This case has two parts.

Part I

Let?s try to apply our knowledge of variable costing and review asample budget for a charter school. This budget is prepared assuming three levels of student enrollment (66, 100 and 120). Revenue and expenses projections are shown in the budget. Operating assumptions are shown in ?Schedule A?.

The first requirement of this case relates to the planning function of a budget. Comment on the following relating to the charter school budget:

1. Is this a static or flexible budget?
2. What is total revenue (excluding grants) per student?
3. What are total expenses per student?
4. Do all expenses seem necessary?
5. Is this school viable? How many students does the school need to break even (show your calculations with analysis and state your assumptions for break-even)?(Note:For break even analysis ? Ignore revenue received as ?Grants? and ?Startup Costs? (Schedule A).
6. What are the general benefits of preparing this budget?
7. Discuss how this budget is likely to be used for the control function.

Part II

The second requirement of this case relates to the control function of a budget. Use the background material and Internet to answer the following questions.

1. Variance analysis is a traditional tool used for planning and control. Comment on advantages and disadvantages of using this approach for performance evaluations.
2. Do you have any suggestions for complementary or alternative performance measures?

Assignment Expectations

It is important to answer the questions as posed. The discussion should be three to five pages and written in a clear and concise manner. Support your discussion with references in APA format. You are encouraged to use Excel or other compatible spreadsheet when computations are involved.

Financial budgets should not only provide a plan for the income statement but should also include the balance sheet. This enables the organization to consider potential cash-flow needs for your entire operation, not just as they pertain to income and expenses. There are three major types of budgets: (1) operating budget, (2) financial budget, and (3) capital budget. They are all important; however, the emphasis is on the operating budget in this course. An operating budget serves multiple purposes. It forces managers and supervisors to plan It provides information that can be used as a tool for improve decision making It provides information that can be used for control and performance evaluations It improves the functions of communication and coordination Required Materials Agrawal, N. K. (2010). Principles of Management Accounting, Global Media (read chapter 3), from library. Hermanson, R.H., Edwards, J.D., & Invacevich, S.D. (2011). Accounting Principles: A Business Perspective. First Global Text Edition, Volume 2 Managerial Accounting, 108-113, 128-134, 165-169 and 181-183. http://textbookequity.com/oct/Textbooks/TBQ_PA_Accounting_managerial.pdf Walther, L.M. (2011). Principles of Accounting: A Complete Online Text, chapters 21 and 22 (the section titled Traditional variance calculations for monitor cost and efficiency). Retrieved from http://www.principlesofaccounting.com/ Optional Resource(s) Accounting for Management (n.d.). Target Costing Approach to Pricing. Retrieved from http://www.accountingformanagement.com/target_costing_pricing_products_and_services.htm Number of Students 120 100 66 425,520 213,000 20,400 -5,093 29,580 44,160 354,600 177,500 17,000 -4,244 24,650 36,800 234,036 117,150 11,220 -2,801 16,269 24,288 50,000 10,000 5,000 10,000 50,000 10,000 5,000 10,000 50,000 10,000 5,000 10,000 802,567 681,306 475,162 6,688 6,813 7,199 Expenses Advertising Computer Equip Staff Development (@ $ 100 per student) Field Trips (@ $ 40 per student) Instructional Material & Equipment (@ $ 150 per student) Instructional Supplies (@ $ 60 per student) Dues and Subscriptions Office/General Supplies Payroll & Salaries Benefits Professional Fees (Accounting & Legal) Principal/Business Mgr Contract Contract Services Printing and Copying (@ $ 98 per student) Internet Access Building Lease Utilities - Water, Electric etc Cleaning Services Maintenance & Repairs Telephone Insurance (Property & Liability) Grass Removal Transportation Food Service (@ $ 246.50 per student) Technology Enhancement 3,000 25,000 12,000 4,800 18,000 7,200 1,000 4,000 200,600 35,566 3,000 15,000 2,000 11,760 1,000 102,471 21,000 6,000 2,000 5,180 4,000 4,000 17,000 29,580 7,000 3,000 25,000 10,000 4,000 15,000 6,000 1,000 4,000 200,600 35,566 3,000 15,000 2,000 9,800 1,000 102,471 21,000 6,000 2,000 5,180 4,000 4,000 17,000 24,650 7,000 3,000 25,000 6,600 2,640 9,900 3,960 1,000 4,000 200,600 35,566 3,000 15,000 2,000 6,468 1,000 102,471 21,000 6,000 2,000 5,180 4,000 4,000 17,000 16,269 7,000 Total Expenses 542,157 528,267 504,654 4,518 5,283 7,646 Revenue Less Expenses 260,410 153,039 -29,492 Schedule A:- Startup Costs Capital Equipment and Improvements Office & Classroom Furniture Playground Equipment and Facilities Total Startup Costs 120,000 24,000 10,000 154,000 100,000 20,000 10,000 130,000 66,000 13,200 10,000 89,200 Revenue General Revenue (@ $ 3,546 per student) Compensatory revenue (@ $ 1,775 per student) Transportation Revenue (@ $ 170 per student) TRA Reduction (@ $ (-) 42.44 per student) Food Reimbursement (@ $ 246.50 per student) Federal Title I Funds (@ $ 368 per student) Grants Federal Charter School S96 Technology Enhancement St Paul Foundation Bigelow Foundation Total Revenue Revenue Per Student Total Expenses Per Student Schedule B:- Operating Assumptions Number of Students, Reg-K Number of Students, 1-6 Total Students Number of School Days Number of Teachers Number of Special Ed Teachers Number of LEP Teachers Number of Health Service Workers Number of Paraprofessionals Number of Secretaries Number of Custodians Number of Clerks Per Student Instructional Material Per Student Instructional Supplies Per Student General Revenue Per Student Compensatory revenue Percentage of Students on AFDC Per Student Transport Revenue Per Student Transportation Reduction Per Student Food Reimbursement 25 20 23 95 80 43 120 100 66 170 170 170 3.60 3.00 3.00 0.50 0.50 0.50 0.50 0.50 0.50 0.20 0.20 0.20 4.80 3.30 3.30 1.00 1.00 1.00 0 0 0 0 0 0 $150.00 $150.00 $150.00 $60.00 $60.00 $60.00 $3,546.00 $3,546.00 $3,546.00 $1,775.00 $1,775.00 $1,775.00 26.47 26.47 26.47 $170.00 $170.00 $170.00 -$42.44 -$42.44 -$42.44 $246.50 $246.50 $246.50 Per Student Federal Title I Funds $368.00 $368.00 $368.00 Schedule C:- Salaries Teachers Paraprofessionals Secretary Health Service Workers Contract Competancy- Based Salarary Increases Total Salaries 88,000 52,800 24,000 4,800 16,000 15,000 200,600 88,000 52,800 24,000 4,800 16,000 15,000 200,600 88,000 52,800 24,000 4,800 16,000 15,000 200,600 15,346 16,329 1,805 1,404 682 35,566 15,346 16,329 1,805 1,404 682 35,566 15,346 16,329 1,805 1,404 682 35,566 Schedule D:- Benefits FICA (7.65%) Retirement (8.14%) Life & Disability (0.9%) Health & Other Insurance (0.7%) Workman Compensation (.34%) Total Benefits (17.73%) ***It is a modified verison of a sample charter school budget available on National Charter School Resource Center website (http://www.charterschoolcenter.org/)***