Master of Commerce (Hons.)
Department of Accounting and Finance
Robertson, Stephen Connelly, Activity based costing and its application in Australian schools: with a particular focus on the King's School, Master of Commerce (Hons.) thesis, Department of Accounting and Finance, University of Wollongong, 1995. http://ro.uow.edu.au/theses/2277
This thesis attempts to establish the relevance and usefulness of activity based costing (ABC) information with respect to Australian schools. It represents the first time in Australia and possibly overseas that ABC has been applied to the educational sector. In striving to prove that ABC provides a mechanism for dramatically enhancing the quality of management information provided to school executives and administrators the author has chosen Australia's oldest independent school, The King's School, as the school upon which to test the applicability of ABC.
Studies conducted by the Economic Planning Advisory Council (EPAC) highlighting that savings of over $1.4 billion (each year) could be made if the state governments were able to adopt the Australian lowest cost price for a given level of quality. There is a strong body of evidence to suggest that the undertaking of a costing study, using modern costing techniques, has the potential to yield substantial benefits to governments and schools alike.
The ABC information presented to The King's School provides some unique information in respect of how costs are consumed by the various activities provided by the school: which events or transactions drive these costs; what are the unit costs associated with each activity; how the different student types within the school consume these activities; how profitable are these different student types and what opportunities for cost reduction exist within the school.
ABC enables benchmarking of activities and student types to be performed schools thereby allowing best practice sites to be identified. The identification of best practice schools with a complete cost picture of all their activities, and how these activities are consumed by the different types of students, would be of enormous benefit to state governments responsible for the level of funding granted to each school in the state. In fact A B C could be used as the mechanism for funding schools on the basis of the number of activities performed. Funding schools based on activities would also act as a means of validating that certain outcomes have in fact been achieved. In other words did the school perform all the activities which they said they were going to perform (and for which they were funded).
Indeed, it would appear, based on the study at The King's School, that information has the potential to yield substantial benefits for schools and government bodies alike in their quest to provide an efficient and cost effective school education system.