So your new accountant could practice the budgeting process in your for-profit company, you want her to compare budgeting methods for two different kinds of entities.

You give her information for a for-profit and for a nonprofit entity and ask her to complete the following:

• complete next year's budgeted figures for each entity within the same Excel worksheet (yellow cells)
• include your reasoning for most of the budgeted figures (green cells)

Because of a bad recession, government grants were not cut by 50% but are eliminated completely for next year's budget and fundraising effortsdespite an increase in expensesdid not improve at all.

Assumptions
For-Profit		Nonprofit
20% of marketing expenses are fixed; the rest are variable; all other expenses are fixed	1	Ticket sales are low because the restricted government grants are to subsidize ticket prices just to children 12 and under.
Next year they plan to double their fixed marketing expenses and as a result will increase ticket sales by 25%.	2	It is expected that total children and adult traffic will increase 25% as the result of increased marketing expenses.
Gift shop sales vary directly with ticket sales; gift shop COGS is 50% of sales but is expected to grow to 55% of sales.	3	20% of marketing expenses are fixed; the rest are variable; all other expenses are fixed
	4	The adult:child ratio of visitors will remain the same as this year.
	5	The fundraising effort will help pay for gift shop inventory such that COGS for the gift shop will drop from 50% to 40%.
	6	Gift shop sales will continue to vary directly with ticket sales.
	7	Next year they plan to double their fixed marketing expenses, and as a result will increase ticket sales by 25%.
	8	To be able to subsidize the increase ticket sales they will have to double fundraising to $200,000. This will require an additional fundraising expense of $50,000 beyond this year's level, plus an additional $20,000 of salaries for additional headcount.
	9	Due to the lower tax revenue of the city government from the recession, the museum's grant will be cut by half.