Question

For a university, identify a cost that you think is controllable in the short term and explain why. Identify a cost that you think is controllable in the intermediate term and explain why. Identify a cost that you think is controllable in the long term and explain why. What does this cost structure imply about the university’s flexibility in responding to changing student demands and enrollments?

Answer 1

Answer is as under :

Cost Controllable in the short term : For the university , expenses such as salary or professional fess , conveyance allowances and other employee welfare expenses paid to interns are controllable because payment is made to them as per the number of hours worked and number lectures taken by them

Cost Controllable in the intermediate term : Expenses such as semester examination, culture activities , training and development activity of lectures, salary and professional fee paid to lecturers for a semester are controllable on intermediate basis because all this cost are related to a particular semester

Cost Controllable in the long term basis : Payment made to permanent staff and long term expenses are only controllable in the long term because they are appointed on long term basis and hence cannot be reduced easily

This cost structure imply that the cost structure of university is fixed and not enough flexible as per the changing needs of the students