CASE: CME (Master Budget) Collegiate Management Education, Inc. (CHE) is a non-profit organization that sponsors a wide variety of management seminars throughout the Southwest. In addition, it is heavily involved in research into improved methods of teaching and motivating college administrators. The seminar activity is largely supported by fees; the research program, from membership dues. CHE operates on a calendar-year basis and is in the process of finalizing the budget for 2016. The following information has been taken from approved plans, which are still tentative at this time Seminar Program Revenue The scheduled number of prograns should produce 112,000,000 of revenue for the year. Each program is budgeted to produce the same amount of revenue. The revenue is collected during the month the program is offered. The programs are scheduled during the basic academic year and are not held during June, July, August, and December. Twelve percent of the revenue is generated in Basics of Business Economics-Corporate Business each of the first five months of the year, and the remainder is distributed evenly during September, October, and November. Direct expenses The seminar expenses are made up of three types: Instructors' fees are paid at the rate of 70% of seminar revenue in the month following the seminar. The instructors are considered independent contractors and are not eligible for CHE employee benefits. - Facilities fees total $5,600,000 for the year. They are the same for each program and are paid in the month the program is given. Annual promotional costs of $1,000,000 are spent equally in all months except June and July, when there is no promotional effort. Research Program Research grants -The research program has a large number of projects nearing completion. The other main research activity this year includes feasibility studies for new projects to be started in 2017. As a result, the total grant expense of $3,000,000 for 2016 is expected to be paid out at the rate of $500,000 per month during the first six months of the year. Salaries and Other CME Expenses office lease Annual amount of $240,000 paid monthly at the beginning of each month. General administrative expenses-$1,500,000 annually, or $125,000 per month. These are paid in cash as incurred. Depreciation expense $240,000 per year. General CHE promotion Annual cost of $400,000, paid monthly. Calaries and benefits No. of employees Employee's Annual Salary Total Annual Salary (5) (5) I 50.000 50,000 . 40,000 120,000 " 30,000 120,000 15 25,000 375,000 5 15,000 15,000 22 10,000 220,000 50 2560,000