CFOS/Student Fees/Exercise 11.2 - Sample Answers

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Exercise 11.2 - ANSWER SHEET

Solomon Islands School of the Air, Senior Primary Course

Method Used	Annual Fee per Learner (SI$)	Calculation
Market-Related Fees	1,105	1,300 × 0.85
Recovering Specific Cost Elements
Marginal Cost	1,558	1,870,000 ÷ 1,200
Recovering Student-Related Variable Costs	1,558	same as above
Percentage Cost Recovery	1,198	(4,793,000 ÷ 1,200) × 0.30
Index-Linked Fees	1,144	1,050 × (1 + 0.0892)

Setting fees on the basis of alternative services in the market, a fixed percentage of cost recovery or changes in the Consumer Price Index all yield figures that are lower than the marginal cost of enrolling additional students. This means that SISA will need to negotiate an additional subsidy from government for each learner it enrols beyond the target of 1,200.