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Impact of Activity-Based Costing Instruction on Students’ Cost Allocation Skills among Accounting Education Students in Nigeria

Abstract

Activity-Based Costing (ABC) is an important management accounting technique that enables organizations to assign overhead costs to products, services, or activities based on the activities that consume resources. Understanding ABC is particularly important for accounting education students because modern accounting practice requires the ability to identify cost drivers, classify activities, allocate overhead costs, calculate activity rates, and interpret cost information for managerial decision-making. However, students may experience difficulties understanding the relationship between activities, cost drivers, resource consumption, and cost allocation when ABC is taught predominantly through theoretical explanations and routine numerical exercises. Activity-Based Costing Instruction provides opportunities for students to examine realistic costing situations, identify relevant activities and cost drivers, calculate activity-based rates, allocate overhead costs, and evaluate the implications of different allocation methods. Against this background, this study investigates the impact of activity-based costing instruction on students' cost allocation skills among accounting education students in Nigeria. The study will be anchored on Experiential Learning Theory, Constructivist Learning Theory, and Cognitive Learning Theory. Experiential Learning Theory emphasizes learning through concrete experience, reflective observation, conceptualization, and active experimentation, providing a suitable framework for students' engagement in practical activity-based costing exercises. Constructivist Learning Theory emphasizes active participation, prior knowledge, problem-solving, and the construction of knowledge through meaningful learning experiences. Cognitive Learning Theory emphasizes how learners acquire, organize, process, retain, and apply information, providing a suitable framework for understanding students' ability to process complex cost-allocation relationships. Collectively, these theoretical perspectives provide a suitable framework for explaining how activity-based costing instruction may influence students' cost allocation skills. The study will adopt a quantitative quasi-experimental or analytical cross-sectional research design. The study population will comprise accounting education students enrolled in selected public and private universities across Nigeria. A multistage sampling technique will be used to select geopolitical zones, states, universities, faculties or departments, levels of study, classes, and eligible accounting education students. Activity-based costing instruction will be assessed using indicators such as exposure to ABC concepts, identification of activities, classification of activity costs, identification of cost pools, identification and selection of cost drivers, measurement of cost-driver usage, calculation of activity rates, allocation of overhead costs, comparison of traditional and activity-based costing methods, use of realistic costing cases, practical costing exercises, group problem-solving, individual costing activities, costing simulations, spreadsheet-based ABC exercises, computerized costing activities, lecturer demonstrations, guided practice, feedback, error correction, case studies, and opportunities for repeated ABC application. Students' cost allocation skills will be assessed using indicators such as identification of relevant cost pools, classification of direct and indirect costs, identification of appropriate cost drivers, calculation of cost-driver rates, allocation of overhead costs, determination of product or service costs, calculation of unit costs, interpretation of activity-based cost information, comparison of allocation outcomes, identification of cost distortions, preparation of cost-allocation schedules, analysis of resource consumption, evaluation of alternative allocation bases, application of ABC to unfamiliar costing situations, accuracy of calculations, interpretation of costing results, and ability to use cost information for managerial decision-making. Data will be collected using structured questionnaires, standardized cost allocation skills tests, practical ABC tasks, costing case studies, spreadsheet exercises, costing simulations, competency-based assessment rubrics, observation checklists, students' practical work, and pre-test and post-test assessments where a quasi-experimental design is adopted. Descriptive statistics will be used to summarize students' demographic and academic characteristics, exposure to ABC instruction, practical costing experiences, and levels of cost allocation skills. Inferential statistical techniques, including chi-square tests, paired and independent t-tests, correlation analysis, and multiple regression analysis where appropriate, will be used to determine the impact of activity-based costing instruction on students' cost allocation skills. Where a quasi-experimental design is adopted, cost allocation skill scores before and after exposure to ABC instruction may be compared with those of a comparison group receiving conventional costing instruction to determine changes associated with the intervention. Diagnostic tests will also be conducted to assess the reliability, validity, and robustness of the findings. The study is expected to find that activity-based costing instruction has a significant positive impact on students' cost allocation skills among accounting education students in Nigeria. Students exposed to structured and practical ABC instruction are expected to demonstrate stronger abilities to identify cost pools, select appropriate cost drivers, calculate activity rates, allocate overhead costs, determine product or service costs, and interpret cost information than students taught primarily through conventional costing approaches. Practical ABC exercises may enable students to understand how resources are consumed by activities and how differences in activity usage affect the allocation of overhead costs. Comparison of traditional costing with ABC may help students recognize how inappropriate allocation bases can distort product costs and potentially influence managerial decisions. Realistic costing cases involving manufacturing, service organizations, financial institutions, and other business environments may strengthen students' ability to apply ABC principles to unfamiliar situations. Spreadsheet-based and computerized ABC exercises may further improve students' numerical accuracy, data-handling abilities, and familiarity with technology-supported costing procedures. Group problem-solving and lecturer feedback may help students identify errors, evaluate alternative cost drivers, and improve their understanding of complex allocation relationships. However, inadequate costing laboratories, limited access to costing software, large class sizes, insufficient instructional time, complex ABC calculations, inadequate lecturer training, and limited exposure to realistic cost data may reduce the effectiveness of ABC instruction. The study therefore expects practical, realistic, technology-supported, and well-supervised activity-based costing instruction to contribute significantly to improved cost allocation skills among accounting education students in Nigeria. The study is expected to contribute to the literature on activity-based costing instruction, cost allocation skills, accounting education, management accounting education, experiential learning, constructivist learning, cognitive learning, practical costing skills, costing pedagogy, accounting technology, and higher education in Nigeria. The findings will provide useful information to the National Universities Commission, universities, accounting education departments, accounting educators, professional accounting bodies, curriculum developers, and policymakers regarding strategies for strengthening management accounting education. The study will also provide evidence-based recommendations for integrating practical activity-based costing instruction into accounting education programmes, developing realistic ABC case studies and costing simulations, strengthening students' understanding of cost pools and cost drivers, incorporating spreadsheet and computerized costing tools into instruction, training accounting educators in practical ABC teaching methods, providing continuous feedback and guided practice, developing competency-based cost allocation assessments, and aligning management accounting instruction with the practical costing competencies required in contemporary accounting and business environments in Nigeria.

Keywords: Activity-Based Costing instruction, cost allocation skills, accounting education students, management accounting education, cost drivers, overhead allocation, costing skills, experiential learning, constructivist learning, cognitive learning, costing pedagogy, Nigerian universities, Nigeria.