Cost Benefit Analysis Example

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Cost Benefit Analysis Example
The first item of the scope of this presentation

Cost-Benefit Analysis
Cost of Training Projected Savings

Cost of Training Costs of supervisors’ time Costs of instructors’ time Costs of teaching materials Costs of classroom-use

Costs of Supervisors’ Time - \$1,296,000
18 hours training per supervisor Average supervisor costing rate is \$120/hour 600 x 18 x 120 = \$1,296,000

Costs of Instructors’ Time
* Preparation time * Classroom time

Cost of Instructors’ Preparation Time- \$10, 800
3 hours preparation per hour of instruction 18 hours of instruction Average costing rate per hour per instructor = \$200 Calculations: 3 x 18 x 200 = \$10, 800

Cost of Instructors’ Classroom Time - \$72,000
600 supervisors divided by 30 supervisors/session = 20 sessions to teach 18 hours/session Costing rate of \$200/ hour/instructor Calculations: 20 x 18 x \$200 = \$72,000

Total Costs of Instructors’ Time \$82,800
* \$ 10,800 Preparation time * \$ 72,000 Classroom time \$ 82,800 Total

Total time Costs - \$1,378,800 \$1,296,000 Supervisors’ time cost
\$ 82,800 Instructors’ time costs \$1,378,800 Total

Direct Costs Cost of teaching materials Off-site training costs
Classroom Rental Meals, break items.

Costs of Teaching Materials - \$2100.00
Handouts: 50 copies/supervisor 600 supervisors \$0.03 per copy Calculations: 50 x 600 x \$0.03 = \$900 Other materials (Pens, notepad) = \$1200 Total \$2100

Off-site Training Costs
Classroom Rental Meals, soft drinks, and snacks. It's important that the training not be conducted on site so that supervisors and instructors are not interrupted by business problems. No cell phones will be allowed.

Cost of Off-site Classes- Classroom Rental = \$4000.00
Classroom Rental Cost 20 2 days per session = 40 days Classroom rental is \$100/day Calculations: 40 x \$100 = \$ 4000

Cost of Meals, etc. - \$18,600 \$15.00 per lunch includes cost of break items (coffee, soft drinks, snacks) 600 supervisors 2 lunches per supervisor Calculations: \$15 x 600 x 2 = \$18,000 Instructors’ lunches 40 x \$15= \$600 Total \$18,600

Off-site Training Costs- \$22,600
\$ 4,000 Classroom Rental \$18,600 Meals, soft drinks, and snacks. \$22,600 Total These are the total direct costs

Total Direct Costs = \$24,700.00 \$ 2, Total cost of teaching materials \$22, Total off-site costs \$24, Total direct training costs

Total Costs - \$1,401,400 \$1,296,000 Total supervisors’ time costs
\$82,800 Total instructors’ time \$24,700 Total direct costs \$1,402,500 Total cost of training

Estimated Cost Savings

Benefits-to-Costs Ratios

An Investment of \$1. 82 Million in the First Four Years Yields \$41
An Investment of \$1.82 Million in the First Four Years Yields \$41.9 Million Return Benefit-Cost Ratio= 23 to 1 (\$41.9 M/\$1.82M)

Objective of Proposal Request authorization for:
\$ ,700 in direct costs \$1,378,800 in time costs \$1,403,500 total cost