ENHANCING BUDGETING ACCURACY THROUGH ACTIVITY-BASED COSTING: A QUALITATIVE STUDY ON COST CONTROL PRACTICES IN EDUCATIONAL INSTITUTIONS

Abstract

The determination of educational unit costs using traditional costing methods is often considered inaccurate, as these methods allocate overhead costs uniformly and do not reflect the actual consumption of resources by each cost object. This condition may lead to cost distortion, particularly undercosting or overcosting, which can affect managerial decision-making in educational institutions. An alternative approach that can provide more accurate cost information is the Activity-Based Costing (ABC) method, which allocates costs based on activities that drive resource consumption. This study aims to enhance understanding of educational unit cost determination using the Activity-Based Costing method and to evaluate differences between unit cost calculations based on the Activity-Based Costing method and those currently applied by the school. This research employs a descriptive qualitative approach with a case study design conducted at SMA Pasundan 3 Cimahi. Data were collected through interviews, documentation analysis, and literature review. The findings reveal significant differences between unit cost calculations using the traditional method and those derived from the Activity-Based Costing method. The application of the Activity-Based Costing method indicates the occurrence of undercosting in the unit cost previously determined by the school. These discrepancies arise because traditional costing methods do not allocate overhead costs proportionally to students based on actual activity consumption. The study concludes that the Activity-Based Costing method provides more accurate and relevant cost information for educational institutions and can support better budgeting, cost control, and managerial decision-making. This research contributes to the management accounting literature by providing empirical evidence on the applicability and benefits of ABC in a non-profit educational setting, offering practical insights for school administrators and policymakers to enhance financial transparency and resource allocation efficiency.