603/662 orders) per order. Then the rate of $250was multiplied by the total number of orders made for each activity or department

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of them decide quite quickly. Some customers consume all of the available services inthe restaurant, whereas some of them do not. Likewise, some of the customers needmore advice about the services of the hotel at the front office, while some of them leavethe front office quickly. Moreover, when making visits to particular customers, the

marketing personnel need to travel and stay longer. Furthermore, the marketing staff members spend more time giving information to some customers before makingcustomer visits. However, some customers do not consume that much effort andresources. Thus, diversity in the use of resources by customers is likely to make itdifficult for the hotel management to analyze the costs using a traditional ABC systembecause ABC uses single cost driver rate for each activity. This is because, the use of asingle cost driver does not adequately reflect resource demands associated with theactivities performed in the hotel. In that respect, the TDABC, with its time equations, isconsidered to better reflect the resource demands of the activities in the case hotel.

The time unit (in terms of minutes) used for the calculations made under TDABCwere average times. These averages were calculated by taking the average of the timeswe obtained through interviews and observations. The staff members in the case hotelwork six days a week and daily working hours vary between seven and 12 hoursdepending on the department in which the personnel work. For example, thereceptionists who are employed at front office work eight hours and 15 minutes a day,whereas the administrative personnel such as the accountant and human resourcemanagers work 12 hours per day. However, the above-mentioned working hoursrepresent theoretical capacity of the personnel, while we based our TDABC calculationson the practical capacity.

In implementing the TDABC approach, we did not assign the costs of accounting,finance, human resource, purchasing and administrating departments directly to thecustomer groups because these costs cannot be determined as specific costs forparticular customers in the case hotel. Instead, we considered the ABC cost pools (in

which the costs of support activities were already included) as activity costs formaking calculations under TDABC.Under the TDABC approach, as it was done under the traditional ABC approach, we

assigned the total cost of the “beverage preparation” activity-cost pool ($413,782) onlyto “customer group 8”. Likewise, the total cost of the “banqueting” activity-cost pool isrelated solely to “customer group 6” and “customer group 7”. Therefore, we assignedthe cost of the “banqueting” activity ($468,241) only to customer groups 6 and 7.

Allocation of the costs of front office activities under TDABC The “front office” activity-cost pool consists of direct and indirect costs such asdepreciation, personnel, energy, stationery, telephone, repair and maintenance, andpurchasing. In addition, it includes the costs which are allocated from human resource,

accounting and finance, and administrating cost centers. The costs gathered in the “frontoffice” cost pool were allocated to the customer segments based on the practical capacityof the receptionists. This approach is also consistent with the TDABC literature (Kaplanand Anderson, 2004). Subtasks related to the main “front office” activity are: takingreservations, giving information to a customer, welcoming the customer, settling thecustomer in the room, opening the customer’s account, monitoring the room in orderto control customer’s spending, closing the customer’s account, and accompanying thecustomer as he\she leaves the hotel. Indeed, the length of time spent on the “front office”

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activities varies depending on the type of customer coming to the hotel. For instance,walk-in-customers (group 4) come to the hotel without making reservations, whilecustomers in “group 1”, who come to the hotel more frequently than the others, need fourminutes to make a reservation and 2.5 minutes to get information. On the other hand,

it takes totally nine minutes for the personnel to make a reservation (six minutes) andgive information (three minutes) for a customer in “group 3”. When “bar customers”come to the hotel, they only ask where the bar is. Therefore, it takes only 30 seconds forthe personnel to give information to these customers.

The total time needed for the main “front office” activity is obtained by summing upthe times spent on the related subtasks. For example, for a customer clustered in“group 1”, the reservation activity starts with taking reservations (four minutes) andgiving necessary information to the customer (2.5 minutes). After the customer arrivesat the hotel, the receptionist welcomes the customer (1.5 minutes), settles the customerin the room (two minutes), and opens the customer’s account (1.5 minutes). At the endof the customer’s stay, the personnel controls the customer’s spending and closeshis/her account (four minutes) and accompanies the customer as he/she leaves the hotel(two minutes). In this case, the total length of time, spent at the front office for acustomer in “group 1”, is 17.5 minutes.

