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Ron Ikuta calculated the variable cost on the instruction time as per contact hour for part-time instructors and $95 per hour for all CRP instructors. However the full time rate was simply a fixed salary of $50000 prorated over 480 contact hours. Ron calculated a cost saving of $44 per hour as section by section, seasonal filled in for full time instructors. This may have been a reasonable measure of the difference in the marginal cost of instruction had only one full-time instructor departed, but the net loss of three instructors turned staffing into a large decision. In the planning stage management accountants should be able to determine what are the relevant costs so that they can make a sound decision whether to take on a new project or make any modification to the current one...
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