Cost of class meaning cost to each student who takes it? Assuming that 1.5xSalary is what it costs the school to put on the class, then yes, that makes sense.

Breakeven = Fixed costs/(price - variable costs).

Thanks Nora!

The part I don't understand is how the instructor's salary makes any difference in the overhead. Wouldn't that be determined by things like the length of the class, how much IT support the class needs, how much I work to advertise the class, if we have brochure printed etc, etc. We have some VERY highly paid instructors that I do nothing for, and some very low paid instructors that I am practically spending my life holding their hand.

Do the instructors teach more than one class?

Cost of class meaning cost to each student who takes it?

Yes. So I guess the formula makes sense, I just don't necessarily agree that the "overhead" should be that high. Our overhead rate at the University is 52 percent.

Do the instructors teach more than one class?

No- the ones that have full or part time appointments we pay anyway and run the class anyway (we did not used to, they used to be able to teach lifelong learning classes to get extra income, but the University prohibited that.

Breakeven calculations are usually just approximations, Sophia, sort of a rule of thumb for making quick decisions for the future, not real analysis of what costs/profits have actually been.

I just don't necessarily agree that the "overhead" should be that high. Our overhead rate at the University is 52 percent.

Right, so the cost of putting on the class is Instructor Salary + Overhead, and overhead rate is 52% so that's Salary + 0.52 Salary is approximately 1.5xSalary. It may not be actually correct, but it lines up with University accounting.

Breakeven calculations are usually just approximations, Sophia, sort of a rule of thumb for making quick decisions for the future, not real analysis of what costs/profits have actually been.

Thank you! That makes sense. I am not sure the associate dean gets this because she is always saying we aren't making any money based on this calculation, but when you subtract our expenses and overhead from the income, we always show a positive number.

You know, I don't know why this is so confusing to me. I mean, it makes a lot more sense now, but why do we scrimp and save and not pay for things for the students, when we could spend .5 times the instructors salary. And what does the instructor's salary have to do with how much the overhead is? Aaargh. Oh well.

Hooray, something I learned in business school was useful to someone!

Yes, thank you -t! I am such a dummy about this-- and my former boss was too!