Table III reveals the unit times of consumption of the “front office” activities byeach customer group. For instance, for the customers clustered in “group 2”, thereceptionists spent 107,352 (5,964 £ 18 minutes) minutes in a year. As Table III shows,the total time actually needed for performing the “front office” activities during thestudy period was 326,600 minutes. Table III also demonstrates the allocation of the“front office” costs using TDABC.

Through the inclusion of the data presented in Table III (“total unit time” column of Table III), we developed the following time equation for estimating the time needed forperforming the “front office” activities:

Total time ðminÞ for front office activities¼ ð17:5*#customresÞ½if customer group 1 þ ð18*#customersÞ½if customer group 2

þ ð22*#customersÞ½if customer group 3 þ ð18*#customersÞ½if customer group 4þ ð12*#customersÞ½if customer group 5 þ ð17*#customersÞ½if customer group 6þ ð0:5*#customersÞ½if customer group 7 þ 2:5*#customersÞ½if customer group 8

The case hotel employs four receptionists to do the front-office work and normalworking hours (theoretical capacity) for each person is around eight hours and15 minutes per day. Each receptionist works six days a week and 26 days in a month.In this case, normal working hours for one receptionist corresponds to 12,870½ð8:25 hour £ 60 minutesÞ £ 26 days minutes per month and 154,440 minutes peryear. Thus, the theoretical capacity for four receptionists is 617,760 minutes per year.However, each receptionist spends around 75 minutes for breaks, arrival anddeparture, and resting every day. Therefore, each receptionist actually works onlyseven hours (which is practical capacity of one receptionist) per day. In this respect,each receptionist practically supplies about 10,920 minutes per month or 131,040minutes per year. Therefore, the practical capacity of 4 receptionists is about 524,160minutes per year. Hence, the practical capacity corresponds to around 85 percent(524,160/617,760 minutes) of the theoretical capacity.

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C u s t o m e r

g r o u p s

U n i t t i m e

( m i n u t e )

s p e n t o n

r e s e r v a t i o n

a c t i v i t y

U n i t t i m e

( m i n u t e )

s p e n t o n

i n f o r m a t i o n

a c t i v i t y

U n i t T i m e

( m i n u t e )

s p e n t o n

w e l c o m i n g

c u s t o m e r

( c h e c k - i n )

U n i t t i m e

( m i n u t e )

s p e n t o n

s e t t l i n g

c u s t o m e r

i n t h e

r o o m

( c h e c k - i n )

U

n i t t i m e

( m i n u t e )

s p e n t o n

o p e n i n g

c u s t o m e r ’ s

a c c o u n t

( c h e c k - i n )

U n i t t i m e

( m i n u t e )

s p e n t o n

c o n t r o l l i n g

c u s t o m e r ’ s

s p e n d i n g

a n d

c l o s i n g t h e

a c c o u n t

U n i t t i m e

( m i n u t e ) s p e n t

o n

a c c o m p a n y i n g

c u s t o m e r

( c h e c k - o u t )

T o t a l

u n i t

t i m e

( m i n u t e )

A c t i v i t y

q u a n t i t y

T o t a l

m i n u t e s

R a t e

( $ / m i n )

