The prompt to build a TDABC model with AI
Time-Driven Activity-Based Costing turns one number, the cost per minute of a resource, plus how long each task takes, into the true cost of every order, product or customer. An AI assistant can build the whole model in one pass, but only if you stop it from inventing the figures. Here is the exact prompt we tested, the result it produced, and the guardrail that keeps it honest.
In short
Paste the prompt below into ChatGPT, Claude, Gemini or Copilot, replace the sample figures with your own department's data, and the assistant will compute practical capacity, the capacity cost rate, the cost of each activity, and, the part traditional costing hides, the cost of your unused capacity. The prompt forces it to show every formula and to flag every assumption, so you can audit the result instead of trusting it blind.
What the prompt is doing
Time-Driven Activity-Based Costing was set out by Robert Kaplan and Steven Anderson in Harvard Business Review in 2004 and in their 2007 book of the same name. The idea is simple. Take the total cost of a department and divide it by its practical capacity in minutes, the time people are actually available to work once you remove breaks, training and admin. That gives a cost per minute. Then estimate how many minutes each activity takes. Multiply, and every activity carries its fair share of cost. Anything left over is the cost of capacity you paid for but did not use, which is a number most cost systems quietly bury. If you want the full method, see our guide to building a TDABC model and to capacity costing.
The prompt
Replace the sample data with your own. Keep the rules at the top and the numbered steps. They are what make the difference.
You are a cost accountant specialising in Time-Driven Activity-Based Costing (TDABC), the method developed by Kaplan and Anderson. I want to build a TDABC model for one department. Work only from the data I give you. Do not invent any numbers, rates, or volumes. Where a figure is missing, ask for it or label it clearly as an assumption. Here is my data: - Department: Customer Service - People: 8 full-time agents - Paid hours per agent per month: 160 - Practical capacity factor: 80% (the rest is breaks, training, admin) - Total monthly cost of the department (salaries + supervision + systems + space): 32,000 EUR - Activities and estimated minutes per event: - Handle a standard order: 9 minutes - Handle a complex order: 22 minutes - Process a return: 17 minutes - Monthly volumes: standard orders 3,100; complex orders 540; returns 410 Do this, step by step and showing the formula at each step: 1. Compute practical capacity in minutes (people x paid hours x 60 x practical capacity factor). 2. Compute the capacity cost rate (total cost / practical capacity minutes), in EUR per minute. 3. Cost each activity (minutes per event x capacity cost rate). 4. Cost each activity at its monthly volume. 5. Sum the cost of used capacity, then show the cost of unused capacity (total cost minus cost of used capacity). 6. List every assumption you made. Output a clean table for steps 3 and 4, and flag any figure you could not derive from my data.
The sample numbers above are illustrative, not from any real client. Swap in your own department, headcount, cost and activity times.
A worked example, so you can see it run
This is the actual result the prompt produced on a current assistant, using the sample data above. We checked the arithmetic by hand. Notice what it does: it shows each formula, it separates used from unused capacity, and it ends with a list of assumptions rather than hiding them.
Step 1. Practical capacity
8 agents × 160 hours × 60 × 0.80 = 61,440 minutes per month
Step 2. Capacity cost rate
32,000 EUR ÷ 61,440 minutes = 0.5208 EUR per minute (about 31.25 EUR per hour)
Steps 3 and 4. Cost of each activity, at volume
| Activity | Minutes | Cost per event | Volume | Activity cost | Minutes used |
|---|---|---|---|---|---|
| Standard order | 9 | 4.69 | 3,100 | 14,531.25 | 27,900 |
| Complex order | 22 | 11.46 | 540 | 6,187.50 | 11,880 |
| Return | 17 | 8.85 | 410 | 3,629.17 | 6,970 |
| Total used | 24,347.92 | 46,750 |
Step 5. Used versus unused capacity
Total cost 32,000 − cost of used capacity 24,347.92 = 7,652.08 EUR of unused capacity (about 24% of what you pay for)
That last line is the insight. Almost a quarter of the money this department costs is not being absorbed by the three activities measured. In a traditional system that cost would be spread across the orders, making each one look more expensive than it is and hiding the real issue, which is spare capacity, not expensive orders.
Step 6. Assumptions it flagged
The model assumed these three activities are the department's only work, that the eight agents are interchangeable at one blended rate, and that the times and volumes given are accurate. It flagged the first as the one to check, because if agents also do work you did not list, the unused capacity figure is overstated. That honesty is the point. It tells you where the model could be wrong instead of presenting a single confident number.
What it costs you to run
This prompt is around 340 tokens of input, roughly 250 English words. A vague version, "help me build a TDABC model", is about 11 tokens, but it cannot produce the result above. In our test it invented a department, a headcount and a rate, then asked for the data anyway, which means a second full round before you get anything real. The structured prompt costs a few hundred extra tokens up front and saves you the wasted round and the work of spotting fabricated numbers.
Token figures are approximate and depend on the model. Portuguese and Spanish versions of the same prompt use more tokens per word than English.
The guardrail that matters
The single most important line in the prompt is this one. Keep it in every costing prompt you write.
Work only from the data I give you. Do not invent any numbers, rates, or volumes. Where a figure is missing, ask for it or label it clearly as an assumption.
For the full set of anti-hallucination guardrails, see how to stop AI inventing your numbers.
When you need the real model
This prompt gives you a clean draft for one department from estimated times. A model your board or your auditor will trust is built on your real general ledger, reconciled to your accounts, and kept alive in software after the project ends. That is what we do. We build Time-Driven Activity-Based Costing models in CostCTRL and hand you a result you can defend, not a sketch.