As he was working on his budget analysis, Rory Lyons received a phone call from the Mayor. The Mayor said that due to state budget cutbacks. The Zoo should expect to receive $100,000 less in state subsidies for the coming year. Faced with this situation, which of the following options would you recommend to Rory Lyons for closing the budget shortfall? Calculate the net budgetary impact for each of these options using the actual budget:

1) Increase ticket prices to $15.00.

Rory believes this might reduce the number of visitors to the Zoo by 20%.

2) Reduce the number of animals to 100 by finding other host programs. There would be a one-time cost of transportation of $1000 each.

3) Fire one of the two assistant zookeepers. This will require a severance payment equal to 10% of the annual salary and a payment of full fringe benefits for 6 months. Note: the zookeepers are not the same people as the animal handlers.

It was a cold drizzly morning in early March 2010 when Rory Lyons, the director of the Kalamazoo Zoo, received the zoo's financial information for the year ending December 31, 2009. The situation was quite different from what Rory had expected. As he folded his umbrella, he wondered whether the strange weather patterns were responsible for the big variances in the budget. It had indeed been a peculiar year, weather-wise, in Kalamazoo. The winter had been the wettest on record, while the spring and summer had been unusually warm and balmy. The winter storms had forced the zoo to close for more days than originally planned. But the frisky spring weather had produced an unexpected success in the animal-breeding program. Kalamazoo, a city in the state of Michigan, was facing a tough economic environment. This year, the zoo itself had received more state aid than expected, largely due to a renovation grant for its facilities. However, the overall budget situation was difficult. The state was reducing the amount of local aid it provided to the cities, forcing the city of Kalamazoo to reconsider many of its popular recreation activities. The Mayor had just called an emergency meeting to discuss the city's financial situation. Rory was asked to give a detailed presentation on the zoo's financial health and to present a preliminary budget for the next financial year. Table 1: All Figures in \$ Table 2 : Operating Data \begin{tabular}{|l|l|l|} \hline & Actual & Budgeted \\ \hline Number of Visitors & 10,000 & 15,000 \\ \hline Price per Admission Ticket & $10.00 & $8.00 \\ \hline Number of donations & 1000 & 500 \\ \hline Value of each donation & $50 & $200 \\ \hline Number of animals in the Zoo & 120 & 100 \\ \hline Food Consumed /animal/year & $3000 & $2400 \\ \hline Overtime costs & $434/ day & $120/ day \\ \hline Number of Zoo open days & 230 & 250 \\ \hline \end{tabular} It was a cold drizzly morning in early March 2010 when Rory Lyons, the director of the Kalamazoo Zoo, received the zoo's financial information for the year ending December 31, 2009. The situation was quite different from what Rory had expected. As he folded his umbrella, he wondered whether the strange weather patterns were responsible for the big variances in the budget. It had indeed been a peculiar year, weather-wise, in Kalamazoo. The winter had been the wettest on record, while the spring and summer had been unusually warm and balmy. The winter storms had forced the zoo to close for more days than originally planned. But the frisky spring weather had produced an unexpected success in the animal-breeding program. Kalamazoo, a city in the state of Michigan, was facing a tough economic environment. This year, the zoo itself had received more state aid than expected, largely due to a renovation grant for its facilities. However, the overall budget situation was difficult. The state was reducing the amount of local aid it provided to the cities, forcing the city of Kalamazoo to reconsider many of its popular recreation activities. The Mayor had just called an emergency meeting to discuss the city's financial situation. Rory was asked to give a detailed presentation on the zoo's financial health and to present a preliminary budget for the next financial year. Table 1: All Figures in \$ Table 2 : Operating Data \begin{tabular}{|l|l|l|} \hline & Actual & Budgeted \\ \hline Number of Visitors & 10,000 & 15,000 \\ \hline Price per Admission Ticket & $10.00 & $8.00 \\ \hline Number of donations & 1000 & 500 \\ \hline Value of each donation & $50 & $200 \\ \hline Number of animals in the Zoo & 120 & 100 \\ \hline Food Consumed /animal/year & $3000 & $2400 \\ \hline Overtime costs & $434/ day & $120/ day \\ \hline Number of Zoo open days & 230 & 250 \\ \hline \end{tabular}