CFOS/Student Fees/Exercise 11.2

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<Return to Unit 11

Determining Fee Levels

The Solomon Islands School of the Air (SISA) provides courses at senior primary level through a combination of printed study guides and radio broadcasts. These courses are targeted at adults who never had an opportunity to finish their schooling, as well as at young people who live in remote areas and cannot attend school on a regular basis. Though the courses are heavily subsidised, learners are still expected to make a contribution towards the cost of studying with SISA.

Market-Related Fees
The annual fees at government primary schools are SI$1,300 (Solomon Island Dollars). Primary schools run by religious groups charge between SI$1,500-2,500 per annum.

  • If the policy at SISA is to charge fees that are 85% of the cost of comparable education at a government school, calculate the annual fee for the coming year.

Recovering Specific Cost Elements
The costs associated with the senior primary course at SISA are as follows:

Solomon Islands School of the Air, Annual Costs of Senior Primary Course
Cost Category Expenditure (SI$)
Student-Related Variable Costs 1,870,000
Depreciated Costs of Course Development 1,960,000
Controllable Committed Costs 502,000
Indirect Common Costs 336,000
Contribution to Business-Sustaining Costs 125,000
Total Costs per annum for Course 4,793,000
  • What is the marginal cost of enrolling each student beyond the projected intake of 1,200?
  • If the policy of SISA is to set fees at a level intended to recover all student-related variable costs, calculate the fee per learner for the coming year.

Percentage Cost Recovery

  • What fee must SISA charge in the coming year in order to recover 30% of the total cost of providing the Senior Primary Course.

Index-Linked Fees
For the current academic year, fees for the Senior Primary Course at SISA were SI$1,050 per learner. The Consumer Price Index rose at a rate of 8.92% over the last twelve months.

  • Calculate the annual fee per learner that SISA should charge in the coming year to compensate for the rise in costs due to inflation.

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