Moray Junior High School Case Solution

2. Issues

The school management is concerned with the rising cost which triggered the needs for reassess the budgeting, cost allocation and accountability. To cut the budget, the behavior of each cost needs to be examined because apparently there were no superfluous costs that can be eliminated. The number of teachers is in line with the strength of students and any reduction will decorate the standard of education. Moreover, the indirect cost is allocated using a different set of bases.

3. Analysis

1. To calculate the average cost of teachers for two programs, the total cost of teacher’s salaries is needed for both programs. The cost of salary for regular instruction program and special education is $1.156 Million and $0.39 Million. The ratio of students to teachers in regular instruction programs is 15:1 and for the special education program, the ratio is 6:2. The total number of students in both programs is 615 and 75. Using the ratios the total number of teachers comes out to be 41 and 13. The average cost is $28,207 and $31,150. 

2. Regular teacher salaries are a semi-variable expense which only changes when a certain level of revenue exceeds. Substitute teacher salaries are a fixed cost. Aide salaries are also a fixed expense. Instructional supplies and library are variable expenses which change with the number of students enrolled. Travel and lodging are fixed cost along with the depreciation expenses. Mr. Cook can reduce the overall budget by efficiently using resources to mallow down the fixed cost.