Analysis and estimation of the cost of educating students with Activity Based Costing approach (ABC)

One of the main goals of a medical education transition program is to estimate the cost of educating a student. The aim of this study was to estimate the final cost of student’s education in the Tabriz School of Management and Medical Informatics. The present study used the Activity Based Costing method (ABC) to calculate the cost of student education in the academic year 2015-16. After identifying and calculating the processes performed in the activity centers, five main groups of costs were identified, including personnel, consumables, building depreciation, equipment depreciation and energy costs. Overhead costs were shared by two direct methods and partial adjustment calculations were done in Excel 2010 in two scenarios without calculating depreciation, and with the calculation of the depreciation. The results showed that the final activity centers spent 67% of costs. The middle centers spent 17% costs and upper centers spent 16% of costs. The cost of personnel costs with 74%, had the highest cost and cost-opportunity with 2.6%, had the lowest share of total cost. In the first scenario, the completed cost of one course was 53 million Rials and the average cost of student education was 104.8 million Rials. In the second scenario, the cost of one course was 50 million Rials and the average cost of student education was 100 million Rails. The use of Activity Based Costing (ABC) system can solve a significant part of the problems of higher education institutions. Due to the high share of personnel costs in total costs, proper planning in the field of recruitment and use of manpower, as well as unused recruitment of some faculty members can bring efficiency and productivity. Cost calculation and analysis should be considered as one of the routine tasks of colleges.