Application Research For C Branch H Bank Based On Time-Driven Activity-Based Costing

Nowadays, Chinese commercial banks are faced with fiercely competition environment and various challenges from both industry and related policies, these factors lead to the gradually reduce of profitability in these commercial Banks. In order to develop effectively, Chinese commercial banks must find out the advantages through reform, and eliminate its disadvantages timely. One of the important internal factors is the expense and cost during their business activities. At present, most Chinese banks adopt the traditional cost allocation method for cost management, which is very difficult to trace and divide indirect costs for bank. Because of a large part of bank cost is indirect cost, the adoption of Time-Driven Activity-Based Costing (TDABC) for commercial bank is very appropriate. Time-Driven Activity-Based Costing is the improvement of Activity-Based Costing (ABC). It not only retains the advantages of Activity-Based Costing, which can improve the accuracy of cost information and provide strong support for bank’s performance evaluation and production dec is ion-making, but also has the advantage to reduce the operation cost and time consuming by using time as cost driver. Hence, TDABC has better application.This paper we use C branch of H bank as a case for commercial bank to implement Time-Driven Activity-Based Costing, and we account indirect cost through the relevant financial and business data of C branch. According to the implementation method of Time-Driven Activity-Based Costing and the characteristics of bank, we establish a TDABC model——Accounting allocation of indirect cost for each activities through the related data to calculate the capacity cost rate and obtain the time equation of C branch by observation and communication. We analysis the result of indirect cost accounting based on TDABC and put forward some suggestions for commercial bank in the future management and business operations. At last, we analysis feasibility to implement TDABC for commercial banks, whether these model can be widely applied in banks and which parts banks should improve when use TDABC in practice.This paper can provide theoretical and practical basis for commercial bank through the implementation of Time-Driven Activity-Based Costing in banks, and give the foundation and enlightenment for further research.