Study of student costs using activity based costing methodology - aair

Setting aside the educational and social merits of part-time study, there have been few attempts to
determine the relative institutional costs of this alternative mode of study, either in Australia or overseas.
Also the findings have been equivocal and some studies have looked beyond institutional costs to the
human and social costs of part-time study and the need for financial support for pan-time students. 10
The methodology adopted for these previous studies has focused on determining marginal costs where
estimations and the attribution of overheads represent significant complexities. But, apart from these
difficulties, there is evidence to suggest that part-time students are not accorded the same attention or
service by some institutions as full time students, and financial constraints on institutions limit the extent
to which pan-time students can be served. 11 Thus it is not surprising that some studies have suggested that
the institutional cost of part-time is lower than full-time education. 12
While research in the 1970’s provided clear evidence of increasing numbers of adults who are continuing
their education on a part-time basis, one of the impacts of global recession since the late 1980s has been to
improve retention rates both at high school and at University, particularly of full-time students. 13
However, it seems that part-time students in present times are more likely to be concerned to retain their
employment at the expense of continuing pan-time classes.
So, the pan-time student may not only suffer some social and opportunity cost of foregone leisure time but
appears to be discriminated against by some institutions in terms of services, and may be pressured by
employers in times of economic difficulty. If, on top of these factors, the cost of providing services and
support to part-time students is only partially funded, and retention of full-time students remains high,
there are significant reasons for discontinuing this alternative mode of study. For an institution like UTS,
committed to supporting part-time students, the motivation to have an independent study of pan-time
student costs, using a recognised costing methodology was high.
In October 1990, UTS invited expressions of interest and tenders for the conduct of a study of part-time
student costs. Three major accounting firms were approached and each submitted proposals based on the
modern, activity based costing (ABC) methodology developed by Kaplan at Harvard University. 14
Each had previous experience in its application and the tendered price for the study varied marginally
between all three firms. The preferred proposal from Ernst and Young was favoured for their proposal to
establish a residual framework to enable UTS to continuously monitor the cost effectiveness of its teaching
and support activities. As part of the preliminary briefing of the three firms, the UTS organisation
structure, details of the university budget for 1990, as well as an annual report were provided to each firm.
In addition, the following life cycle of activities associated with the process of a student through the
university was provided. 15
10 Venables, Ethel. The Human Costs of Part-time Day Release, Journal of Higher Education, 1, 3, August 1972, pp. 267-85.
Walker, Allan W. Profile of Part-time Credit Students, Saskatchewan Journal of Educational Research and Development, 6,
2, Spring 1976, pp. 18-24.
Horch, Dwight H. Simulation of Financial Needs and Contributions of Adult Part-time Students, Research Report,
Educational Testing Service, Princeton, N.J., June 1976.
Gleeson, A.J. An Analysis of the Costs of Part-time and Full-time Study at Colleges of Advanced Education, Doctoral Thesis,
La Trobe University, 1979.
11 Kegal, Paul L. Community and Junior College Concern for Services Provided to Part-time Students, Research Report,
March 1977.
Mangham, Clarence. Part-time Students. Conference Paper presented to the Board of Governors of the California
Community Colleges, Sacramento, June 1975.
12 Brinkman, Paul T. The Financial Impact of Part-time Enrolments on Two Year Colleges: A Marginal Cost Perspective.
National Center for Higher Education Management Systems, April 1983.
13 National Advisory Council on Extension and Continuing Education, Washington, D.C. Annual Report: Equity of Access:
Continuing Education and Part-time Students, March 1975.
14 Kaplan, Robert S., Johnson, Thomas H. Relevance Lost: The Rise and Fall of Management Accounting. Harvard Business
Press, 1987.
15 Doyle, Ken J. Life Cycle of Institutional Activities Contributing to Student Cost, University of Technology, Sydney,
November 1990.