Suppose you are the controller of a University. The university president is preparing for her annual fund-raising campaign for 2021-2022. To set an appropriate target, she has asked you to prepare a budget for the academic year 2021-2022. You have collected the following data for the current year 2020-2021: Undergraduate Division Graduate Division Average annual salary of a faculty member $ 58,000 $ 58,000 Average faculty teaching load in semester credit-hours per year (eight undergraduate courses or six graduate courses) 24 18 Average number of students per class 30 20 Total enrolment (full-time and part-time students) 3,600 1,800 Average number of credit hours registered each year per student 25 20 Full-time load, semester hours per year 30 24 For 2021-2022, all faculty and staff will receive a 6% salary increase. Undergraduate enrolment is expected to decline by 2%, but graduate enrolment is expected to increase by 5%. The 2020-2021 budget for operation and maintenance of facilities was $500,000, which includes $240,000 for salaries and wages. Experience so far this year indicates that the budget is accurate. Salaries and wages will increase by 6% and other operating costs will increase by $12,000 in 2021-2022. The 2020-2021 and 2021-2022 budgets for the remaining expenditures are as follows: 2020-2021 2021-2022 General administrative $ 500,000 $ 525,000 Library Acquisitions 150,000 155,000 Operations 190,000 200,000 Health services 48,000 50,000 Intramural athletics 56,000 60,000 Intercollegiate athletics 240,000 245,000 Insurance and retirement 520,000 560,000 Interest 75,000 75,000 Tuition is $92 per credit hour. In addition, the ministry of education provides $780 per full time equivalent student. (A full time equivalent is 30 undergraduate hours or 24 graduate hours). Full tuition scholarships are given to 30 full-time undergraduates and 50 full time graduate students. Revenues other than tuition and the ministry of education apportionment are as follows: 2020-2021 2021-2022 Endowment income $ 200,000 $ 210,000 Net income from auxiliary services 325,000 335,000 Intercollegiate athletic receipts 290,000 300,000 The chemistry/physics classroom building needs remodelling during 2021-2022 period. Projected cost is $575,000. Required 1. Prepare a schedule for 2021-2022 that shows, by division, (a) expected enrolment, (b) total credit hours, (c) full-time equivalent enrolment, and (d) number of faculty members needed. 2. Calculate the budget for faculty salaries for 2021-2022 by division. 3. Calculate the budget for tuition revenue and ministry of education apportionment for 2021-2022 by division. 4. Prepare a schedule for the president showing the amount that must be raised by the annual fund-raising campaign.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Suppose you are the controller of a University. The university president is preparing for her annual fund-raising campaign for 2021-2022. To set an appropriate target, she has asked you to prepare a budget for the academic year 2021-2022. You have collected the following data for the current year 2020-2021:
|
|
Undergraduate Division |
Graduate Division |
|
Average annual salary of a faculty member |
$ 58,000 |
$ 58,000 |
|
Average faculty teaching load in semester credit-hours per year (eight undergraduate courses or six graduate courses) |
24 |
18 |
|
Average number of students per class |
30 |
20 |
|
Total enrolment (full-time and part-time students) |
3,600 |
1,800 |
|
Average number of credit hours registered each year per student |
25 |
20 |
|
Full-time load, semester hours per year |
30 |
24 |
For 2021-2022, all faculty and staff will receive a 6% salary increase. Undergraduate enrolment is expected to decline by 2%, but graduate enrolment is expected to increase by 5%.
- The 2020-2021 budget for operation and maintenance of facilities was $500,000, which includes $240,000 for salaries and wages. Experience so far this year indicates that the budget is accurate. Salaries and wages will increase by 6% and other operating costs will increase by $12,000 in 2021-2022.
- The 2020-2021 and 2021-2022 budgets for the remaining expenditures are as follows:
|
|
2020-2021 |
2021-2022 |
|
General administrative |
$ 500,000 |
$ 525,000 |
|
Library |
|
|
|
Acquisitions |
150,000 |
155,000 |
|
Operations |
190,000 |
200,000 |
|
Health services |
48,000 |
50,000 |
|
Intramural athletics |
56,000 |
60,000 |
|
Intercollegiate athletics |
240,000 |
245,000 |
|
Insurance and retirement |
520,000 |
560,000 |
|
Interest |
75,000 |
75,000 |
- Tuition is $92 per credit hour. In addition, the ministry of education provides $780 per full time equivalent student. (A full time equivalent is 30 undergraduate hours or 24 graduate hours). Full tuition scholarships are given to 30 full-time undergraduates and 50 full time graduate students.
- Revenues other than tuition and the ministry of education apportionment are as follows:
|
|
2020-2021 |
2021-2022 |
|
Endowment income |
$ 200,000 |
$ 210,000 |
|
Net income from auxiliary services |
325,000 |
335,000 |
|
Intercollegiate athletic receipts |
290,000 |
300,000 |
- The chemistry/physics classroom building needs remodelling during 2021-2022 period. Projected cost is $575,000.
Required
1. Prepare a schedule for 2021-2022 that shows, by division, (a) expected enrolment, (b) total credit hours, (c) full-time equivalent enrolment, and (d) number of faculty members needed.
2. Calculate the budget for faculty salaries for 2021-2022 by division.
3. Calculate the budget for tuition revenue and ministry of education apportionment for 2021-2022 by division.
4. Prepare a schedule for the president showing the amount that must be raised by the annual fund-raising campaign.
Step by step
Solved in 2 steps
