82nd International Atlantic Economic Conference

October 13 - 16, 2016 | Washington, USA

Limitations of cost management reforms in the field of education institutes- an activity based costing perspective

Sunday, October 16, 2016: 10:00 AM
John Sorros, PhD , Department of Business Administration, University of Piraeus, Piraeus, Greece
Alkiviadis Karagiorgos, M.B.A. , Business Administration, University of Piraeus, Piraeus, Greece
Nicholas Belesis Sr., M.B.A. , Business Administration, University of Piraeus, Piraeus, Greece
The educational sector has often been found to lag behind other sectors of a business nature, even in relation to other service industry businesses. Research shows how both higher education and institutes of lower tier are in a constant search to improve their cost management and optimization levels. However few institutes reformed their cost accounting management, resulting in the need for cost benefit analysis to convince stakeholders regarding the benefits of such an organizational reconfiguration. The Activity Based Costing (ABC) method is selected by many researchers as a novel solution of harmonizing the educational status of the organization with the business part of an educational organization. However, the application appears to present complexities and difficulties fluctuating from staff reactions and overheads, to the high cost application of the method. It was found that some of these restraints are related to the nature of the educational sector and some with the overall business functions. However one of the greatest hindrances implementing an ABC approach is the lack of a standard and concise cost accounting system or model for educational organizations to allocate indirect costs to the proper activities.  This study describes and analyzes the introductory, application and maintenance ofABC problems. The research aims are to clarify the distinctive characteristics of Greece’s educational sector and demonstrate the role of cost accounting management for the different educational levels. Furthermore these restraints are categorized according to their nature and origin. Finally the survey proposes actions to enable educational Institutions and cost managers to transition smoothly from a traditional costing system to the ABC model and surpass the implementation cost as a deterrent.