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Real Costs from Real Faculties

This project explores the implementation of Activity Based Costing (ABC) in universities to obtain more accurate costing information and make informed decisions. It highlights the advantages and disadvantages of ABC and shares case studies from Anglia Polytechnic University and Cropper and Cook's survey. The project includes activities such as workshops, consultation, time interviews, and identifying cost drivers. Future steps include reporting and a potential wider trial.

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Real Costs from Real Faculties

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  1. Real Costs from Real Faculties £ + Charlotte Ash Sheffield Hallam University ALT-C 2000

  2. Background • CNL phase one ran from July to October 1999 • Funded by JCALT • Run by Sheffield Hallam University • Outcome - the theory and identification of the main issues • Further funding from JCALT - CNL phase two • Aims to transform the theory into a practical guide

  3. Activity Based Costing • Cooper and Kaplan 1980s • Alternative to traditional costing methodologies • Analysis of activities and resources that go into a product or service • Credible way of dealing with overheads, more accurate and useful costing information • Cuts across departmental and faculty divisions

  4. Activity Based Costing • More accurate costing information across the institution • Very close to the true costs of courses • Tool for understanding costs - not costing tool • Decision-making tool • Potential of bringing to the surface costs borne by the Institution, Staff and Students

  5. Activity Based Costing - Advantages and Disadvantages in Universities • Anglia Polytechnic University reduced or eliminated NVA activities leading to initial saving of £1.5 million • Cropper and Cook (2000) surveyed finance officers - 9% said ABC already introduced; 16% intend to introduce; 38% giving it consideration. • Cost of Costing • Implementation requires skilled labour

  6. Activities • 2 day intensive workshop in 3 departments • Identification of activities that go towards developing and providing a course • Consultation to expand • Activity Dictionary

  7. Time • Time Interviews • Question how much time spent on different activities from the Dictionary during different periods of the academic year • Related to Role and Grade • Either as percentage or actual

  8. Overheads • As used by the course This area denotes the amount of students services used by this course and therefore to be paid for by this course The Library The Course Student Services The Computing Centre

  9. ABC / ABM Model Normal Reallocate Direct General Ledger Resource Drivers Attributes Function Process Activities Cost Drivers Cost Objects Budgets Business costs

  10. Next Steps • Trial ends November 2000 • Will report in New Year • Keep and eye on the web site - http://www.shu.ac.uk/virtual_campus/cnl • Hopefully a third phase of the project will be a wider trial

  11. Thank you Charlotte Ash c.e.ash@shu.ac.uk Any Questions?

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