Study of student costs using activity based costing methodology - aair

2. The cost of a student includes a fixed element and a variable cost element which is dependent upon
the student’s workload (or EFTSU);
3. A method of funding based entirely on EFTSUs is not a reflection of the level of expenditure required
to support a diverse student population, and
4. UTS, with a large part-time student population, is under funded through the Commonwealth
Government Relative Funding Model which fails to address the fixed element of administration
costs. 22
A more appropriate funding model would recognise the following costs in a student profile:
• a set administration cost;
• a set faculty cost
• a variable faculty cost.
This could be represented in the fashion of the following formula:
funding = a x (student #‘s) + b x (EFTSU)
where:
a = the fixed cost per student for the faculty
b = the variable cost per student for the faculty
Clearly the fixed amount per student would vary between disciplines as would the coefficient of the
variable amount.
As the study of part-time student costs at UTS was the first reported application of activity based costing
methodology in higher education it is worthwhile reflecting on some of the limitations and difficulties
experienced in the application.
1. Some of the organisational units such as Student Administration and Publicity and Public Affairs were
responsible for several activities and it was necessary to carry out a detailed analysis of staffing and
expenditure to separate out the costs of individual activities. Sometimes staff performed more than
one activity as part of their job and it was necessary to estimate the amount of time spent on
individual activities. This task was time consuming.
2. In the case of some cost drivers data was not readily available, for example in relation to space which
was a driver for a number of overheads, such as cleaning, power, security. In these cases it was
necessary to make technical estimates as a basis for allocating costs. Appropriate cost driver
information was also not available for the library or for computing and technical estimates were
necessary in these areas.
3. Another difficulty arose from the fact that in the first year of amalgamation the organisational
structure for a number of administrative areas had not been finalised and there was some duplication
of costs between old UTS and Kuring-gai.
4. In a broader application of the methodology, particularly for comparative purposes, it would be
necessary to recognise a potential problem may arise from individual differences between one
university and another in the treatment of certain administrative activities. For example, at UTS,
careers and appointments activities are carried out by the Union, whereas at many universities these
costs are met by the university administration.
22 Ibid., p. 14.