Budget Project for Chapter 9

The School of Hard Knocks (SHK) needs to establish a budget for the coming calendar year. The current Budget Director has submitted her retirement and will be leaving the University immediately. You and your team have been hired to establish a budget for the coming year and complete a presentation to the President and the Board of Trustees. They are requesting that you present a balanced budget (meaning zero profit since Happy Valley is a non-profit institution) and a tuition rate for students to pay by the credit hour. FACTS: Revenues: SHK has three semesters during the year, there are 10,000 students during fall and spring semesters and 3,000 students during summer semester. Class size averages 30 per class and students take on average 12 credits per semester. This means that 334 professors are employed during the regular school year and 100 are employed during the summer. Tuition is currently $80.00 per credit hour. Sports generate a total of $500,000 through gate receipts and concessions throughout the academic school year (you decide how to allocate it). SHK receives from the state - appropriations: $5,000,000 per calendar year (divide equally over 3 semesters) SHK receives from their endowment annually: $ 500.000 per calendar year (split between fall and spring semesters) Expenses: Faculty teach 12 credits (4 classes at three credits each) per semester and the average Salary is $60,000 per academic school year, plus benefits that run at 30% of salaries. Faculty receive an additional 30% of their salary for teaching summer classes if they choose to do so (no additional benefits) work in the super There are four colleges within SHK, College of Business, College of Technology, College of Arts and Sciences and the College of Health Sciences. Each college has a Dean, an Associate Dean and each of these two people has a secretary. Each college is allowed to spend $100,000 per calendar year to cover supplies, travel, telephones, and other miscellaneous expenses. The Executive branch has a president and two (2) vice presidents and each of these people has a secretary. The president and vice presidents each spend $100,000 for supplies, travel, telephones, and other miscellaneous expenses per calendar year. Where salaries are not given, establish a salary for each position, plus benefits at 30% of salaries - HVU also has the following extra curricula activities that need to be funded: Football $450,000 during fall semester Hockey $400,000 % during fall semester and during spring semester W. Basketball $100,000 during spring semester M Basketball $100,000 during spring semester W. Volleyball $175,000 during spring semester W. Softball $175,000 during spring semester Maintenance will cost 2% of tuition k ble Utilities will cost 3% of tuition Business office expenses are $250,000 per year (divide equally between 3 semesters) Financial aid office expenses: $175,000 per year (divide equally between 3 semesters) Additional Comments: Because The School of Hard Knocks is a non-profit organization, the goal is to budget for net income that is as close to zero as possible. I will accept budgets that are within $200,000 plus or minus from zero. This means that you may have to go through the numbers more than once. Required: 1. Wherever specific information is not given regarding the amount of an expense, you are to decide how much it should be. You may not change any of the numbers that are given except for the rate of tuition per hour.

2. Develop a total revenue budget including all sources listed above by semester & in total for the year. ery and Benefits only

3. Develop a labor budget (including benefits) by semester & in total for the year. Include all employees; you may lump faculty into one line item.

4. Develop an expense budget for all expenses (which includes labor) by semester & in total for the year.

5. Develop an income statement that includes all revenues and expenses by semester & in total for the year.

6. Prepare a note page giving information about any decisions you made (such as how much you decided to pay each employee) including what you did to ensure a balanced budget.

7. After the project is turned in, you will evaluate the other members of the team on their input and work on the budgets.