A l l o c a t e d

c o s t

G r o u p 1

4

2 . 5

1 . 5

2

1 . 5

4

2

1 7 . 5

5 , 1 2 3

8 9 , 6 5 3

0 . 2 3 8 6

8

2 1 , 3 9 7

G r o u p 2

5

3

2

2 . 5

1 . 5

2

2

1 8

5 , 9 6 4

1 0 7 , 3 5 2

0 . 2 3 8 6

8

2 5 , 6 2 3

G r o u p 3

6

3

2

2 . 5

1 . 5

4

3

2 2

1 , 2 5 6

2 7 , 6 3 2

0 . 2 3 8 6

8

6 , 5 9 3

G r o u p 4

0

4

3

2

1

4

4

1 8

3 , 7 6 7

6 7 , 8 0 6

0 . 2 3 8 6

8

1 6 , 1 8 4

G r o u p 5

1

4

0 . 5

1

1 . 5

2

2

1 2

1 , 5 0 4

1 8 , 0 4 9

0 . 2 3 8 6

8

4 , 3 0 8

G r o u p 6

4

3

1

2

1

3

3

1 7

3 1 4

5 , 3 3 8

0 . 2 3 8 6

8

1 , 2 7 4

G r o u p 7

0

0 . 5

0

0

0

0

0

0 . 5

1 1 , 9 4 0

5 , 9 7 0

0 . 2 3 8 6

8

1 , 4 2 5

G r o u p 8

2

0 . 5

0

0

0

0

0

2 . 5

1 , 9 2 0

4 , 8 0 0

0 . 2 3 8 6

8

1 , 1 4 6

T o t a l

2 2

2 0 . 5

1 0

1 2

8

1 9

1 6

1 0 7 . 5

3 1 , 7 8 8

3 2 6 , 6 0 0

7 7 , 9 5 0

Table IICosts of front offi

activities allocated undTDAB

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The cost per minute of capacity supplied is calculated by dividing the cost of capacitysupplied by the practical capacity of resources (Kaplan and Anderson, 2004). Thus, wecalculated the cost per minute of supplying capacity for the “front office” activities as$0.23868 [$125,105 (Table I)/524,160 minutes]. Then, the rate of $0.2368 per minute

was multiplied by the total time (in terms of minutes), needed for each customer group,in order to allocate the costs of the “front office” cost pool to the customer segments.

As revealed by the calculations, around 62 percent [326,600 minutes(Table III)/524,160 minutes] of the practical capacity of the resources supplied forthe “front office” activities had actually been used for productive work during thestudy period. Hence, only 62 minutes ($77,950/$125,105) of the total cost of $125,105was assigned to the customer groups using TDABC. In this case, the total cost of unused resources supplied to perform the “front office” activities was computed as$47,155 ($125,105 2 $77,950).

Allocation of the costs of housekeeping activities under TDABC

The “housekeeping” activity-cost pool includes depreciation, personnel, energy,cleaning and laundry, repair and maintenance, storing, and purchasing costs. The“housekeeping” cost pool also comprises the costs allocated from accounting andfinance, administrating, and human resource cost centers. The total cost of the“housekeeping” activity-cost pool was allocated to the customer segments based on thepractical capacity of the housekeepers. The “housekeeping” activities are classified asactivities that take place before a customer comes to the hotel and activities aftercheck-out. These activities constitute several subtasks as follows: cleaning andvacuuming the rooms, making beds, and replenishing linens. The length of time spenton the “housekeeping” activities is almost the same for all customer segments exceptfor the customers clustered in “group 5”. The customers in “group 5” (football players)come to the hotel after training and football matches and they leave their rooms dirtier

than the other customers. Therefore, it takes more time and effort for the housekeepersto clean these rooms when compared to the rooms of other customers.

The total time for the main “housekeeping” activity is sum of the times spent on theactivities performed before check-in and after check-out. For example, before acustomer (group 1) checks in, the housekeeper controls (three minutes), as well ascleans and vacuums the reserved room (seven minutes). After the customer settles in,the housekeeper cleans and vacuums the reserved room during customer’s stay (fourminutes). After the customer leaves the hotel, the housekeeper cleans and vacuums theroom and replenishes the linens (16 minutes). In this case, the total length of time, spenton the “housekeeping” activity for a customer in “group 1”, is 30 minutes. Table IVportrays the average unit times of consumption of resources of the main“housekeeping” activities by each of the customer groups. Table IV also shows the

amount of costs allocated under TDABC. Based on the figures presented in Table IV,the total time needed for performing the “housekeeping” activities was calculated as566,154 minutes.

