CFOS/Unit Costs/Exercise 5.1

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Exercise 5.1 - Backflush Costing

An open school in Illinois provides courses leading to the high-school equivalency diploma (senior secondary certificate) for adults who dropped out of school early. Each course lasts one academic year and students need to successfully complete eight subject-courses in order to get their diploma. In the USA, those who obtain their high-school diploma are referred to as ‘graduates’. The table below provides the following information for a five-year period:

  • total expenditure by the institution in the relevant year,
  • number of subject-courses delivered,
  • number of subject-course passes.
2000/01 2001/02 2002/03 2003/04 2004/05
Total Costs (US$) 1,986,700 2,132,200 2,568,900 2,587,300 2,604,100
Subject-Courses Delivered 2,312 2,428 2,633 2,576 2,498
Cost per Subject-Course Delivered
Subject-Courses Passed 1,891 1,944 2,103 2,138 1,987
Number of ‘Graduates’
Cost per ‘Graduate’

1. Copy the table above on a blank piece of paper;
2. Using the Backflush Costing approach, calculate the following figures for the years 2000/01 to 2004/05:

  • unit costs per subject-course delivered,
  • number of 'graduates', and
  • unit costs per ‘graduate’;

3. Write these into the blank cells of the table.

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