curento Mecosta (UM) needs to establish a budget for the coming calendar year. T
ID: 2518309 • Letter: C
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curento Mecosta (UM) needs to establish a budget for the coming calendar year. The leavine tget Director has submitted her resignation (circumstances unknown) and will be for the comioniversity immediately. You and your team have been hired to establish a budget They are re protit institution) and a tuition rate for students to pay per the credit hour. FACTS: ear and complete a presentation to the President and the Board of Trustees. g that you present a balanced budget (meaning zero profit since UM is a non- Revenuss: UM has three semesters during the vear: there are 10,000 students during fall and spring semesters and 3.000 students during summer semester. Class size averages 30 per class, students take an average 5 classes per semester and faculty teach 4 classes per semester. ith this information you should be able to determine the number of faculty per semester.) Sports generate a total of $500,000 through gate receipts and concessions throughout the academic school year (you decide how to allocate it). UM receives from the state- appropriations: $5,000,000 per academic year (divide equally over 3 semesters) UM receives from their endowment annually: S 500,000 per academic year (split between fall and spring semesters) Expenses: Faculty teach 12 credits (4 classes at three credits each) per semester and the average salary is $60,000 per academic school year, plus benefits that run at 25% of salaries. Faculty receive an additional 30% of their salary ($18,000) for teaching summer classes if they choose to do so (no additional benefits). There are four colleges within UM, College of Business, College of Technology, College of Arts and Sciences and the College of Health Sciences. Each college has a Dean, and an Associate Dean and each of these two people has a administrative assistant. Each college is allowed to spend $50,000 per year to cover supplies, travel, telephones, and other miscellaneous expenses. The Executive branch has a president and two (2) vice presidents and each of these people has a administrative assistant. The president and vice presidents each spend $50,000 for supplies, travel, telephones, and other miscellaneous expenses per academic year. Where salaries are not given, establish a reasonable salary for each position, plus benefits at 30% of salaries. Assume that Deans, Associate Deans and executives make more than faculty and that the maximum salary is $250,000 per year. UM also has the following extra curricula activities that need to be funded: Football Hockey W. Basketball M Basketball W. Volleyball W. Softball $500,000 during fall semester $400,000 ½ during fall semester and $100,000 during spring semester $100,000 during spring semester $75,000 during spring semester during spring semester acu $75,000 during spring semester Page 1 of 2Explanation / Answer
Ans 3. Labour Budget (All figure in $) Particulars Fall Spring Summer Total Explanation No of faculty per semester 83 83 25 192 No of students per semester/No of students per class X 4 classes per faculty Faculty Salary & Allowances 2075000 2075000 775000 4925000 Salary + 25 % benefits for fall & spring and 55 % benefits for summer Salary to Admin staff Dean 433333 433333 433333 1300000 Dean salary assumed to be $ 250000 with 30 % benefit Assistant Dean 346667 346667 346667 1040000 Salary assumed to be 80 % of Dean's salary ie $ 200000 with 30 % benefits Assistants to dean 216667 216667 216667 650000 Salary assumed to be 50 % of Dean's salary ie $ 125000 with 30 % benefits Assistants to Assistant Dean 173333 173333 173333 520000 Salary assumed to be 50 % of Associate Dean ie $ 100000 with 30 % benefits President 108333 108333 108333 325000 Salary assumed to be equal to Dean Vice President 173333 173333 173333 520000 Salary assumed to be equal to Associate Dean Assistant to President 54167 54167 54167 162500 Salary assumed to be $ 125000 Assistant to VP 86667 86667 86667 260000 Salary assumed to be 100000 Total Salary Budget 3667500 3667500 2367500 9702500 Ans 4.Expenses budget (All Figures in $) Admin Expenses 66667 66667 66667 200000 Admin Expenses of President & VP 50000 50000 50000 150000 Labour Cost as above 3667500 3667500 2367500 9702500 Sports Expenses Football 500000 500000 Hockey 200000 200000 400000 Basketball 200000 200000 Volleyball 75000 75000 Softball 75000 75000 Business office expenses 83333 83333 83333 250000 Financial aid office exenses 66667 66667 66667 200000 Total Expenses 4634167 4484167 2634167 11752500 Ans 2: Revenue Budget for the year Tuition Fees 2337500 2337500 701250 5376250 Maintenance Charges 93500 93500 28050 215050 Utilities 70125 70125 21038 161288 Revenue from sports 166667 166667 166667 500000 Donations from state 1666667 1666667 1666667 5000000 Endowment 250000 250000 500000 Total Revenue 4584458 4584458 2583671 11752588 Ans 5: Income Statement Revenue 4584458 4584458 2583671 11752588 Less: Expenses Admin Expenses 66667 66667 66667 200000 Admin Expenses of President & VP 50000 50000 50000 150000 Labour Cost as above 3667500 3667500 2367500 9702500 Sports Expenses Football 500000 500000 Hockey 200000 200000 400000 Basketball 200000 200000 Volleyball 75000 75000 Softball 75000 75000 Business office expenses 83333 83333 83333 250000 Financial aid office exenses 66667 66667 66667 200000 Total Expenses 4634167 4484167 2634167 11752500 Net Income/Loss -49708 100292 -50496 88 Note:Let tuition fees be $ x per student per semester Tuition fees collected 10000x 10000x 3000x 23000x Maintenance charges 400x 400x 120x 920x Utilities 300x 300x 90x 690x Revenue from sports 166667 166667 166667 500000 Donations from state 1666667 1666667 1666667 5000000 Endowment 250000 250000 500000 Total Revenue 10700x+ 2083333 10700x+ 2083333 3210x+ 1833333 24610x+ 6000000 For a balanced budget 24610x+6000000=11752500 x= 233.75 per student per semester
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