The case hotel employs seven housekeepers and each housekeeper works 6.5 hoursper day (excluding time for breaks, meetings, arrival and departure, and resting hours).In this case, each housekeeper supplies about 10,140 minutes per month and 121,680minutes per year. Thus, the practical capacity of seven housekeepers is 851,760minutes per year. We combined the “unit time” figures in Table IV (“total unit time”

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C u s t o m e r

g r o u p s

U n i t t i m e ( m

i n u t e )

s p e n t o n c o n t r o l l i n g

t h e r e s e r v e d

r o o m

( b e f o r e c h e c

k - i n )

U n i t t i m e ( m i n u t e )

s p e n t o n c l e a n i n g

a n d v a c u u m i n g t h e

r e s e r v e d r o o m

( b e f o r e c h e c k - i n )

U n i t

t i m e ( m i n u t e )

s p e n t o n c l e a n i n g t h e

r o o m s a n d

r e p l e n i s h i n g l i n e n s

d u r i n

g c u s t o m e r ’ s

s t a y

U n i t t i m e ( m i n u t e )

s p e n t o n c l e a n i n g

t h e r o o m s a n d

r e p l e n i s h i n g l i n e n s

a f t e r t h e c u s t o m e r

l e a v e s t h e h o t e l

T o t a l

u n i t t i m e

( m i n u t e )

A c t i v i t y

q u a n t i t y

T o t a l

m i n u t e s

R a t e

( $ / m i n )

A l l o c a t e d

c o s t

G r o u p 1

3

7

4

1 6

3 0

5 , 1 2 3

1 5 3 , 6 9 0

0 . 6 8

1 0 4 , 5 0 9

G r o u p 2

2

6

4

1 6

2 8

5 , 9 6 4

1 6 6 , 9 9 2

0 . 6 8

1 1 3 , 5 5 5

G r o u p 3

3

7

4

1 6

3 0

1 , 2 5 6

3 7 , 6 8 0

0 . 6 8

2 5 , 6 2 2

G r o u p 4

3

7

4

1 8

3 2

3 , 7 6 7

1 2 0 , 5 4 4

0 . 6 8

8 1 , 9 7 0

G r o u p 5

4

1 1

4

3 1

5 0

1 , 5 7 0

7 8 , 5 0 0

0 . 6 8

5 3 , 3 8 0

G r o u p 7

2

6

4

1 6

2 8

3 1 4

8 , 7 9 2

0 . 6 8

5 , 9 7 9

T o t a l

1 7

4 4

2 4

1 1 3

1 9 8

1 7 , 9 9 4

5 6 6 , 1 9 8

3 8 5 , 0 1 5

Table IVCosts of housekeepin

activities allocated undTDAB

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column) and derived the following time equation for the “housekeeping” activities(customers clustered in groups 6 and 8 are not included in the equation because thesecustomers do not stay overnight in the hotel):

Total time ðmin Þ for housekeeping activities¼ ð30*#customersÞ½if customer group 1 þ ð28*#customersÞ½if customer group 2

þ ð30*#customersÞ½if customer group 3 þ ð32*#customersÞ½if customer group 4þ ð50*#customersÞ½if customer group 5 þ ð28*#customersÞ½if customer group 7

As previously presented in Table I, the total cost of the “housekeeping” activities was$579,208. Dividing this amount by the practical capacity of 851,760 minutes per yearresulted in a cost of $0.68 per minutes as the cost of one time unit of the “housekeeping”activities. The rate of $0.68/minute was then multiplied by the total minutes, spent foreach customer group, in order to apportion the costs of the “housekeeping” activities tothe customers.

