Assignment 2: A Course in Higher Education Management

This assignment task below starts by describing the scenario of a project (Narrative).
In a second step it identifies the various ingredients required for the project and their
unit costs (Ingredient / cost list). In a third section the assignment-tasks are specified
(List of questions). These tasks mainly consist of simple calculations to be completed
according to the cost-analysis outlined in the textbook. For completing them, please
use the specified cost data provided even if they do differ from costs you know from
your context.
Include references to the textbook of G. Rumble to justify your solutions where
appropriate. This applies especially to tasks 6 and 13 where you have to discuss the
issue of annualization (task 6) and to summarize the argument in favor of the costefficiency of distance education (task 13).
The Narrative
A dual mode DE university plans to offer a graduate course in Higher Education
Management. The course is a three credit course and requires about 150 hours of
study time (15 weeks at 10 hours per week). The course will be offered once a year.
Course management:
The course development process extends over one year; during this time it absorbs
half of the per annum staff-time of a course manager and a full time commitment of
one secretarial staff.
Over the next eight years, in which the course will be presented, it will continue to
absorb management time, albeit at the reduced rate of a quarter; it will continue to
require the full time commitment of one secretarial staff.
Course material:
The course material is developed by a number of consultants who are renowned
experts in the field. It consists of ten study guides of about 50 pages each and one
additional reader (150 pages). Layout and design of the study guides and clearance of
copy right will be done in-house.
In addition three DVDs will be developed. They include real world case studies of HE
institutions with descriptions and data, including interviews with administrators,
faculty and students; they also include data and scenarios for fictitious case studies
with tasks and assignments as well as video-podcasts with quizzes. Development of the

assignments is part of the DVD development. The required person/hours for the
respective specialist you find in the list of ingredients below.
Money is set aside for updating three study guides. It the budget simulation it is
assumed that the material will be developed in year four and presented from year five
onwards.
Student support:
There will be an online forum for which thirty hours of tutorial time are calculated.
Students can ask questions and can get help on exercises or mock assignments.
Students are supported by a tutor. The tutor will extensively comment on and mark
five assignments during the course. The assignments will be made available online.
Assessment:
The student will be assessed on the basis of the five assignments which will be marked
by the tutor.
Envisaged enrollment:
The course is expected to attract 180 students per year. Money is earmarked to
update the course in year 5 and to present the updated version from year 6 onwards.
Use the following list for your cost-analysis:
Ingredient / cost list
Input

Unit of
input

Amount of input

Cost per unitof

input

A COURSE OVERHEADS
Course
manager

per annum
salary

1/4 of full-time post

(ongoing)

$62000

Secretarial
support

per annum
salary

1 full-time post (ongoing)

$25600

B DEVELOPMENT COSTS (OVERHEADS)

Management (during development phase)
Course
manager

per annum
salary

1/2 of full-time post p.a.

over one year of
development

$62000

Secretarial
support

per annum
salary

1 full-time post p.a. over

one year of development

$25600

C DEVELOPMENT & PRODUCTION COSTS

Development Print
Authoring
study guides

per study
guide (=50
pages)

ten

$1800

Preparation
of course
reader

per reader
(=150
pages)

one

$1200

Editing and
design

per unit of
50 pages

thirteen (which includes the

reader with 4 x 50 pp)

$750

Copyright
clearance

per unit of
50 pages

thirteen (which includes the

reader)

$1800

Development of DVDs
Development per hour
of content

360

$25

Instructional per hour

design

225

$20

Production

per hour

180

$15

Copyright

Per DVD

three

$1200

Development of assignment
Development per
of
assignment
assignment

five

$750

D MAINTENANCE COSTS (PART OF PRINTED MATERIAL ONLY)

Author

per study
guide

three

$1800

(updating)
Editing and
design

per study
guide
(updating)

three

$1200

Copyright

per study
guide
(updating)

three

$750

E ANNUAL PRESENTATION COSTS (all per student)

Student support
Marking of
assignment

per
assignment

five

$40

Tutor

per hour of
seminar of
group size
of 25

30

$19

Replication and Distribution

Production
of study
guide

per study
guide

ten

$8.80

Production
of course
reader

per reader

one

$12.00

Production
of DVD

per DVD

three

$16.60

Packaging
and postage

per mailing

two

$15.20

F INCOME (per student per credit)

Fee

per student
per credit
point

three

$380

List of questions
Based on the above figures and the scenario, please, answer the following questions.
Include references (not lengthy quotations) to sections of the textbook to support your
argument where appropriate.
1. Classify the different cost items as either fixed or variable costs (matching row
number to Fixed or Variable as appropriate) AND as capital or recurrent costs.
Give a short explanation of the two distinctions.
2. Calculate the Recurrent Fixed Costs of course overheads (management and
secretarial support).
3. Calculate the aggregate Fixed Costs of Development (FD) and the aggregate
Fixed Costs of Maintenance (FM).
4. Calculate the variable cost per student (V).
5. Calculate the depreciation rate on a basis of the lifetime of the presentation of
the project (compare Rumble Table 6.1) and charge it to each year of
presentation. (You may use the format of the attached spreadsheet.)
6. Following the template of Rumble Table 6.4, annualize the Fixed Costs of
Development (FD) over the eight years of presentation at 6.2% interest and the
Fixed Costs of Maintenance (FM) over four years at the same rate.
7. Summarize in a short paragraph the reasons for and against annualization in
your own words.
8. Calculate the equation of total costs (TC=F+VxN) using the annualized figure of
fixed costs and the total number of students expected over the lifetime of the
course.
9. Draw the respective graph of the total cost function.
10. Calculate the equation of average costs (AC=F/N+V) using the annualized figure
for fixed costs and the total number of students expected over the lifetime of
the course.
11. Draw the respective graph of the average cost function.
12. If the student is charged the per student fee specified calculate the break-even
point. (Use the equation TC=F+VxN and the income equation: I=SFxN (Income
=Student Fee x No of students). The break-even point is N=F/(SF-V)

13. Represent the break-even point graphically (overlaying the graphs of TC and I).
14. Summarize in a short paragraph why it is believed that the TC and AC equations
and the specific cost structure of DE suggests that DE may be more costefficient than conventional modes of educational provision.
Note that you need to attach an Excel file to show your calculation. You find an
Excel file attached which you may use as template. Make sure that your
calculations are reflected in the Excel sheet. However you need to summarize
your answers to the 13 questions in a separate text file.