Activity-based costing (ABC) is often thought of quite complex and difficult to implement. A further innovation has been the development of Time Driven ABC (TABC), that is supposed to be a superior method, estimates costs more accurately, as well as easier to implement.

Required:

1. What are the principal differences between ABC and TABC?
2. What does Activity based allocation system buy with its additional complexity over labor or machine hour-based allocation system?
3. How is TABC different from the labor-based allocation system?

Time Driven Activity Based Costing (TABC) System has been proposed as a simpler version of activity-based cost system. Usually simplicity (in implementation as claimed) comes at a cost. Does TABC make any sacrifice from the principles of ABC that has the potential to make it less accurate? Does TABC make any sacrifice for simpler implementation? Why or why not?