How Activity Based Costing Analysis Can Be Used To Test-Drive Future Scenarios
ARTICLES ON ACTIVITY-BASED COSTING This is a companion piece to our earlier article Activity Based Costing: What’s the Return On It? You can also hear more from William Massy at the upcoming conference “Academic Resourcing Models for Evidence-Based Decision-Making.” by William F. Massy, Professor Emeritus and former Vice President for Business and Finance, Stanford University Activity-Based Costing for individual courses (“Course-based ABC”) is emerging as the best way to understand the cost and revenue structures of colleges and universities. In this article, I want to extend this idea to cover prediction as well as understanding—specifically, how the model can be used to evaluate future scenarios. Examples of Scenario Planning that Can Benefit from Course-Based ABC Universities regularly encounter challenges that this kind of scenario planning can help address. Here are just a few, derived from my own experience over the years: Respond to externally driven declines in student enrollment—for example, due to government immigration policies or new competitors. Evaluate proposals for adding new programs or expanding, contracting, or eliminating old ones. Moreover, there is a good case for including capacity and margin analysis as a routine part of Program Review. Cope with significant funding cuts, e.g. in government appropriations or […]