Reasons for non-adaptation of

Activity Based Costing techniques by

urban and suburban colleges
Dr. S.B. Yadav
Assistant Professor
C.K. Thakur College, New Panvel
sbyadavckt@gmail.com

Introduction
An activity based
system recognizes
between
costs,
products,
and
relationship assigns
products

costing (ABC)
the relationship
activities
and
through
this
indirect costs to

Review of literature
Mahdi Salehi, Rezvan Hejazi,
Nazanin Bashiri Manesh(2010)
has explain the steps and the
benefits of implementing activity
based costing (ABC) for the Iranian
Gas Company.
Maria
Joao
Cardoso
Vieira
Machado
has
studied
the
application of activity based costing
in small and medium size enterprises

Sample Framework
Table 1:- Table showing the selection of sample colleges.
Sr.

District/Study

Total

No.

Block

ASC

Sample

Colleges Sample to total

College
01

Mumbai City

02

Mumbai

03

suburban
Thane

Total

Percentage of
colleges

s
45

06

13.33%

101

10

9.90%

99

10

10.10%

245

26

10.61%

Objectives of the study

To analyze the various reasons for nonadaptation of activity based costing
systems to the colleges in urban and
suburban area affiliated to university of
Mumbai.
To enlist valid conclusions of the study and
recommendations for more adaptation of
activity based costing systems in urban
and suburban colleges to strengthen the
college activities as regards to cost
effectiveness and efficiency.

Limitations of the study

The study has been restricted to the
colleges, which are in urban and suburban
areas affiliated to the University of
Mumbai and selected as a sample.
Study has been restricted to the
jurisdiction of the University of Mumbai,
which means the colleges, which come
under other university areas, are excluded
from the scope of the study.
Other aspects of the accountancy i.e.
.Financial
Accounting,
Management
accounting etc. will not be taken into

Data analysis

Table1: Status of adaptation of Activity Based Costing System in colleges.

Designat

Urban

ion
Principal

N
o

Registra N
r

Count
% of Total
Count
% of Total

05

Subur
ban
21

19.23 80.76
%

05

21

19.23 80.76
%

Total
26
100%
26
100%

Table2: Willingness to adopt Activity

Based Costing.
Designation
Principal

Urban

Suburban

Total

05

20

25

19.23%

76.92%

96.15

Count

00

01

01

% of Total

0%

3.85%

3.85%

Count

05

21

26

19.23%

80.77%

100%

Yes Count
% of Total
No

% of Total

Table2: Willingness to adopt Activity

Based Costing.
Registrar

Yes Count
% of Total

No Count

% of Total

Count

% of Total

03

17

20

11.54%

65.38%

76.92%

02

04

06

7.70%

15.38%

23.08%

05

21

26

19.23%

80.77%

100%

Table3: Feasibility of application of

Activity Based Costing in educational
institutions?
Designation
Principal

Yes

Urban

Suburban

Total

05

20

25

20%

80%

100%

Count

00

00

00

% of Total

0%

0%

0%

Count

05

21

25

20%

80%

100%

03

17

20

15%

85%

100%

Count

00

00

00

% of Total

0%

00%

00%

Count

03

17

20

15%

85%

100.0%

Count
% of Total

No

% of Total
Registrar

Yes

Count
% of Total

No

% of Total

Table 4: Reasons for not willing to adopt

Activity Based Costing
Mea

Ambiguity of activity based costing benefits in literature.

3.25

3.00

1.288

Costly to switch to activity based costing.

3.50

4.00

1.567

Consultants too costly.

3.25

3.00

1.357

Difficulties in collecting data on the cost drivers.

3.50

3.00

.798

Difficulties in selecting appropriate software package.

2.83

3.00

.835

Difficulties in selecting cost drivers.

3.42

3.00

.515

Higher priorities to other Changes.

3.50

4.00

1.243

Lack of awareness of activity based costing.

5.00

5.00

.000

Lack of expertise to implement activity based costing.

4.67

5.00

.651

Lack of internal resources to install and operate.

3.17

3.00

1.030

Lack of management policies.

1.67

2.00

.492

Lack of top management support.

3.17

3.00

1.115

Less complexity in services and processes.

3.50

4.00

.798

No intensity of competition.

2.92

3.00

.900

No significant problems with current costing system

1.92

2.00

.515

Resistance from employees and other management.

2.75

3.00

.754

Satisfied with the current system.

4.08

4.50

.996

Too complex and time-consuming.

3.50

4.00

.674

Median

Mod

Std. Dev.

Conclusion and suggestions

The head of the institutions has to take initiative to make

them aware of advantages of ABC system.
Management of institutions should think new policies which
will benefit to the colleges and society at large.
Proper literature is not available on activity based costing
so it is our suggestion that college management should
take initiative to develop library and internet connectivity in
urban and suburban colleges so that employees as well as
students get knowledge of activity based costing.
New source of funding will reduce the installation and
maintenance cost of ABC software in urban and suburban
colleges
It is suggested that more use of ICT technology should be
used.
Regular seminars and workshops should be organize at
college level for teaching and nonteaching staff members
on use of ABC and benefits of ABC.