COMPUTING FOR

TRAINING COST
National TVET Trainers Academy

Abstract
This document will provide you information on how training cost for labor, supplies and materials,
tools and equipment, facilities, and utilities are computed. It involves computation for direct cost
and indirect cost of the groups/category of items related to the implementation of a training
program. The information provided here is supported by references from the TRDD-NITESD and
the National Tax Research Center (NTRC). The information contained here are better understood
when learned together with the template provided by the NTRC for Trainer’s training.

TESDA-NTTA
ntta@tesda.gov.ph
 I. Introduction

Training costs are expenses associated with the development, implementation,

evaluation and/or maintenance of training or programs.

A. Types of Costs

1. Direct Costs
Direct costs are expenses that can easily be connected during the delivery or
provision of training service.

2. Indirect Costs
Indirect costs are expenses that go beyond the expenses associated with the
delivery or provision of training service. It is commonly called as overhead cost.

3. Variable Costs
Variable costs are either direct costs or indirect costs that vary in accordance
with the volume of trainees or duration of program.

4. Fixed Costs
Fixed costs are either direct cost or indirect costs that do not vary with the
number of trainees or duration of training.

Examples of training costs are shown in the table below:

Table 1: Types of Costs and Examples

Types of Costs Variable Costs
Direct Costs • Supplies and materials used
in workshop
• Cost of electricity and water
as utilized in the workshop
Indirect Costs • Supplies and materials used
the provision of
administrative support
• Cost of printing certificate
Fixed Costs
• Cost of trainers’ honoraria
• Cost of National Competency
Assessment Fee
• Cost of developing learning
materials
• Cost of accident insurance
• Cost of renting office space

As shown in Table 1, supplies and materials used in the workshop and cost of
electricity and water as utilized during training are considered as direct cost since
they are used in the workshop. They are also variable costs since the exact number of
supplies and materials and/or the electricity and water vary depending on the number
of practices needed to complete the learning activity.

On the other hand, the cost of trainer’s honoraria is considered direct cost because
the trainer is immediately involved in the program, and fixed cost because the
honoraria of trainer will not change even if the number of learners changed. The
same with the costs of National Competency Assessment Fee, the assessment fees will
follow the TESDA-approved schedule of National Assessment Fees.

Indirect costs in the given example are those expenses associated outside the
workshop such as supplies and materials used in the provision of administrative
support, cost of office facilities and others.

Another difference between the direct cost and the indirect cost is the time variable. If
it is a direct cost, the number of days will only be computed at 22 days, as the estimated
number of working days in a month, and at 8 hours per day since the program will not
be conducted for 24 hours in a day. See Table 2 for the differences.

Table 2: Time Variable (in a Year)

Type of Cost Months Days Hours Minutes
Direct Cost (output-based) 12 22 8 60
Indirect Cost
12 30.42 24 60
(common/ shared)

II. Computing for Each Category of Training Cost

In order to make the training or program costs easier to comprehend, it is

essential to group the costs. Following our categories or group of costs in
relation to the implementation of a training program:

o Personnel Salary
o Supplies and Materials
o Tools and Equipment
o Facility
o Utilities

A. Computing for Cost of Labor (Personnel Salary)

There are two (2) ways to approach the computation of labor for a training
program. The computation will depend if (1) the training provider is considered
as a training center of the specific qualification only, or (2) as a larger institution
with several programs and services offered.

Table 3: Comparison between two cases for computation of cost of labor

As a training provider of the specific program As an institution with several other programs
only (e.g., Bookkeeping NC III) and personnel
• Cost of labor (direct and indirect) only • Cost of labor will include all personnel
includes those who are closely including administrative personnel in
involved in the delivery of the whole institution, whether or not
 Bookkeeping NC III; usually a small involved in the delivery of
number of personnel Bookkeeping NC III or in other
programs
• Indirect allocated cost will be imputed
salary from the administration, thus
divided by the number of all students
and employees in the TVI (all users)

Note: The salary per month for the computation of both direct and indirect cost
of labor must include all salaries and benefits under the law like 13th month pay.

