Responsibility centre performance reports Data Jim Smith has recently been appointed as the Head Teacher of Mayfield School in Midshire. The age of the pupils ranges from 11 years to 18 years. For many years, Midshire County Council was responsible for preparing and reporting on the school budget. From June, however, these responsibilities passed to the Head Teacher of Mayfield School.

You have recently accepted a part-time appointment as the accountant to Mayfield School, although your previous accounting experience has been gained in commercial organizations. Jim Smith is hoping that you will be able to apply that experience to improving the financial reporting procedures at Mayfield School.

The last budget statement prepared by Midshire County Council is reproduced below. It covers the ten months to the end of May and all figures refer to cash payments made.

Task 1 Write a memo to Jim Smith. Your memo should:

(a) identify four weaknesses of the existing statement as a management report;

(b) include an improved outline statement format showing revised column headings and a more meaningful classification of costs which will help Jim Smith to manage his school effectively (figures are not required);

(c) give two advantages of your proposed format over the existing format.
Data The income of Mayfield School is based on the number of pupils at the school. Jim Smith provides you with the following breakdown of student numbers.

The new year | pupils come from the final year at four junior schools. Not all pupils, however, elect to go to Mayfield School. Jim has investigated this matter and derived accurate estimates of the proportion of final year pupils at each of the four junior schools who go on to attend Mayfield School.
The number of pupils in the final year at each of the four junior schools is given below along with Jim’s estimate of the proportion likely to choose Mayfield School.

Task 2

(a) Forecast the number of pupils and the income of Mayfield School for the next year from August to July.

(b) Assuming expenditure next year is 5% more than the current annual budgeted expenditure, calculate the budgeted surplus or deficit of Mayfield School for next year.

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Midshire County Council Mayfield School Statement of school expenditure against budget: 10 months ending May Budget Under/ Expenditure to over Total budget to date date spend for year Teachers full-time 1 680 250 1 682 500 2250 Cr 2019 000 Teachers - part-time 35 238 34 600 638 41 520 Other employee expenses 5 792 15 000 9 208 Cr 18 000 Administrative staff 69 137 68 450 687 82 140 Caretaker and cleaning 49 267 57 205 7938 Cr 68 646 Resources (books, etc.) 120 673 100 000 20 673 120 000 Repairs and maintenance 458 0 458 0 Lighting and heating 59 720 66.720 7:000 Cr 80 064 Rates 23 826 19 855 3971 23 826 Fixed assets: 84 721 100 000 15 279 Cr 120 000 furniture and equipment Stationery, postage and phone Miscellaneous expenses Total 1945 0 1945 9 450 6750 2 140 477 2 151 080 2,700 10 603 Cr 8 100 2 581 296