The Columbia Arena Company was formed in 2021 and uses the accrual basis of accounting. Using the companys 2021 budget, provided in Exhibit 6.10, develop a Pro-forma operating budget for 2022 based on the following revenue and expense estimates:

A. It is forecasted that costs and expenditures will change in 2022 as follows:

*Merchandise COGS, G&A, Event Costs, and Maintenance increase by 2.5%

* Concessions COGS will increase by 4.5%

*Utilities will increase by 8.0%

*Personnel will increase by 2.5%

*Insurance, Contract Services, Marketing, Management Fee, and Reserve are forecasted to remain the same.

B.The arena is expected to generate cash receipts in 2022 as follows:

*All rent will increase by 5.5%

*Concessions Gross will increase by 4.0%

*Merchandise Gross, Suite Revenue, Club Seating Revenue, Advertising Revenue, and Naming Rights are forecasted to remain the same.

*Box Office, Parking, and Ticket Fee revenues will decrease by 2.3%

2. After you have calculated the 2022 budget (see Problem 1), suppose your boss asks you to revise it so that overall revenues increase by 4% and operating expenses decrease by 1.5%.

A. Based on current trends in facility management, what revenues do you anticipate can be increased? What expenses can be decreased?

B. Use the 2022 budget that you created in Problem 1 and create a new 2022 budget based on the revenue increases and expense decreases outlined in Problem 2 and you work on Problem 2a.