AAA Spark Meeting of Regions

Tibbins Pharmaceuticals: A Case on the Application of Time-Driven Activity-Based Costing in a Pharmaceutical Environment

• In Event: Effective Learning Strategies Poster Session A
  In Poster Session: Room 2

Abstract

Healthcare organizations have historically used traditional costing and/or activity-based costing systems in their reporting and pricing processes. However, many systematic deficiencies have been reported due to the overall complexity of the healthcare industry. In recent years, a new costing system called “time-driven activity-based costing (TDABC)” has emerged as a possible solution to these issues. Early pilot studies report that this method of costing may be more efficient and effective in healthcare environments in properly allocating indirect costs and reporting costs of services provided.

The proposed teaching session will discuss the introduction of a case examining the application of TDABC to a pharmacy. Session attendees will be introduced to accounting complexities in the healthcare industry as well as learn about how TDABC varies from traditional and activity-based costing systems. It is our hope that this session will encourage thoughtful critiques and questions that will help us further refine this case before submission for publication.

This case introduces an engaging, cost accounting exercise in a novel environment that will spark students’ interest. This case is intended for use in an upper-level, undergraduate cost accounting course. Student prerequisite knowledge should include traditional cost accounting procedures, activity-based costing, and basic allocation techniques.

Authors

• Shari Fowler, Indiana University- East

• Sondra L Smith, Indiana University - East