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Moray Junior High School
Young, David W.
Functional Area(s):
   Management Control Systems
Difficulty Level: Beginner
Pages: 6
Teaching Note: Available. 
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First Page and the Assignment Questions:
This budget cut is a serious problem for us. I don't know quite how to reduce our costs because there really wasn't much flexibility in the budget to begin with. However, we're all in the same situation; we expect to have only $2.2 million to spend on Moray and we have to find some way to live with that.

Ms. Hilda Cook, Principal of Moray Junior High School, had just returned from the March meeting of the Moray Public School System’s School Committee, where she had agreed to cut her school’s budget by almost 12 percent. Although Ms. Cook did not consider her projected costs to be excessive, neither did several of the other principals, who also had agreed to attempt to reduce their budgets.


Moray Junior High School was one of three junior high schools in the town of San Pedro, Arizona. It was in excellent physical condition, and had an enrollment of approximately 700 students a year. The quality of education was considered extremely high, and a student-teacher ratio of no more than 15:1 had always been maintained. Among the school's special programs were a highly-regarded Drug and Alcohol Awareness Program, and an Understanding Handicaps Program, in which trained parents and handicapped speakers provided a course of instruction to both students and teachers to acquaint them with the various handicapping conditions, such as epilepsy, blindness, physical handicaps, retardation, and deafness.

Moray was best known, however, for its Spanish Language Program, which used native speakers of Spanish to teach courses that began in the 7th grade and continued through the 9th grade. A special language laboratory with 30 student “stations” and three instructor stations was equipped with the latest in audio technology, including an “interrupt” feature that allowed an instructor to listen in on a student practicing with a cassette tape and intervene electronically, when necessary, to correct the student's pronunciation or grammar. Students successfully completing the Program were considered to be extremely proficient in the Spanish language, and a special field trip to a “sister” junior high school in Anguila, Mexico was organized each year for the 9th graders. The students lived with local families for an entire week while actively participating in the Anguila school system's activities.

As principal of Moray for over ten years, Ms. Cook had witnessed numerous changes in the school. For over 40 years, Moray had been the only junior high school in San Pedro; however, in the late 1970s, when migration from the northern U.S. had led to a large influx of new residents, additional demands had been placed on the school system. As a result, Moray had been expanded and two new junior high schools had been built.

With such a dramatic increase in services, the School Committee had become . . .


  1. What is the average teacher salary for the Regular Instruction and Special Education Programs?
  2. Analyze the costs in the category “Direct Costs-Instruction,” and classify each line item as either fixed, variable, semi-variable, or step-function. If variable, semi-variable, or step-function, indicate specifically how the cost behaves. How, if at all, is this analysis useful to Ms. Cook?
  3. What are the budgetary options open to Ms. Cook? What are the cost savings associated with each?
  4. What should Ms. Cook do?