1. The Columbia Arena Company formed in 2021 and uses the accrual basis of accounting. Using the companys 2021 budget, provided in Excel, develop a pro forma operating budget for 2022 based on the following revenue and expense estimates: a. It is forecasted that costs and expenditures will change in 2022 as follows: Merchandise COGS, G&A, Event Costs, and Maintenance will increase by 2.5%. Concessions COGS will increase by 4.5%. Utilities will increase by 8.0%. Personnel will increase by 2.5%. Insurance, Contract Services, Marketing, Management Fee, and Reserve are forecasted to remain the same. b. The arena is expected to generate cash receipts in 2016 as follows: All rent will increase by 5.5%. Concessions Gross will increase by 4.0%. Merchandise Gross, Suite Revenue, Club Seating Revenue, Advertising Revenue, and Naming Rights are forecasted to remain the same. Box Office, Parking, and Ticket Fee revenues will decrease by 2.3%. 2. After you have calculated the 2022 budget, suppose your boss asks you to revise it so that overall revenues increase by 4% and operating expenses decrease by 1.5%. a. Based on current trends in facility management, what revenues do you anticipate can be increased? What expenses can be decreased? b. Use the 2022 budget that you created in Problem 1 and create a new 2022 budget based on the revenue increases and expense decreases outlined in Problem 2 and your work on Problem 2a.

Columbia Arena Company Pro Forma Operating Budget - 2022 2021 Revenues: Rent from Sports Teams $ 465,000 Rent from Events $ 729,000 Equipment Rent $ 27,600 Concessions (Gross) $ 2,512,000 Merchandise (Gross) $ 244,600 Advertising and Sponsorships $ 580,400 Naming Rights $ 327,000 Box Office $ 150,560 Suite Revenue $ 781,700 Club Seat Revenue $ 549,360 Ticket Fees $ 654,000 Parking $ 482,010 Total Revenues $ 7,503,230 Less COGS: Concessions COGS $ 1,507,300 Merchandise COGS $ 122,300 Total COGS $ 1,629,600 Gross Profit $ 5,873,630 Operating Expenses: Personnel $ 981,000 G&A $ 218,000 Non-reimbursed Event Costs $ 163,500 Utilities $ 490,500 Insurance $ 272,500 Maintenance $ 369,800 Contract Services $ 119,900 Marketing and Promotion $ 218,000 Management Fee $ 109,000 Reserve $ 163,500 Total Operating Expenses $ 3,105,700 Operating Income (Loss) $ 2,767,930