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1333 302 1250 930 theabcsystempanelbo fsolut

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Unformatted text preview: ckey program is st ill high and significant ly increases the cost of educating each student 5­12 4. Academic instruction capacit y Cost of academic instruction act ivit y (fro m requirement 1 calculat ions) Cost of academic instruction per student at full utilizat ion = $3,540,000 ¸ 600 Academic instruction resource costs used by current student populat ion = 500 ´ $5,900 Cost of excess academic instruction capacit y = $3,540,000 – $2,950,000 600 students $3,540,000 $ 5,900 $2,950,000 $ 590,000 Most of the costs at Harmon school are fixed in the short­run. So, Smith must try to recruit more students to the school. If, in the long run, it seems like the student populat ion is going to be stable at around 500, he should plan how so me of the excess capacit y can be cut back so that the fixed school capacit y is better utilized, that is, he should work to reduce the cost of excess capacit y. One problem with that plan is that “cutting excess academic instruction capacit y” ma y even...
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