South Coast University is preparing its budget for the upcoming academic year. This is a specialised private university that charges fees for all degree courses. Currently, 15 000 students are enrolled on campus. However, the university is forecasting a 5 per cent growth in student numbers in the coming year, despite an increase in fees to $3 000 per subject. The following additional information has been gathered from an examination of university records and conversations with university managers: 

South Coast is planning to award scholarships to 180 students, which will cover their fees.

The average class has 80 students, and the typical student takes 4 subjects per semester. South Coast operates 2 semesters per year.

The average academic staff salary is $120 000 per annum including on-costs.

South Coast’s academic staff are evaluated on the basis of teaching, research, administration and professional/community service. Each of the academic staff teaches the equivalent of three subjects during the academic year. 

Required: 

1. Prepare a revenue budget for the upcoming academic year.

2. Determine the number of staff needed to cover classes.

3. Assume there is a shortage of full-time academic staff. List at least five actions that South Coast might take to accommodate the growing student numbers.

4. You have been requested by the university’s deputy vice chancellor (DVC) to construct budgets for other areas of operation (such as the library, grounds, cafeteria and maintenance). The DVC noted: ‘The most important resource of the university is its academic staff. Now that you know the number of staff needed, you can prepare the other budgets. Academic staff are indeed the key driver—without them we don’t operate’. Does the DVC really understand the linkages within the budgeting process? Explain.