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Impact of Relevant Cost Information Exercises on Students’ Make-or-Buy Decision-Making Skills in Nigerian Universities

Abstract

Relevant cost information is an important component of management accounting education because it enables students to distinguish costs and revenues that are relevant to a particular decision from those that will remain unchanged regardless of the alternative selected. Accounting education students require practical competence in identifying avoidable costs, opportunity costs, incremental costs, differential costs, and other relevant financial information when evaluating short-term business decisions. One important application is the make-or-buy decision, where organizations must determine whether to produce a component or service internally or obtain it from an external supplier. However, students may experience difficulties applying relevant costing principles when instruction focuses primarily on theoretical explanations and routine calculations without sufficient opportunities to analyse realistic decision-making situations. Relevant Cost Information Exercises provide students with practical opportunities to identify relevant costs, compare internal production costs with external purchase costs, consider opportunity costs and capacity constraints, and formulate appropriate make-or-buy recommendations. Against this background, this study investigates the impact of relevant cost information exercises on students' make-or-buy decision-making skills in Nigerian universities. 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' participation in practical relevant costing exercises. Constructivist Learning Theory emphasizes active participation, problem-solving, prior knowledge, 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 identify, evaluate, and apply relevant cost information to decision-making situations. Collectively, these theoretical perspectives provide a suitable framework for explaining how relevant cost information exercises may influence students' make-or-buy decision-making 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. Relevant cost information exercises will be assessed using indicators such as identification of relevant costs, identification of irrelevant costs, avoidable cost analysis, unavoidable cost analysis, opportunity cost analysis, incremental cost analysis, differential cost analysis, fixed and variable cost classification, comparison of internal production costs with external purchase prices, capacity utilization analysis, excess-capacity situations, constrained-capacity situations, supplier quotation analysis, qualitative factors in make-or-buy decisions, special-order analysis, outsourcing decisions, continuation or discontinuation decisions, replacement decisions, realistic make-or-buy cases, decision-making scenarios, costing simulations, spreadsheet-based relevant-cost exercises, group problem-solving, individual exercises, lecturer demonstrations, guided practice, feedback, and opportunities for repeated application. Students' make-or-buy decision-making skills will be assessed using indicators such as ability to identify relevant costs, exclude sunk and irrelevant costs, calculate avoidable production costs, identify opportunity costs associated with alternative uses of capacity, compare internal and external costs, determine the financial advantage or disadvantage of making or buying, evaluate the effect of capacity constraints, distinguish between short-term and long-term decision considerations, incorporate relevant qualitative factors, interpret supplier quotations, analyse alternative scenarios, evaluate decision risks, justify make-or-buy recommendations, communicate decision outcomes, and apply relevant costing principles to unfamiliar business situations. Data will be collected using structured questionnaires, standardized relevant costing tests, practical make-or-buy decision tasks, management accounting case studies, supplier quotation scenarios, costing simulations, spreadsheet-based exercises, 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 relevant cost information exercises, practical management accounting experiences, and levels of make-or-buy decision-making 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 relevant cost information exercises on students' make-or-buy decision-making skills. Where a quasi-experimental design is adopted, make-or-buy decision-making skill scores before and after exposure to relevant cost information exercises may be compared with those of a comparison group receiving conventional management accounting 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 relevant cost information exercises have a significant positive impact on students' make-or-buy decision-making skills in Nigerian universities. Students exposed to structured and practical relevant costing exercises are expected to demonstrate stronger abilities to identify relevant costs, exclude irrelevant information, compare internal and external alternatives, consider opportunity costs, evaluate capacity constraints, and formulate appropriate make-or-buy recommendations than students taught primarily through conventional theoretical approaches. Practical exercises may help students understand that not all accounting costs are relevant to every decision and that historical or sunk costs should generally not influence short-term choices. Make-or-buy cases involving excess capacity may strengthen students' ability to focus on avoidable production costs and compare them with external purchase prices. Capacity-constrained cases may improve their ability to recognize opportunity costs associated with alternative uses of production resources. Supplier quotation exercises may strengthen students' ability to compare external purchase prices with relevant internal costs, while qualitative-factor analysis may help students recognize non-financial considerations such as quality, reliability, supplier relationships, and production control. Spreadsheet-based relevant costing exercises and decision simulations may further improve students' ability to organize cost information, compare alternatives, test assumptions, and communicate evidence-based recommendations. However, complex decision scenarios, limited access to realistic costing data, inadequate spreadsheet and accounting software, large class sizes, insufficient instructional time, inadequate lecturer training, and students' difficulty distinguishing relevant from irrelevant costs may reduce the effectiveness of the exercises. The study therefore expects practical, realistic, technology-supported, and well-supervised relevant cost information exercises to contribute significantly to improved make-or-buy decision-making skills among accounting education students in Nigerian universities. The study is expected to contribute to the literature on relevant cost information exercises, make-or-buy decision-making skills, accounting education, management accounting education, relevant costing, opportunity cost analysis, incremental costing, decision-making education, experiential learning, constructivist learning, cognitive learning, practical accounting skills, accounting pedagogy, 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 practical management accounting education. The study will also provide evidence-based recommendations for integrating relevant cost information exercises into accounting education programmes, developing realistic make-or-buy cases and decision-making simulations, strengthening students' ability to distinguish relevant from irrelevant costs, incorporating opportunity and incremental cost analysis into instruction, using spreadsheet-based relevant costing tools, providing continuous guided practice and feedback, training accounting educators in practical decision-making techniques, developing competency-based make-or-buy assessments, and aligning management accounting education with the practical cost-based decision-making competencies required in contemporary accounting and business environments in Nigeria.

Keywords: Relevant cost information exercises, make-or-buy decision-making skills, accounting education students, relevant costing, opportunity cost, incremental cost, differential cost, management accounting education, practical accounting skills, decision-making skills, experiential learning, accounting pedagogy, Nigerian universities, Nigeria.