Institutional characteristics that support activity-based costing and business officers' perceptions regarding cost management

Cost accounting literature produced in recent years contains many references to the deficiencies of traditional accounting systems related to the limited usefulness of the data for management decisions, lack of accuracy, and limited relevance for cost management. Activity-based costing (ABC) was developed as a solution to these deficiencies. In the for-profit sector cost management systems have been developed to address the information needs of managers, but the not-for-profit sector (including higher education) lags in this development. The purpose of this study was to examine the existence of characteristics for applying activity-based costing systems in higher education institutions' environments. This study also was conducted to identify the differences in attitudes and opinions regarding cost management held by business officers in higher education.; The target population for this study consisted of approximately 1,500 institutions business officers holding membership in the National Association of College and University Business Officers (NACUBO). A survey was used to collect data from a stratified random sample of 410 business officers in higher education institutions classified based on the Carnegie classification: public research, public comprehensive, public baccalaureate (BA), public specialized, private research, private comprehensive, private baccalaureate, and private specialized institutions.; Descriptive and inferential analyses were performed to answer the research questions posed for the study. Inferential statistics, including t tests, one-way analyses of variance (ANOVAs) and Tukey's HSD tests were used to determine if there were significant differences in the institutional environmental characteristics that support activity-based costing among higher education institutions and to examine the differences in business officers' perception regarding cost management among higher education institutions.; Major conclusions to emerge from the study include the following. First, the suitability of characteristics for applying activity-based costing exists in higher education institutions, but not consistently through all categories. Second, public and research institutions may be appropriate candidates for activity-based costing implementation due to the diversity of their institutional characteristics. Third, because they face more serious price competition and a greater need for useful cost information, private and BA institutions also may be appropriate candidates for activity-based costing implementation.