Abstract
This research proposes a guide to implementation of time- driven activity -based costing (TDABC) in Saudi Electronic University (SEU) as an alternative to the traditional costing systems. It is worth mentioning that the cost accounting system should support mission and vision of the university by detecting any idle capacity and providing relevant information for rational decision-making as well as improving the quality of services provided to students and finally managing SEU’s resources efficiently and effectively. According to Saudi’s vision 2030, public universities in Saudi Arabia should act on both of revenue side and cost side.
 
 In the current costing system of SEU, there are no cost pools at colleges’ level, at academic departments’ level, at courses’ level, as well as at students’ level. Rather cost pools found at university’ level only. Therefore, the current costing system provides neither information on unit cost per student at any academic program nor information on the unused capacity at any resource centers.
 
 Despite the fact that TDABC theoretically overcomes the criticism to both traditional costing system that uses direct labor or machine hours as a cost driver and the traditional activity- based costing (ABC that uses many transactions cost drivers to allocate overhead costs to cost objects. The implementation of TDABC is still challenging particularly in universities by using the time as the primary cost driver for allocating resource costs to final cost objects in academic programs especially the human labor is considered the main resource in universities.
 
 The proposed guide to implementation TDABC provided SEU’s management information, including but not limited to, the average actual unit cost per student in each academic program either per semester, or per year, comparing actual fees students paid in each academic program to the actual average unit cost in each academic program to determine whether SEU covers all costs. In addition, comparing the average unit cost per student among all academic programs and investigating reasons of variations. The guide helps management determine the unused capacity in each resource center as well as preparing budgets of all resource centers accurately based on the actual used capacity.
Highlights
In the current costing system of Saudi Electronic University (SEU), there are no cost pools at colleges’ level, at academic departments’ level, at courses’ level, as well as at students’ level
The proposed guide to implementation time- driven activity -based costing (TDABC) provided SEU’s management information, including but not limited to, the average actual unit cost per student in each academic program either per semester, or per year, comparing actual fees students paid in each academic program to the actual average unit cost in each academic program to determine whether SEU covers all costs
The results found that the information provided by Activity Based Costing (ABC) system is more useful than information provided by the traditional costing system
Summary
Today the accounting information system becomes an integral part of the management information system. Cost management has been shifted dramatically from the traditional costing system that is mainly focuses on allocating overheads to cost objects to ABC system and to TDABC system. TDABC has been found as an alternative to ABC to improve the allocation of overhead costs using time-based drivers. Under TDABC, cost pools in general ledger are assigned to resource centers and main activities are identified within each resource center that might be department, unit, sector, section within the organization that consumes human and non-human resources. The difference is fewer resource centers exist under TDABC and activity cost pools are found in the resource centers as well as cost drivers are time- based not transactions –based; as a result, the reduction of measurement errors. This study tries to fill in this gap in the literature.in addition, as far as the researcher knows, this study is the first in its kind in the kingdom
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