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Mar 2009

Time estimates as cost drivers

This research focuses on the accuracy of the time estimates provided by employees on their various activities, as time estimates are present throughout cost systems. These time estimates are used as duration drivers to allocate resource costs to activities and cost objects.

As the service industry grows in importance, the use of duration drivers is expected to increase further, as the cost of staff time spent becomes the most important resource.

This research studies the determinants of measurement error in time-driven costing to obtain an observable true-cost benchmark that can assess the error in a costing system.

Time estimates as cost drivers