Full costing of business programs: benefits and caveats

Full costing of business programs: benefits and caveats Purpose – To suggest an approach to program costing that includes the approaches and concepts developed in activity based costing. Design/methodology/approach – The paper utilizes a hypothetical case study of an Executive MBA program as a means of illustrating the suggested approach to costing. Findings – The paper illustrates both the benefits of using an activity based costing approach and the danger of allocating organizational sustaining costs to a specific program for the purpose of assessing the profitability of that program. Practical implications – University and faculty administrators will understand the benefits of activity based costing and they will understand that they should not evaluate the profitability of a program (nor make decisions about the termination of a program) on the basis of allocated organizational sustaining costs. Originality/value – The value of the paper is to university and faculty administrators, who will be able to utilize a new approach to costing university programs. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png International Journal of Educational Management Emerald Publishing

Full costing of business programs: benefits and caveats

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Publisher
Emerald Publishing
Copyright
Copyright © 2006 Emerald Group Publishing Limited. All rights reserved.
ISSN
0951-354X
DOI
10.1108/09513540610639576
Publisher site
See Article on Publisher Site

Abstract

Purpose – To suggest an approach to program costing that includes the approaches and concepts developed in activity based costing. Design/methodology/approach – The paper utilizes a hypothetical case study of an Executive MBA program as a means of illustrating the suggested approach to costing. Findings – The paper illustrates both the benefits of using an activity based costing approach and the danger of allocating organizational sustaining costs to a specific program for the purpose of assessing the profitability of that program. Practical implications – University and faculty administrators will understand the benefits of activity based costing and they will understand that they should not evaluate the profitability of a program (nor make decisions about the termination of a program) on the basis of allocated organizational sustaining costs. Originality/value – The value of the paper is to university and faculty administrators, who will be able to utilize a new approach to costing university programs.

Journal

International Journal of Educational ManagementEmerald Publishing

Published: Jan 1, 2006

Keywords: Activity based costs; Cost allocations; Cost drivers; Business schools

References

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