As the volunteer business manager for the New City Band (City Band), you are res

Question

As the volunteer business manager for the New City Band (City Band), you are responsible for preparing the operating budget for the organization's upcoming summer concert season. Each year, City Band presents up to 20 weekend performances, depending on weather conditions. The concerts are free to the public, but the band hangs a pot from the bandstand and people leave small donations in it. On average, City Band gets S100 in donations at each of its performances. In addition to donations, New City pays the band S3,000 per season plus $125 for each performance. City Band also has a small endowment of $100,000 on which it expects to earn 3.5 percent in the coming fiscal year. City Band's trustees have decided to use that money to pay for operating expenses if they need to City Band pays its conductor $3,000 for the summer season and has an insurance policy to protect it against any loss of equipment or damage to the bandstand. That policy costs the band $500 for the summer plus $25 per performance. New music costs the band $200 per year. Following Generally Accepted Accounting Principles, the band recognizes music acquisitions as expenses in the year the music is acquired. In addition, City Band pays music publishers an average of $40 per concert for the rights to perform certain pieces in its repertoire The band has an average of 60 musicians at each of its performances. Eaclh musician is paid S5 per performa Question 1. Prepare an operating budget for City Band for the coming fiscal year assuming the band performs on each of its 20 scheduled concert dates

Explanation / Answer

Ans 1. Operating budget (assuming 20 concerts) Particulars $ Explanation Total income from donations 2000 Donations per concert X No of concerts (assumed 20 as per question) Remuneration from New City-Fixed 3000 Remuneration from New City-Variable 2500 Remuneration per performance X No of performances (assumed 20) Endowment Interest 3500 Endowment amt X Rate of interest Total Revenue 11000 Expenses Payment to conductor 3000 Fixed Insurance premium 1000 Fixed premium + $25 X No of performance Cost of new music 200 Payment to music publishers 800 Rate per concert X No of concerts Salary to musicians 6000 Rate per musician per concert X No of musicians X No of concerts Total Expenses 11000 Budgeted profit/loss 0

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