The case study illustrates management accounting issues in higher education organizations. It particularly addresses the benefits of planning research projects with activity-based costing instead of absorption costing. The case continues by explicating hidden transfer pricing systems and opportunity cost in higher education. Students can discuss how small misalignment in management control system leads to unintended and dysfunctional behavior. The case offers opportunity to explore non-financial incentives in the public sector.
Activity-based costing; incentives; transfer pricing; higher education; instructional case study.