1. Direct Cost

The trainer(s) of the specific program for which cost is computed must be the
ones included in the computation of direct cost of labor, whether or not there
are other programs or services offered by the TVI. For example, the training
cost for Bookkeeping NC III is being computed. The trainer(s) who conducts
the training for the Basic, Common and Core Competencies of Bookkeeping
NC III must be the only ones specified in the direct cost computation.

Table 4: Computation for Direct Cost of Labor

Personnel No. of Hours
Activities Cost per Hour Estimated Cost
Involved Required
No. of hours
(no. of hours for
Personnel (salary required
Basic the basic salary/22/8
per month) multiplied by
competencies)
cost per hour
No. of hours
(no. of hours for
Personnel (salary required
Common the common salary/22/8
per month) multiplied by
competencies)
cost per hour
No. of hours
(no. of hours for
Personnel (salary required
Core the core salary/22/8
per month) multiplied by
competencies)
cost per hour
Total Estimated
TOTAL
Cost

Remember that the time variable for computing for direct cost is at 22 days
per month, 8 hours per day, hence the “salary/22/8” cost per hour.
 Sample computation is shown below:

Assumption(s):
• There will be 25 learners taking Bookkeeping NC III with the following
duration:
o Basic Competencies = 20 hours
o Common Competencies = 24 hours
o Core Competencies = 248 hours
• The two trainers assigned each in the Basic Competencies and Common
Competencies is a TESD Specialist II whose monthly salary is estimated at PHP
41,000.00 (including 13th month pay and allowance).
• The trainer assigned to handle the Core Competencies is an Associate
Professor I with an estimated monthly salary of PHP 54,000 (including 13th
month pay and allowance).

Table 5: Sample Computation for Direct Cost of Labor

Personnel No. of Hours
Activities Cost per Hour Estimated Cost
Involved Required
TESD Specialist II
Basic 20 PHP232.95 PHP4,659.00
(PHP41,000.00)
TESD Specialist II
Common 24 PHP232.95 PHP5,590.80
(PHP41,000.00)
Associate
Core Professor I 248 PHP306.82 PHP76,091.36
(PHP54,000.00)
TOTAL PHP86,341.16

To get the per capita cost of the total direct cost, divide it by the number of
students in the specific qualification. The per capita cost is PHP3,453.65.

2. Indirect Cost

When computing for indirect cost of labor, it is necessary to identify first who
will be included in the costing. Remember in Table 3 that we have two ways
to approach this cost.

In the first case, only the personnel associated in the training program will be
included in the cost computation, while in the second case all of the personnel
including administrative personnel will be considered in the cost
computation. The main difference between the two (2) cases is the number of
personnel/users that will be included for the computation of indirect cost for
labor.

Case 1 (if the training provider only offers Bookkeeping NC III or has a distinct
division/office for the specific qualification), the personnel involved in the
indirect cost computation may only include, as available, the training
institutions’ administrator and other administrative personnel who provide
support services in the implementation of the specific program.
In Case 2, which is more likely (the training provider is an institution/TVI
which offers several programs in a year other than Bookkeeping NC III), the
personnel involved in the indirect cost computation shall include all of the
administrative personnel such as:
• Administrator
• Registrar
• Accountant
• Nurse
• Cashier
• Supply Officer
• Security Guard
• Librarian
• Guidance Counselor
• AC Manager
• Driver
• Others (must be specified)

Both cases follow the computation table below:

Table 6: Computation for Indirect Cost of Labor

Administrative
Number Salary/Month Total Salary Allocated Cost
Personnel
(Total salary divided
(How many of
(Number by no. of students
(Personnel this position (Monthly
multiplied by and employees
Position) exists in the salary)
Salary/Month) directly-involved in
TVI?)
the program)
Total Total Allocated Cost
Percent to Per capita indirect
Total Direct cost divided by per
Salary capita direct cost

Below is a sample computation:

