U.S. methods for costing in higher education: taking the technology abroad

Costing, the process by which an organization's costs are determined, is one of the most useful policy-making and management tools available to higher education leaders throughout the world. Yet despite the ongoing demand for analytically derived cost information in higher education, the use of costing for policy and management purposes is only now gaining momentum. This article reports the results of the first known application of U.S. costing methods to an institution of higher learning in Latin America - the Universidad de Monterrey (UDEM), a prestigious independent university in Mexico. This study elucidates differences in direct and indirect instructional costs among the UDEM's seven academic colleges and discerns reasons for variations in these costs. Based on the correlation and regression analyses performed, the student-faculty ratio, the average class size, and the total number of courses (a measure of curricular breadth) were among the major factors creating differences in instructional costs among the seven colleges. An important implication of this study is that potential economies are available if faculty productivity levels are increased. Thus, UDEM could conceivably double the existing average class sizes and student-faculty ratios in several of its colleges without any deterioration in the quality of instruction.