Theoretical Framework and an Overview of the Cost Drivers that are Applied in Universities for Allocating Indirect Costs

The major task of cost accounting is connected with the allocation of indirect costs to cost objects. To allocate indirect costs (also called as overhead or common costs) to cost objects cost drivers are selected as the cost allocation bases. Selecting the cost drivers is critically important for developing costing methodology. In order to improve the accuracy and credibility of the allocation the most appropriate cost drivers should be selected, and more than one cost driver should be applied. Thus the decision on which and how many cost drivers to use is of critical importance. The number of cost drivers should be optimal, as an excess number of cost drivers could lead to skewed results. The aim of this article is to present the theoretical framework of the cost drivers, including the selection of cost drivers, and to report on the author's research on cost accounting. The article describes cost drivers, specifies their meaning, gives an overview of their classification, typologies, and also discusses the selection methods, relevant research papers and other issues regarding the cost drivers. The article also provides the first-time review of the study carried out on implementation of cost accounting in universities, including the use of cost drivers. The survey was conducted among different universities all over the world in the period from May to September 2013.