Benefit Cost Per FTE Per Otr $7,150 $150 Exhibit 3 - Marketing Options Media Circulation Newspaper 100,000 adults Flyers for home flexible delivery Radio 900,000 listeners Twenty 60 sec commercials Television Local station for Lifetime and Nickelodeon 30 second commercials Program Details Pet rentals Monthly rotation of unique animals Cost $550 half page per week $50 per thousand, distribute monthly $2300 per month $2000 per month 1 FTE per quarter 1 FTE per thousand per month 5 FTE per quarter .5 FTE per quarter $13,800 $12,000 Cost $25 per month Cost Per FTE Per Otr $150 zero Private music lessons Required uniforms Benefit .5 FTE per quarter .5 FTE per quarter 1 FTE per quarter 1 new FTE per quarter 1 FTE per quarter Piano lessons starting at age 5 No cost to center $50 per lesson by parents Parents would buy uniforms rather No cost to center than multiple play clothes $50 per 2 uniforms by parents Parents would pay to gain access to Video system costs $2,000 video system, 30% using feature Parents to pay $10 week access Hire professional to create and update $500 initial fee and S100 weekly website for center to update current events zero On-line video access New Website $500 year offset by revenue $1300 per quarter plus start-up A previous group of consultants came up with marketing and program improvements. These are shown in Exhibit 3. Using the marketing data in Exhibit 3, evaluate the cost of each idea and the estimated benefit in terms of increased FTEs. Your team should choose one option from the marketing alternatives and one option from the program improvement suggestions. You should choose the two you think would improve the bottom line the most. Start with the forecasted year-end numbers from the current year 2012-2013. Add in the new FTEs in each quarter and new revenue from them in each quarter. Add the new expenses to the expenses from the current-year forecast and put those in the new total-year budget column on the far right. Rather than using the exact expense codes, use the format below to put the new expense in either the fixed or variable categories. Develop a cost function for the forecasted year. Change the yearly cost function to a quarterly function. Use it to calculate the quarterly fixed and variable expenses, using your estimated FTEs. Now you have prepared a budget for the next fiscal year (2013-2014) by quarter. Will you be able to meet the 1 profit expectation in the prior year's budget by the end of the year? If not, how many months into the next fiscal year will it take to meet the prior year's targeted net income using your plan? Forecast Budget Budget Budget Budget Budget Total Year Quarter Quarter 2 Quarter 3 Quarter 4 Total Year 31 36 38 40 38 $317.663 FTES Revenue Variable Cost Fixed Cost Total Cost Net Income Benefit Cost Per FTE Per Otr $7,150 $150 Exhibit 3 - Marketing Options Media Circulation Newspaper 100,000 adults Flyers for home flexible delivery Radio 900,000 listeners Twenty 60 sec commercials Television Local station for Lifetime and Nickelodeon 30 second commercials Program Details Pet rentals Monthly rotation of unique animals Cost $550 half page per week $50 per thousand, distribute monthly $2300 per month $2000 per month 1 FTE per quarter 1 FTE per thousand per month 5 FTE per quarter .5 FTE per quarter $13,800 $12,000 Cost $25 per month Cost Per FTE Per Otr $150 zero Private music lessons Required uniforms Benefit .5 FTE per quarter .5 FTE per quarter 1 FTE per quarter 1 new FTE per quarter 1 FTE per quarter Piano lessons starting at age 5 No cost to center $50 per lesson by parents Parents would buy uniforms rather No cost to center than multiple play clothes $50 per 2 uniforms by parents Parents would pay to gain access to Video system costs $2,000 video system, 30% using feature Parents to pay $10 week access Hire professional to create and update $500 initial fee and S100 weekly website for center to update current events zero On-line video access New Website $500 year offset by revenue $1300 per quarter plus start-up A previous group of consultants came up with marketing and program improvements. These are shown in Exhibit 3. Using the marketing data in Exhibit 3, evaluate the cost of each idea and the estimated benefit in terms of increased FTEs. Your team should choose one option from the marketing alternatives and one option from the program improvement suggestions. You should choose the two you think would improve the bottom line the most. Start with the forecasted year-end numbers from the current year 2012-2013. Add in the new FTEs in each quarter and new revenue from them in each quarter. Add the new expenses to the expenses from the current-year forecast and put those in the new total-year budget column on the far right. Rather than using the exact expense codes, use the format below to put the new expense in either the fixed or variable categories. Develop a cost function for the forecasted year. Change the yearly cost function to a quarterly function. Use it to calculate the quarterly fixed and variable expenses, using your estimated FTEs. Now you have prepared a budget for the next fiscal year (2013-2014) by quarter. Will you be able to meet the 1 profit expectation in the prior year's budget by the end of the year? If not, how many months into the next fiscal year will it take to meet the prior year's targeted net income using your plan? Forecast Budget Budget Budget Budget Budget Total Year Quarter Quarter 2 Quarter 3 Quarter 4 Total Year 31 36 38 40 38 $317.663 FTES Revenue Variable Cost Fixed Cost Total Cost Net Income