Assumption(s):
• There will be 25 learners taking Bookkeeping NC III with the following
duration:
o Basic Competencies = 20 hours
o Common Competencies = 24 hours
o Core Competencies = 248 hours
• The TVI or training center specifically offers Bookkeeping NC III.
• The TVI has one (1) administrator, one (1) administrative officer, and one (1)
security guard, in addition to the three (3) trainers handling the Basic,
Common and Core Competencies in Table 5 example.
 Table 7: Sample Computation for Indirect Cost of Labor
Administrative Allocated
Number Salary/Month Total Salary
Personnel Cost
Vocational School
1 PHP76,000 PHP76,000 PHP2,714.29
Administrator I
Administrative Officer
1 PHP23,000 PHP23,000 PHP821.43
I
Security guard 1 PHP14,000 PHP14,000 PHP500.00
Total PHP4,035.72
Percent to Total
1.17
Direct Salary

The percentage of Indirect Cost to Total Direct Cost may be derived by dividing
the total monthly salary of the administration to the number of students plus
number of employees in the direct cost in a TVI. The resulting quotient represents
the imputed salary of the administration for each student (per capita). The total
is further divided by total direct salary per capita to get the percentage to be
added to the total salary cost.

B. Computing for Cost of Supplies and Materials

The supplies and materials are the expendable and semi-expendable resources
needed by the learners to practice the skills requirements associated with the
learning activities. These also include the resources needed to carry out the
institutional assessment.

Expendable resources – supplies and materials which can only be used once
Example: paper (once written on can never be used for the same purpose,
thus consumed resource)

Semi-expendable resources – items (tools, equipment) which can be used more

than once with a useful life of more than one year and which cost less than
PHP15,000.00. They are included in the supplies and materials.
Example: screw driver (can be used multiple times for the same purpose)

1. Direct Cost
The supplies and materials that must be included in the computation for the
direct cost are all the expendable and semi-expendable items which are used
in the workshop or during the performance-based activities of the specific
program for which cost is being computed. For example, if the program is
Computer Systems Servicing NC II, an example of a supply/material is RJ45
which is considered consumable. The supplies and materials may be grouped
into the basic, common and core competencies or may be grouped into non-
reusable, reusable and semi-expendable items.
The computation for direct cost of supplies/materials follows the table below:

Table 8: Computation for Direct Cost (Supplies and Materials)

A B C D E F
Items Unit Times Allocated
Unit Quantity Total Cost
Cost Reusable Cost
BASIC - 4 units of competency (no. of hours)
May be further
(No. of
grouped into (1) non-
training (Total
reusable supplies & (Quantity
(No. of (Cost of program if Cost
materials, (2) (Unit of multiplied
items one consumable multiplied
reusable supplies and count) by Unit
required item) / No. of by Times
materials, and (3) Cost)
days if Reusable)
semi-expendable
reusable)
items
COMMON - 2 units of competency (no. of hours)
May be further
(No. of
grouped into (1) non-
training (Total
reusable supplies & (Quantity
(No. of (Cost of program if Cost
materials, (2) (Unit of multiplied
items one consumable multiplied
reusable supplies and count) by Unit
required item) / No. of by Times
materials, and (3) Cost)
days if Reusable)
semi-expendable
reusable)
items
CORE- 4 units of competency (no. of hours)
May be further
(No. of
grouped into (1) non-
training (Total
reusable supplies & (Quantity
(No. of (Cost of program if Cost
materials, (2) (Unit of multiplied
items one consumable multiplied
reusable supplies and count) by Unit
required item) / No. of by Times
materials, and (3) Cost)
days if Reusable)
semi-expendable
reusable)
items
Total of
Allocated
Cost of all
Total Items
 See sample computation for Bamboo Processing (Engineered Bamboo) NC II:

Table 9: Sample Computation for Direct Cost of Supplies and Materials

A B C D E F
Items Times Allocated
Unit Quantity Unit Cost Total Cost
Reusable Cost
Supplies and
materials
Bamboo pole pc 5 150.00 750.00 1 750.00
(Kawayan tinik or
Botong), >8 cm x 5m
Slivers, 0.5mm x 5mm bundle 5.5 22.00 121.00 4 30.25
x 300mm
Plastic straw (will use roll 0.04 120.00 4.80 1 4.80
2 meters) only - 50m
long
Rags, cotton pc 10 3.00 30.00 1 30.00
Liquid Hand soap pc 1 200.00 200.00 10 20.00
(250ml)
Reusable
Sack, 50 kg pc 2 15.00 30.00 10 3.00
Semi-expendable
items
Industrial fan, 30" unit 2 6,000.00 12,000.00 1320 9.09
LED bulb pc 4 259.00 1,036.00 528 1.96
Bolo pc 5 500.00 2,500.00 792 3.16
Hand saw pc 1 400.00 400.00 2640 0.15
Honing stone pc 3 200.00 600.00 528 1.14
Pliers pc 1 375.00 375.00 2640 0.14
Pusher, metal/wood pc 1 500.00 500.00 1320 0.38
Scissor, heavy duty pc 5 770.00 3,850.00 2640 1.46
Shaver pc 3 350.00 1,050.00 2640 0.40
Slicing knife pc 5 300.00 1,500.00 1320 1.14
Tape measure, 8 0.30
meters pc 1 240.00 240.00 792
Wrench, adjustable pc 1 400.00 400.00 2640 0.15
Total PHP857.52

2. Indirect Cost

The supplies, materials and semi-expendable resources that are included in

this category are those which are considered as common supplies and
materials which are shared with other programs/activities and which are not
specifically identifiable with the particular program or qualification. An
example of this is paper which is a common office supply and which may be
used/consumed in different programs.

The computation for indirect cost of supplies/materials follows the table

below:

Table 10: Computation for Indirect Cost of Supplies and Materials

A B C D E F G
Items Unit Total Times Allocated Usage
Unit Quantity
Cost Cost Reusable Cost
May be
grouped into (1)
non-reusable (No. of Column F
supplies & similar divided by
(Quantity (Total Cost
materials, (2) (No. of (Cost training no. of users
(Unit of multiplied multiplied
reusable items of one program if (no. of
count) by Unit by Times
supplies and required item) consumable students,
Cost) Reusable)
materials, and / No. of days no. of
(3) semi- if reusable) programs)
expendable
items
Total of
Allocated
Cost of all
Total Items

Since the supplies and materials are common/shared, “usage” is added to

include all “users” of the items. Users are the number of students multiplied
by the number of programs offered by the TVI.

Below is a sample computation for indirect cost of supplies and materials:

Table 11: Sample Computation - Indirect Cost of Supplies and Materials

A B C D E F G
Items Unit Total Times Allocated
Unit Quantity Usage
Cost Cost Reusable Cost
Common
Supplies and
Materials
bond paper
(RWAC) - legal 5 1.50 7.50 1 7.50 0.30
size
bond paper
20 1.00 20.00 1 20.00 0.80
(SAG) - A4
brown
pack 1 25.00 25.00 1 25.00 1.00
envelope
expanding
pack 1 145.00 145.00 10 14.50 0.58
envelope
scotch tape roll 1 25.00 25.00 15 1.67 0.07
 rags 5 3.00 15.00 1 15.00 0.60
Semi-
expendable
Items
3-Drawer steel 7,995.
pc 1 7,995.00 1,095 7.30 0.29
filing cabinet 00
Arm chair (in
pc 10 750.00 7,500.00 1,095 6.85 0.27
reception area)
Fire
extinguisher
2,000.
(Dry Chemical pc 2 4,000.00 1,825 2.19 0.09
00
ABC), 10 lbs,
portable
First aid kit set 1 500.00 500.00 365 1.37 0.05
LED bulb unit 5 259.00 1,295.00 730 1.77 0.07
Multi-purpose
9,000.
Printer/Scanner unit 1 9,000.00 1,825 4.93 0.20
00
/Copier
Office
10,600
Application unit 1 10,600.00 1,095 9.68 0.39
.00
software
Office chair for 1,620.
pc 3 4,860.00 1,825 2.66 0.11
staff 00
Total 120.43 4.82

C. Computing for Cost of Tools and Equipment

1. Direct Cost

The tools and equipment which shall be included in the direct cost are the
special tools and equipment in the specific qualification. For example, in
Bamboo Processing (Engineered Bamboo) NC II, special tools and equipment
include pole cutter machine and twin rip saw machine.

