Hinkley Preschool operates a not-for-profi t morning preschool that operates nine months of the year. The preschool has 160 kids enrolled in its various programs. The preschool's primary expense is payroll. Teachers are paid a fl at salary each of the nine months as follows:
Salary data
Teachers of two-day program: ...................................................................... $ 400 per month
Teachers of three-day program: .................................................................... $ 600 per month
Teachers of four-day program: ...................................................................... $ 800 per month
Teachers of five-day program: ...................................................................... $ 900 per month
Preschool director's salary: ......................................................................... $1,400 per month
Hinkley Preschool has 8 two-day program teachers, 5 three-day program teachers, 7 four-day program teachers, and 3 five-day program teachers. Hinkley Preschool also has a director.
In addition to the salary expense, Hinkley Preschool must pay federal payroll taxes (FICA taxes) in the amount of 7.65% of salary expense. The preschool leases its facilities from a local church, paying $4,000 per month. Fixed operating expenses (telephone, internet access, bookkeeping services, and so forth) amount to $700 per month over the nine-month school year. Variable monthly expenses (over the nine-month school year) for art supplies and other miscellaneous supplies are $12 per child. Revenue for the entire nine-month school year from tuition, registration fees, and the lunch program is projected to be $233,400.
Requirements
1. Prepare Hinkley Preschool's monthly operating budget. Round all amounts to the nearest dollar.
2. Using your answer from Requirement 1, create Hinkley Preschool's budgeted income statement for the entire nine-month school year. You may group all operating expenses together.
3. Hinkley Preschool is a not-for-profit preschool. What might the preschool do with its projected income for the year?