Activity Based Costing (ABC) to Calculate the Cost of Training Students in School of Management and Medical Information Sciences

Introduction: Public higher education is competing for limited public funds. Activity-basedcosting (ABC) provides detailed evidence that higher education administrators and policymakerscan be employed to allocate scare resources more effectively and better understandwhat education centers do. Conducting context-specific studies on ABC and budgeting foreducational systems is the crux of the matter for cost containment and making decisions. Thepresent study was undertaken with the aim of determining the costs of training undergraduateand postgraduate students.Methods: This is a descriptive-analytic and applied study. The costs incurred by 7 differentdisciplines and degrees including bachelor (n=2), master (n=4), and PhD (n=1) in the Schoolof Management and Medical Information Sciences of the Shiraz University of MedicalScience in the academic year 2015-16 were examined and costs of training undergraduate andpostgraduate students were totaled by ABC method. The total number of students in includeddisciplines was 269; of them, 71% were studying in the bachelor, 26% in the master, and 3%in PhD programs. Since the primary purpose of our study was to calculate the total sum ofcost per student, no sampling was done. After identifying the activity centers and incurredcosts per activity center, the proportion of the schools’ costs to the university headquarter wastraced. In the school level, the costs of non-faculty staff by the deputies of education, research,support, and cultural-student affairs were estimated. Moreover, other costs, namely energycosts, rentals, consumables, depreciation, and missions were determined and assigned basedon the number of students. Data management and analysis were performed using Excel 2007.Results: The cost of training undergraduate students in the disciplines of health servicesmanagement and health information technology was $24413±2891 and $24286±2926,respectively. The maximum cost of schooling a student in the master degree belonged to thediscipline of medical informatics. The total cost of training a PhD student in the academicyear 2014-2015 was $95303±16106.Conclusion: In an era of resource scarcity, the ability to recognize the gaps between resourcesand academic goals and redirect the resources into programs which maximize the valueadded is crucial for all higher education institutes.