Activity based costing awareness and utility – A survey in Greek private schools

For nearly three decades, Activity-Based Costing or ABC, provides accurate and appropriate information regarding consumption, resources and determining a company’s true costs. This enabled managers to efficiently allocate costs and process decisions.  However, as its implementation was focused mainly on large scale industries, despite previous studies, ABC’s utility in the service sector and especially in educational institutions was not thoroughly examined. The ability to identify curriculum costs and profitable workshops make ABC a system capable of developing cost management systems suitable for schools and other educational institutions. Through a survey conducted in Greece’s private educational institutions this paper provides information on ABC- awareness in the education industry.

Implementing the ABC method is challenging, especially for managers unfamiliar with it. In this research, ABC is introduced in Greek schools and institutions, a sector foreign to untraditional costing methods. This research tries to determine the educational industry’s potential to adapt to the costing method based on activities. Furthermore it argues about the ability of private schools and educational institutes to understand the consequent employees' responses.  Similar cases in the educational literature, rareely approach specific costing methods, nor do they include the ability of an educational institution to implement these methods as a means of profitability augmentation. For these purposes the research team contacted school management as well as the financial manager, if one existed. Otherwise, the accountants in charge of the economic and costing procedures were contacted. The sample ranges from large schools to preparatory facilities, in a large number of geographical regions within Greece. Beyond the scope of identifying awareness, it was also possible to determine management desire to change the costing method used in their facility after understanding the benefits of an ABC method.          

Key words: Activity Based Costing, ABC, Education, Schools, Costing methods, Educational Institutions, Cost allocation, ABC awareness