What's in a cost estimate?

We often read a lot about cost estimates in the news. But what goes into making cost estimates?

There has been a lot of debate about the cost to reopen schools amid the COVID-19 pandemic, with different groups and individuals arriving at different cost estimates. One estimate(Links to an external site.) places the cost at $2,300 per student while another source(Links to an external site.) estimates it will cost only $490 per student. NOTE: This is the cost that schools will incur and is not to be confused with funding that schools might receive from grants and other sources (that's revenue).

Given what you know about cost behavior and cost estimates, respond to the following questions in your discussion post.

• How can two estimates for the same cost be so different?
• Identify examples of costs included in the estimate that exhibit different behaviors. In other words, identify specific costs that would be considered fixed, variable, mixed, or step-variable costs.
• Assuming that the $2,300 per student is an accurate cost estimate, would it cost a school an additional $2,300 if one more student enrolled? Would it cost a school $2,300 less if one more student chose to stay home and be home-schooled? Why or why not?
• If you were in charge of developing the cost for a school, which estimate would you use - $2,300 or $490? Why?