CFOS/Costing a New Course or Programme/Exercise 6.4

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Exercise 6.4 - Calculating the Marginal Cost of Enrolling an Additional Student

An ODL institution in Malaysia is planning to develop a new course in English Communication Skills. The working life of the course is estimated to be six years and projections of income and expenditure, as well as student numbers, are shown in Table 6.4 below.

CFOS Exercise 6.4 - Table.jpg

  • Calculate the average cost per student over the six-year life of the course.

This particular course does not involve any face-to-face tutorials, and sufficient materials have been produced to accommodate 5% more students than included in the projection.

  • What is the marginal cost of providing the course for each additional student?

If the amount collected in fees exceeds the marginal cost, then the difference represents a ‘profit’ or a surplus for the institution.

  • Would there be any ‘profit’ or other advantage to enrolling additional students on this course?

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