PERCEPTION OF ACTIVITY BASED COSTING IN AUSTRALIAN UNIVERSITIES

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Abstract

The study examines the perception of activity based costing (ABC) in Australian universities. Using a questionnaire survey, data was collected from twenty-six finance directors and/or chief financial officers in Australian universities. The perception of ABC implementation in Australian
universities depends on many variables including the understanding of ABC, consideration of ABC as a strategic cost management system, the role of ABC in reduction of expenses, consideration of ABC as a valuable tool to enhance overhead cost allocation, and consideration of ABC as an effective strategic cost management system designed to incorporate the university’s
critical input, output, and process variables resulting in value creation. The result of regression analysis provides significant and positive association between the decision to implement ABC in Australian universities and both the treatment of ABC as a strategic cost management system and the degree of both senior management and internal champion support. The findings
indicate substantial differences in the allocation of the overhead costs between ABC and traditional costing systems. The result also reveals that many Australian universities using the ABC method receive benefits in improving cost reduction and better resource allocation with revenue surplus. Furthermore, the study develops a generic model of cost pools and drivers of
ABC implementation in Australian universities.

Keywords: ABC Implementation, Australian Universities, Equivalent Full- Time Student Unit, Cost Drivers, and Cost Pools

How to cite this paper: Zaman, M., & Elsayed, M. (2011). Perception of activity based costing in Australian universities. Corporate Board: role, duties and composition, 7(2), 64-78. https://doi.org/10.22495/cbv7i2art5