Factors associated with the perceived benefits of activity-based costing in nonprofit institutions of higher learning

This study examined the relationship between selected environmental factors and the perceived benefits of activity-based costing (ABC) in nonprofit institutions of higher learning. The chief fiscal officers of 245 CACUBO affiliated nonprofit colleges and universities responded to a survey instrument administered during the spring of 2001. The four research questions of the study examined the relationship between the belief that ABC would be beneficial to the organization as a cost management tool and the following environmental factors: (a) the potential for cost distortions, (b) the decision-usefulness of cost information, (c) satisfaction with the current cost system, and (d) the financial commitment to technology-based distance education. A statistically significant relationship was found in the aggregate for the first three factors. A statistically significant positive relationship was found for the financial commitment to technology-based distance education for private, four-year, and large (greater than 10,000 FTE enrollment) schools. A major finding of the study was that nonprofit institutions of higher learning share a relationship similar to that which has been found by other researchers in for-profit, business-type organizations between the three environmental factors and the perceived benefits of ABC. Further, the financial commitment to technology-based distance education was found to be a unique environmental factor associated with the perceived benefits of ABC for certain institutions in this setting. The investigation highlighted the need for further research into (a) the development of more refined measures for two of the environmental factors under study, (b) the relationships between and among the four environmental factors, and (c) reasons underlying the relatively low adoption rate of ABC in institutions of higher learning.