The use of TDABC reveals that the cost of unused resources, devoted for the

“housekeeping” activities, was $194,193 [$579,208 (again Table I)2

$385,015]. This isdue to the fact that, only 66 percent (which was calculated by dividing 566,198 minutesby the practical capacity of 851,760 minutes) of the practical capacity of the resourcessupplied for the “housekeeping” activities had been actually utilized during the studyperiod.

Allocation of the costs of food preparation activities under TDABC The “food preparation” activity-cost pool basically consists of depreciation, personnel,energy, stationery, repair and maintenance, purchasing, storing, and food andbeverage costs. This cost pool also comprises the costs allocated from the humanresource, accounting and finance, and administrating cost centers. We allocated thetotal cost of the “food preparation” activity-cost pool to the customer segments based

on the practical capacity of the personnel working in the restaurant. We identified threecommon “food preparation” activities (preparing and serving breakfast, preparing andserving lunch, and preparing and serving dinner), with each one comprising severalsubtasks. These subtasks are: welcoming customers, taking orders, preparing andcooking foods, serving the foods, waiting while the customers eat, and after-servicecleaning. In calculating the total time spent on the “food preparation” activities, theunit time a customer spends on eating is also taken into account because the personnelof the restaurant must wait until the customer finishes eating.

The unit and total times spent on the subtasks of the “preparing and servingbreakfast” activity is presented in Table VI. The total time needed for “preparing andserving breakfast” activity is sum of the times spent on the subtasks. For example,when a customer (group 1) comes to the restaurant, the staff members of the restaurantwelcome the customer and take the order (one minute), prepare and serve the food(ten minutes), wait until the customer finishes eating (40 minutes), and deal withafter-service cleaning once the customer leaves the restaurant (one minute). In this case,the total length of time, needed to offer breakfast for a customer in “group 1”, is52 minutes (Table VI in order to see the total unit times needed to serve breakfast forother customer groups).

Based on the data presented in Table VI (“total unit time needed for breakfast”column of Table VI), we derived the time equation for “breakfast” as follows (customer

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groups 6 and 8 are not included in the equation because these customers do not havebreakfast in the hotel):

Total time ðminÞ for breakfast ¼ ð52*#customersÞ½if customer group 1

þ ð50*#customersÞ½if customer group 2þ ð52*#customersÞ½if customer group 3þ ð52*#customersÞ½if customer group 4þ ð37*#customersÞ½if customer group 5þ ð38*#customersÞ½if customer group 7

As can be seen in Table VI, the time spent on performing the “food preparation”activities varies for different customers. For instance, since a set menu is offered to thecustomers in “group 5”, it takes up less time for the hotel personnel to perform thesubtasks for these customers when compared to others. Based on the data presented inTable VI (“total unit time needed for lunch” column in Table VI), we developed thefollowing time equation to capture the estimate of the time necessary to implement the

“preparing and serving lunch” activity (Table VI in order to see the total unit timesneeded to serve lunch to all customer groups):

Total time ðminÞ for lunch ¼ ð95*#customersÞ½if customer group 1þ ð81*#customersÞ½if customer group 2þ ð83*#customersÞ½if customer group 3þ ð94*#customersÞ½if customer group 4þ ð42*#customersÞ½if customer group 5

Customer groups 6-8 are not included in the above equation because these customersdo not have lunch in the case hotel. Similar to breakfast and lunch, the estimated timefor the “preparing and serving dinner” activity can be calculated using the following

time equation that we developed based on the data presented in Tables V and VI. In theequation, customer groups 6-8 are not included because these customers do not havedinner in the hotel (“total unit time needed for dinner” column of Table VI):

Total time ðminÞ for dinner ¼ ð145*#customersÞ½if customer group 1þ ð106*#customersÞ½if customer group 2þ ð108*#customersÞ½if customer group 3þ ð129*#customersÞ½if customer group 4þ ð57*#customersÞ½if customer group 5

