Question

In: Economics

I work in a high school. What are fixed costs of a school? The variable costs?

I work in a high school. What are fixed costs of a school? The variable costs?

Expert Solution

Answer

Fixed cost : The fixed cost is that part of the total cost, which remains fixed or constant in the short-run irrespective of the level of output.

Variable cost: The variable cost is that part of the total cost that changes with the change in the output level.

In a school, in the short-run.most of the costs are fixed cost but in the long-run, almost all costs are variable cost.

Land and School Building

Investment on land and then school building is fixed cost.

If needed, the building may be extended in future , and it will be then variable cost.

Example: If the number of student enrollment rises in future, the number of class room has to be increased. So there would be a need to purchase a new land to build a new school building or the old building has to be extended.

Classroom Materials

Fixed cost - The classroom materials that includes student chairs,desks,teacher's table and chair,black-board all are fixed cost. If any machinery or electrical equipment is used in classroom, it will be regarded as fixed cost.

Variable cost- The chalk used for writing on black-board is variable cost. Over time,with the rise in the number of students,the number of student chairs, desks will also also rise.It will be then variable cost.

Teacher's Room Materials

The cost for teacher's room materials is fixed cost. Over time if the number of teachers rises, then the materials used by the teachers have to be increased.So over time, it will be a variable cost.

School Laboratory

If the school has laboratory, then the cost bear on machinery and equipment is fixed cost until a new machine or equipment is purchased.

Wages and Salaries

The wages and salaries for permanent school workers, teaching and non-teaching staffs, are fixed for some period of time.

If the salary structure changes in future, then the cost for salary payment will also change.It will be then variable cost. If the school recruits part-time teachers as par requirement , the payment for them will be regarded as variable cost.

Electricity Bill

The consumption of electricity changes almost in every time.So electricity bill, generally paid monthly, is a variable cost.

School Van/Bus/Auto Facilities

If the school has the vehicle facilities for students and school staffs, then the school has to bear the cost on it.The cost for School Van/Bus/Auto includes the purchase cost of vehicle , cost for driver and assistant, cost for vehicle servicing, cost for petrol/diesel etc. Besides these cost there is also a cost for vehicle insurance,road tax, etc.

Fixed cost - The fixed cost includes here the cost of purchase of vehicle, cost for driver and assistant, yearly cost on vehicle insurance,road tax etc.

The salaries for driver and assistant remain fixed for a certain period of time but may vary over time. The yearly cost on vehicle insurance,road tax etc. remain fixed for a year or for some years. These costs may vary over time with the changes in the policies.

Variable cost - Cost on petrol/diesel changes with the change in the price and the quantity requirement. The cost for vehicle servicing is also variable cost. The timely vehicle servicing is necessary and the cost on it changes over time.

Other Costs

The other costs the school bears may include the school educational tour , school picnic , school sports , cultural function etc. which varies according to the program and requirement.

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Rahul Sunny answered 1 year ago

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