2. Indirect Cost

The tools and equipment which shall be included in the indirect cost are the
common tools and equipment which are not found in the training area of the
specific qualification. Examples of these include printer, computer set, CCTV
package, etc.
These tools and equipment for both direct and indirect cost are those items
which have a useful life of more than a year and cost of more than PHP15,000.
The estimate useful life or times reusable will vary depending on the item. You
may find below the estimated useful life of some property, plant and
equipment.
The repair and maintenance cost is placed at 2% to 4% (National Research Council.
(1996). Budgeting for facilities maintenance and repair activities: Report Number 131.
https://doi.org/10.17226/9226)

The difference in the between the computation for direct cost and that of the indirect
cost is the time variable used. Since special tools and equipment are identified with the
specific qualification, the time variable will be output-based; while the common supplies
and materials which are not found in the training area will follow the time variable for
shared/common.

The table below shows the computation for direct and indirect cost of tools and
equipment and example for each category. Useful life is computed in years.

Table 11: Computation for Cost of Tools and Equipment

A B C D E F G H I
Total
Tools and Cost
Equipment No. of Unit Useful Allocated Repair and
Unit Quantity (unit Total
Mins. Used Cost Life Cost Maintenance
cost x
qty)
Common Tools and Equipment

Aircon 1Hp 480 unit 1 14998 14998 5 2.74 0.11 2.85

Total
Special Tools and Equipment
Pole cutter
machine 60 pc 1 80000 80000 10 3.79 0.15 3.94
Total

D. Computing for Cost of Facility

In computing for the cost of facilities, there are two (2) options to choose from:
1. Rental Method
2. Building Depreciation Method

When using Rental Method, the following table for cost computation will be used:
Facility Cost (Office Space)
Required Space in Meter2 (Basic and Common)
Required Space in Meter2 (Core)
177.05
(national ave.
Cost per Meter2 from QSO)
Facility Cost (Basic and Common) -
Facility Cost (Core) -
Total Allocated Facility Cost -
Total Office Facility Cost -
 Facility Cost (ex. Agriculture)
Required Space in Meter2 (Basic and Common)
Required Space in Meter2 (Core)
Cost per Meter2 2.00
Facility Cost (Basic and Common) -
Facility Cost (Core) -
Total Allocated Facility Cost -
Total Agriculture Facility Cost -
Total Facility Cost -

Facility Cost (Office Space) for the Direct Cost is the venue where training is
conducted. Facility Cost specific to the qualification (ex. Agriculture) are venues
or areas which are direct-related to the qualification. The facility for the Indirect
Cost shall be the Office Space shared with other activities and services of the TVI.

If the building or training area is not rented, the building depreciation method
will be used and this will follow the table below:

Required
Building Building Cost / Allocated
space in
Size (m2) cost meter Facility Cost
m2
(Bldg. (Cost per
Size x meter x
Bldg. required
Cost) space)

A B C D E F G H I
Residual
Allocated No of Total Maintenance Total
Value Useful Annual Per Hour
Facility Hours Depreciation Cost (4% of Cost (I=
(10% of Life Depreciation Depreciation
Cost Used Cost G) G+H)
A)
Total
(Alloc. Cost – Annual No. of hours Depre.
(Alloc. Total
Residual Depreciation / used x Per Cost
cost x Depreciation
Value)/ no. of hrs. in a Hour plus
10%) Cost x 4%
Useful Life year Depreciation Maint.
cost

The difference between the computation of direct cost of facility and indirect
cost of facility is the time variable. The direct cost must use the output-based
time variable while the indirect cost shall use the time variable for
common/shared items/facilities.
E. Utilities (Electricity, Water, Gas)

Estimating the Cost of Electricity

In estimating the cost of electricity, there is a need to determine the length of
usage for each electrical equipment and device to carry out the activities
related to the qualification. Also, it is necessary to identify the estimated
power rating of each electrical equipment/devices which can be done by
looking into the technical specification of the equipment or devices.

In some cases, unit measure conversion is required from watts per hour to
kilowatts per hour (1kW=1,000 watts).

Sample computation is shown below:

Assumption(s):
• There will be 25 learners taking the module Drafting and Cutting Pattern for
Ladies' Casual Apparel under Dressmaking NC II.
• Each learner is required to produce 7 pattern designs (output of exercises
and institutional assessment).
• It will take the learners approximately 80 hours to complete all activities.
• The training method will use the traditional/manual approach (will not use
computer -aided design in preparing the pattern).
• The current cost of electricity charged by the electric company for
nonresidential is PHP 9.73 per KWh.