Based on the figures presented in Table V, the total time needed for the “foodpreparation” activities was calculated as 3,978,510 minutes. On the other hand, the casehotel employs 30 employees in the restaurant and each employee works eight hours perday (excluding meeting and resting hours). In this case, each employee supplies 12,480minutes per month and 149,760 minutes per year. In that respect, the practical capacityof 30 employees is about 4,492,800 minutes per year. On the other hand, the total amountof indirect costs of the “food preparation activities” amounted to $298,434[$381,349(Table I) 2 $82,915 (total direct food costs, see Table V)] during the studyperiod. Dividing this amount by the practical capacity of 4,492,800 minutes per yearproduced$0.07as the cost of one time unit of the “food preparation” activities. The rate of

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C u s t o m e r

g r o u p s

T o t a l m i n u t e s s p e n t

f o r b r e a k f a

s t ( s e e

T a b l e V I –

c o l u m n

“ g ” )

T o t a l m i n u t e s s p e n t

f o r l u n c h ( s e e T a b l e V I

– c o l u m n “ n ” )

T

o t a l m i n u t e s s p e n t

f o r d i n n e r ( s e e T a b l e V I

– c o l u m n “ u )

T o t a l m i n u t e s

( s u m

o f

t h e t o t a l m i n u t e s s p e n t

f o r b r e a k f a s t ,

l u n c h ,

a n d d i n n e r )

R a t e

( $ / m i n )

T o t a l

i n d i r e c t

c o s t s

a l l o c a t e d

T o t

a l

d i r e

c t

c o s t s

T o t a l

c o s t

G r o u p 1

1 , 2 5 3 , 6

1 6

6 8 , 6 8 5

4 1 9 , 4 8 5

1 , 7 4 1 , 7 8

6

0 . 0 7

1 2 1 , 9 2 3

3 0 , 4

4 6

1 5 2 , 3 6 9

G r o u p 2

4 7 7 , 1

5 0

3 , 8 8 8

8 0 , 8 7 8

5 6 1 , 9 1

6

0 . 0 7

3 9 , 3 3 3

9 , 0

1 3

4 8 , 3 4 6

G r o u p 3

2 6 1 , 1

4 4

1 4 , 6 0 8

5 9 , 6 1 6

3 3 5 , 3 6

8

0 . 0 7

2 3 , 4 7 7

7 , 6

5 4

3 1 , 1 3 1

G r o u p 4

3 3 3 , 0

0 8

2 7 , 0 7 2

7 4 , 3 0 4

4 3 4 , 3 8

4

0 . 0 7

3 0 , 4 0 5

9 , 4

0 5

3 9 , 8 1 0

G r o u p 5

1 9 7 , 4

3 2

2 2 4 , 1 1 2

3 3 1 , 5 1 2

7 5 3 , 0 5

6

0 . 0 7

5 2 , 7 1 5

1 8 , 8

8 1

7 1 , 5 9 6

G r o u p 7

1 5 2 , 0

0 0

1 5 2 , 0 0

0

0 . 0 7

1 0 , 6 4 0

7 , 5

1 6

1 8 , 1 5 6

T o t a l

2 , 6 7 4 , 3

5 0

3 3 8 , 3 6 5

9 6 5 , 7 9 5

3 , 9 7 8 , 5 1

0

2 7 8 , 4 9 3

8 2 , 9

1 5

3 6 1 , 4 0 8

Table V.Cost of food preparationactivities allocated underTDABC (allocation of costs of food preparationactivities under TDABC)

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T i m e s p e n t o n s e r v i n g b r e a k f a s t

C u s t o m e r

g r o u p s

( a ) Q u a n t i t y

( n u m b e r o f

c u s t o m e r s h a v i n g

b r e a k f a s t )

( b ) U n i t t i m e ( m i n u t e )

n e e d e d f o r w e l c o m i n g

c u s t o m e r s a n d t a k i n g

o r d e r s f o r b r e a k f a s t

( c ) U n i t t i m e ( m i n u t e )

n e e d e d f o r p r e p a r i n g

t h e o r d e r

dalci / cpa with tdabc

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