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Transparent Costing: Has the emperor got clothes?

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  • Ratnatunga, Janek
  • Waldmann, Erwin

Abstract

Transparent Costing (TC) is a framework for determining the full indirect costs and thereby the full costs (FC) of Australian Competitive Grant (ACG) research projects; with the objective of ensuring the full funding of these projects by the government, so that they could be sustained in the long-run, and preventing their cross-subsidisation from other revenue sources. If a university wishes to be fully funded for its AGC research projects, it is mandatory to undertake a TC exercise and allocate the indirect costs of research activities. It was found in this study that whilst the objectives of FC appear worthwhile, FC may not prevent the practice of cross subsidisation. Also whilst it was found that Time-Driven Activity-Based Costing (TDABC) is preferable to ABC in the TC modelling of ‘research only’ departments and institutes; both approaches do not provide accurate information in ‘teaching and research’ departments. In these departments more accurate estimations could be obtained from studying the workload allocation methods and conducting direct interviews of the staff undertaking research on ACG and other externally funded grants.

Suggested Citation

  • Ratnatunga, Janek & Waldmann, Erwin, 2010. "Transparent Costing: Has the emperor got clothes?," Accounting forum, Elsevier, vol. 34(3), pages 196-210.
    • Handle: RePEc:eee:accfor:v:34:y:2010:i:3:p:196-210
    DOI: 10.1016/j.accfor.2010.08.005
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    References listed on IDEAS

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    1. Gosselin, Maurice, 1997. "The effect of strategy and organizational structure on the adoption and implementation of activity-based costing," Accounting, Organizations and Society, Elsevier, vol. 22(2), pages 105-122, February.
    2. S. Hoozée & W. Bruggeman, 2007. "Towards explaining cost estimation errors in time equation-based costing," Working Papers of Faculty of Economics and Business Administration, Ghent University, Belgium 07/486, Ghent University, Faculty of Economics and Business Administration.
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    Cited by:

    1. Morteza BAGHERPOUR, 2015. "Risky Time Driven Activity Based Costing in a Medical Center: A Development, Implementation and Simulation based Optimization Approach," The Journal of Accounting and Management, Danubius University of Galati, issue 2, pages 47-61, August.
    2. Karl Schuhmacher & Michael Burkert, 2022. "Time Is Relative: How Framing of Time Estimation Affects the Accuracy of Cost Information," Management Science, INFORMS, vol. 68(7), pages 5493-5513, July.
    3. Pashkevich, Natallia & von Schéele, Fabian & Haftor, Darek M., 2023. "Accounting for cognitive time in activity-based costing: A technology for the management of digital economy," Technological Forecasting and Social Change, Elsevier, vol. 186(PB).

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