Activity-Based Costing

636 Words3 Pages
So, how does Activity-Based Costing apply to Higher Education? Many people are concerned about the rising cost of tuition. Referring to Ronald Ehrenberg’s article titled, “Tuition Rising: Why College Costs so Much”, it states, “For at least a century, tuition at selective private colleges and universities has risen annually by two to three percent more than the rate of inflation,” (pg 28, Ehrenberg, 2000). In this article he discusses how the “Winner-Take-All” Society is causing post-secondary institutions to do whatever it takes to appear better than their competitors, by mentioning that, “institutions wind up in an arms race of spending to improve facilities, faculty, students, research, and instructional technology,” (pg 29, Ehrenberg, 2000).…show more content…
Tatikonda and Rao J. Tatikonda’s document titled “Actvity-Based Costing for Higher Education Institutions” also supports Ehernberg’s theory about the cost issues with Higher Education Facilities. This document discusses how Higher Education facilities are facing issues with finances due to increases in tuition, competition, and limited resources by stating, “Escalating costs, diminishing resources, increased com- petition, unhappy customers (students, parents), and state legislators demanding accountability are pressuring them to manage their costs better,” (pg 19, Tatikonda and Tatikonda, 2001). This document attempts to suggest ways that the activity based costing system can reduce or eliminate those issues by explaining the steps of applying Activity-Based Costing and discussing activity classification. Also, it attempts to compare the usage of Activity-Based Costing programs in the manufacturing industry to universities to support its claims. Ultimately this document discovered that, “ABC helped them with tighter financial management and better resource allocation,” (pg 19, Tatikonda and Tatikonda, 2001). Robert W. Duron from Capella University has a document titled, “Factors associated with the perceived benefits of activity-based costing in nonprofit institutions of higher learning” that attempts to investigate the effectiveness of the usage of activity-based costing in nonprofit firms. Duron informs us that Activity-Based costing is a great remedy for
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