Indirect Compliance Costs:
Inspections: Number per year x hourly cost of person guiding inspector = $__________ Reporting: Hours per year x hourly rate of person completing reports = $__________ Record keeping: hours per year x hourly rate of person compiling = $__________ These costs can then be added to the direct and indirect costs of the actual day-to-day conduct of the business. The total costs of personnel is a function of the number of hours which will be determined in part by the kinds of reporting that must be done (for example, a provider with no payroll other than payments to the owner will not have to maintain and report as substantively as a provider with employees other than the owner). Likewise it is possible to convert these provider indirect costs to direct costs by employing a payroll, accounting, tax, or record keeping service to perform those functions rather than have the owner or an employee perform them. Note that this example does not deal with the cost of “lost opportunity,” the time away from direct service or engaging in market building activities like advertising. In the context of child care where there is a licensed capacity of the provider which cannot be exceeded without a new license and where – as noted above – the market operates differently from a standard supply-demand market, these “opportunities” may not be available to the provider.
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