Employing Active Learning in the Discovery of Activity-Based Costing

Activity-Based Costing (ABC) is generally viewed as a costing system that provides valuable managerial insights. Notwithstanding these insights, students often experience difficulties and frustration learning its methods, strengths and fundamental concepts. This paper reports on the students’ use of a profits-driven business simulation as an alternative, active learning tool to learn and utilize ABC-derived information effectively, and make better ABC-supported business decisions, even without preliminary ABC training. The simulation, an interactive, computerized business game, uses active and discovery learning techniques to provide students practical and lasting insights into ABC’s methods and strengths. Playing the game, allows students to follow their own instincts in unraveling ABC’s mysteries. Incorporating active, discovery-based learning experiences in the classroom, especially activities involving technology, improves student understanding and retention of all overhead costing methods, and is consistent with recent observations by the accounting profession.