APPLICATION OF TIME-DRIVEN ACTIVITY-BASED COSTING FOR ALLOCATING MAINTENANCE DEPARTMENT COSTS TO PRODUCTION DEPARTMENTS: A CASE STUDY OF A PHARMACEUTICAL MANUFACTURING PLANT

Abstract

This study aims to examine the current cost allocation system of the maintenance department, develop a cost allocation approach using the Time-Driven Activity-Based Costing (TDABC) method, and compare the allocation results between the existing method and the TDABC approach in a pharmaceutical manufacturing plant. A case study research design was employed. Data were collected from internal organizational documents, maintenance activity records, production service utilization records, interviews with personnel, and observations of work processes. The study analyzed maintenance activities, calculated the Capacity Cost Rate (CCR), and allocated maintenance costs to production departments based on the time required to perform maintenance activities. The findings indicate that using the total working time of both Corrective Maintenance (CM) and Preventive Maintenance (PM) activities as the cost allocation basis under the TDABC approach provides a more accurate representation of resource consumption by production departments than the existing method, which relies solely on CM hours. As a result, cost allocation becomes more appropriate and reduces cost distortion. Furthermore, the TDABC system is capable of identifying unused capacity within the maintenance department, providing valuable information for resource planning and cost management. The results suggest that the application of TDABC improves the accuracy of cost information, supports managerial decision-making, and serves as an effective approach for allocating maintenance department costs to production departments in pharmaceutical manufacturing environments.

Keywords: Time-Driven Activity-Based Costing (TDABC), Cost Allocation, Maintenance Department