ABC Preschool is a not-for-profit preschool that operates for ten months of the year. There are 30 children enrolled in the four-day program. Each child in that program pays tuition of $500 per month. There are 40 children enrolled in the five-day program. Each child in that program pays tuition of $600 per month. The primary expense of the organization is payroll. Teachers are paid a straight salary for each month. Teachers of the four day program are paid $2,400 per month, and teachers of the five day program are paid $3,250 per month. The director of the pre-school is paid for 12 months at a rate of $3,600 per month. ABC Preschool has three four-day program teachers, four five-day program teachers, and one director. In addition to the salary expense, ABC Preschool must pay CPP, EI, and Workers' Compensation at a rate of 12% of the salary expense. The Preschool operates from a local church, which they pay rent to of $2,000 per month, for each month operating where kids are present. Fixed operating expenses (telephone, internet, bookkeeping services, etc.) amount to $1,290 for the full year. Variable monthly expenses during the period the preschool operates for art supplies and snacks are $40 per child.

Question 1) Prepare ABC Preschool's Operating Expense Budget (20 marks)

Question 2) Prepare ABC Preschool's Budgeted Income Statement (20 marks)

Question 3) Since ABC Preschool is a not-for-profit, what should it do with its operating income (if any)? (10 marks)