Question: TDABC is an activity-based costing that is also based on the function of time. In TDABC, we allocate the activity capacity based on how much

TDABC is an activity-based costing that is also based on the function of time. In TDABC, we allocate the activity capacity based on how much time used for each activity.

There are two types of TDABC:

a. bottom-up TDABC (in which employees estimate the time associated with performing the activity once) --> leads to underestimation of time used

b. top-down TDABC (in which employees estimate the total time associated with the total practical capacity of the activity) --> leads to overestimation of time used

The question is why the underestimation/overestimation in TDABC occurs?

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