This document discusses key concepts and determinants of education costs. It identifies the main components of education costs as direct and indirect, private and social, current and capital, and fixed and variable. Each cost component is defined. For example, direct costs are those solely for education production like teacher salaries while indirect costs are shared across multiple activities. The document also discusses mechanisms to monitor and reduce deficits, such as departmental accounting and sharing losses. It introduces the concept of the break-even point, where costs and revenues are equal, and how this can be computed using a boardwork formula.

1. CONCEPTS AND DETERMINANTS OF
EDUCATION COSTS
Feljone G. Ragma

2. Why is it necessary to determine
education costs?

3. This contributes much to decisionmaking, planning and monitoring in
education.
A school head/ manager can adjust
financial resources or requirements
he can minimize costs and improve
profit.

4. What are the Components of
Education Costs?

5. The Components of Education Costs:
1. Direct and Indirect
2. Private and Social
3. Current and Capital
4. Fixed and Variable

6. Direct and Indirect Costs
• Direct Costs are costs that can be identified
solely for the use in the production process of
a particular product. I.E. salary of teachers,
personnel, books
• Indirect Costs are costs that are used in the
production of several products, such that one
has to apply a certain ratio to apportion such
costs. I.E. water, light

7. Private and Social Costs
• Private Costs are payments made by parents for
tuition fees, registration and matriculation, other
school fees, uniforms and transport services.
These are costs incurred by parents.
• Social Costs are costs incurred by society and the
government due to the provision of educational
services. The hiring of additional traffic enforcers,
traffic lights and the like because of the presence
of students in a community.

8. Current and Capital Costs
• Capital Costs are those which have some material
impact of prolonging the life of assets and
capitalized and form part of the capital
expenditures. I.E> assets with life of more than 1
year such as buildings, books, equipments
• Current Costs are those costs incurred in the
depreciation of value of assets procured. Such is
considered depreciation, and considered expense
of the year.

9. Fixed and Variable Costs
• Fixed Costs are costs which do not increase
with an increase in the number of students.
These are administrative costs such as the
salary of the dean, president, payments for
loans and their interests
• Variable Costs are dependent on the number
of students such as teachers’ salary,
classroom, supplies.

10. Since expenditures and profit rely
on students’ enrollment, especially
in the private schools, what
mechanism can be done to
monitor and lessen deficits?

11. Departmental Accounting and
Sharing of Deficits are very good
mechanisms.

12. Concept of Break-even point
• In economics & business, specifically cost
accounting, the break-even point (BEP) is the
point at which cost or expenses and revenue
are equal: there is no net loss or gain, and one
has "broken even". A profit or a loss has not
been made, although opportunity costs have
been "paid", and capital has received the riskadjusted, expected return

13. How to compute for the BEP?
• Boardwork