Part I

Marquoya College (MC) is a medim sized private school locate in the Midwest.  In the past, MC Adminstrators established a budget for the next academicx year by adding a specific percentage (e.g. 6%, 8%) to the tutition revenue and operating expenses.  This year MC has asked for your asssistance in developing its budget for the next academic year.   You are supplied with the following data for the current year.:

Enrollment:                        4,900 students

Tutition                                3,300  year

Fulltime Faculty               250  (72% Tenured)

Fees                                      280/year

Average Faculty Salary                          $36,000/year

Fulltime only Students           400 students

For the next Academic year, enrollment is expected to increase by 300 students, with each student taking an of 32 credit hours.  Tuition will increase by 100/year.

Prepare a schedule computing the next academic years  tuition and fee revuenue budget.  Expliclitly Show the effect of scholarships.

Part II

The additional students will require MC to hire 20 adjunct faculty members.  Each adjunct will teach 18 credit hours and will be paid at the rate of $750/credit hr.  Full-time faculty members will receive a 5% pay increase.  Additional merit increases to be awarded to individual faculty members will amount to $280,000.

Prepare a schedule computing the next academic year’s budget for faculty salaries.  The payroll budget should reflect payroll taxes using  a rate of 10%

Part III

The current budget is $1,200,000 for operations and maintenance of plant and equipment, including $190,000 for salaries and wages.  Experience of the past 3 months suggest that the current budget is realistic.  However expected increase for next year are $10,000 in salaries and $50,000 in other expenditures for maintenance of plant and equipment.  The IRS has determined that MC has unrelated business income.  In the year just past, MC paid $48,000 of federal income taxes and penalty of $2,000.

MC administrators feel that proper allocation of cost and timely payments to the IRS will result in A total tax liability of $39,000.

Estimates for other cost include:

Mortgage Payments:    $264,000 (reducing principal by $100,000)

Administrative and general   1,440,000 (Including salaries of $1,200,000)

Library                                       1,800,000 (Including Salaries of $1,000,000)

Health and Recreation:           750,000     (Including salaries of #300,000)

Athletics                                     320,000   (Including salaries of $60,000)

Insurance and Retirement benefits          548,000

Capital Improvements                  1,300,000

Where applicable, use a Payroll Tax of 10% .

Anticipated revenues, other than tuition for the Next Academic year, as follows:

Endowment Receipts:                            $514,000

Net Income from Auxiliary Services:    $538,000

Athletics                                                       $1,580,000

 

MC’s remaining source of revenue is an annual alumni support campaign.  Last year, the alums were very generous (MC’s basketball team was ranked high throughout the cage Campaign) and contributed over $600,000.

MC borrowed $200,000 from the Golden Dome Bank for summer Operation on June 15.  The principal plus interest (at an annual rate of 12%) is to be paid on September 15.  On the basis of the tuition and fee revenue budget and faculty salaries budget computed in parts I and II, prepare a schedule computing the amount that must be raised during the annual support campaign to cover the expenditures budgeted

 

 

Part IV

Using the anticipated alumni support of $750,000, prepare a cash busget for the first quarter (September, October, November) of the MC fiscal year. (Round all Calculations to the nearest hundred dollars.)

The following patterns of cash flows are anticipated:

MC must maintain a cash balance of $3,000. Financing can be arranged at the Golden Dome Bank at a rate of 8 percent.  Borrowing occurs in $1,000 increments.  All loans are repaid as soon as possible, but a minimum of 1 month’s interest is charged.  Estimated cash on September 1 is $3,700.

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