Cost of electricity per hour = Length of use x power rating x quantity x cost of
(Trainer’s laptop) electricity per KWh
= 80 hours x 0.1 KWh x 1 set x PHP9.73
= PHP 77.84

The table below provides the template and example items for the computation
of electricity:
ELECTRICITY
Rating in Cost per No. of Allocated
Qty Appliance
Watts Hour Hours Used Cost

LED light 40 - -
A/C 1Hp 1180 - -
Refrigerator 350 - -
-
Estimating the Cost of Water

Unlike electricity, the water used in the training/program implementation is

not always associated with an equipment or device. As it is commonly treated
as consumables, the water consumption can be more conveniently estimated
if associated per learning activity.

Assumption(s):
• There will be 25 learners taking the module Cleaning and Maintaining Kitchen
Premises under Cookery NC II.
• Learners will be grouped into 5 members per team. Each team is required to
clean the kitchen tools and premises with the following specific activities:
o Clean, sanitize and store equipment; and
o Clean and sanitize premises
• The five groups of learners will need approximately 0.5 cubic meter of water
to clean, sanitize and store equipment, while they will need 2.0 m3 to clean
and sanitize the kitchen premises.
• The current cost of water charged by the water company for nonresidential is
PHP 50 per cubic meter.

Cost of water for activity 1: = Volume of water needed x Cost of water per
Clean, sanitize and store cubic meter
equipment
= 0.5 m3 x PHP50.00
= PHP 25.00

The table below provides the template and example items for the computation
of water consumption:
WATER
3
Qty in Liters. Item Meter Used Allocated Cost
Qty. in Liters /
Name of item Meter3 Used Meter3 Used x Cost of Water per Meter3
-

Aside from electricity and water, Utilities also include internet cost and gas
cost as applicable. The computation will follow the tables below.

INTERNET
No. of Hours COST Cost/Hour Total Cost
2898/month 16.4659091 0
GAS
No. of Hours Kg
Item Allocated Cost
Used Used
Ex. cooking (gas
range) - (Kg Used x Cost of gas per Kg)
-
The total cost of Utilities will include cost of Electricity, Water, Internet and Gas
consumption. The difference between the direct and indirect cost for these utilities is
the time variable. The direct cost which are for utilities used in the training program will
use the output-based time variable while the indirect cost for utilities used in the office
and which are not directly-used in the specific program will use the common/shared.

The indirect cost for Utilities also divides the allocated cost by the number of users (no.
of students plus employees) who are sharing in terms of the use of these utilities. Thus,
in the table of computation, you will observe that there is an additional column for usage
in order to compute for the indirect cost of utilities.

ELECTRICITY
Qty Appliance Rating in Watts Cost per Hour No. of Hours Used Allocated Cost Usage
LED light 40 - - =allocated cost/users
A/C 1Hp 1180 - -
Refrigerator 350 - -
Ceiling Fan 80 - -
CCTV 24 - -
computer 50 - -
printer 80 - -
CCTV monitor 80 - -
- -
- -
- -
- -
- -

No. of
Hours INTERNET COST Cost/Hour Total Cost Usage
2898/month 4.025 0 =total cost/users

WATER
Qty in Ltrs. Item Meter3 Used Allocated Cost Usage
- - =allocated cost/users

- -
- -

GAS
No. of
Item Kg Used Allocated Cost
Hours Used Usage
cooking (gas range) - - =allocated cost/users
- -
- -
- -

TOTAL Utilities -

After computing for each group of cost items, the Total Training Cost or Fee can be
acquired by adding all of the direct cost and the indirect cost.
Type of Cost
Personnel Salary
Supplies and Materials
Tools and Equipment
Utilities
Facility/Building
Total Direct Cost (materials, equipment, utilities, & facility)
Indirect Cost for Labor
Indirect Cost for materials, equipment, utilities
Total Cost
Per Capita Cost
Profit Margin @ 10%
Total Training Fee