Page 181 - DMGT518_TRAINING_AND_DEVELOPMENT_SYSTEM

Training and Development System

Notes (ii) Accommodation costs for the learners;
Travelling and other subsistence costs for the learners;
The learner’s salaries.

Opportunity Cost

Although the salaries of the learners have been included in the costing, while the learners are
away on the training course they are not directly contributing to the company output. The value
of this is often described as the opportunity cost – the value of that individual’s services if they
had been contributing directly in their job to the company output.

Cost Analysis

The above methods of costing can be used to produce a monetary statement for:
 Cost of the training function
 Cost of training per learner
Suppose one wants to avoid all the intricacies of calculation and still wants to have a rough
estimate of the cost of the training department, then the total of fixed, support and opportunity
cost when divided by the number of people who contribute towards training would provide the
baseline for comparisons using the same set of factors.

Example:
Total cost of training function
with a staff of five in 2001 = ` 20,00,000
Unit cost per trainer = ` 4,00,000
Cost of per training with
the same staff in 2002 = ` 22,00,000
Accordingly the unit cost
will go up to = ` 4,40,000
The cost of living index in 2002 has risen by 5% whereas the cost of the training function has gone
up by 10%. A cost training manager would like to analyse, explore and be able to explain the 5%
increase in his training cost.
2002 2003
The total training cost ` 20,00,000 ` 22,00,000
The number of people trained 5000 Nos. 6000 Nos.
Cost of training per learner 400.00 367.00
Cost of each course ` 10,000 ` 11,000

Though the cost of each course has risen but the cost of training per learner has decreased.
A calculative training manager would try to minimize the cost by optimizing the number of
trainees in each course and to that extent reduce the number of course to a point where quality
and resources of the training are maintained.

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