Accounting 202 Modules 5



Accounting - Module 5

Module 5 - Case

Part I: Planning Function of Charter School Budget

Static Or Flexible Budget

Charter School Sample Budget represents that it is flexible budget. Flexible budget is a budget that adjusts changes in the activity volume whereas, Static budget is concern it is estimates expenses of the business within a given period of time. The reason for stating that Charter School Sample Budget is flexible budget is due to fact that this budget is supplying results for more than one activity or in different level of case (Jane, 2008).

Total Revenue (excluding grants) Per Student

The total revenue excluding grants comprises of $ 727,567, $ 606,306 $400,162 for three levels that is 66, 100 and 120 respectively. Total revenue per student $ 6,063 for all three level.

Total Expenses Per Student

Total expenses per student for level 120 comprises of $4,518 whereas for level of 100 students Total expenses per student is $5,283 and lastly, Total expenses per student for level 66 comprises of is $7,646

Necessary Expenses

Evaluating all expenses that has been incurred to run the charter school, the most unnecessary expenses that I came across is the field trip expense since it is not so much necessary.

Feasibility of the school

In order to see that whether school is viable or not, break even calculations is necessary as it will provide the clear picture of the cost and benefit.

Formula for breakeven is:

Break even sales = fixed cost + variable cost

Revenue

General Revenue (@ $ 3,546 per student)

425,520

354,600

234,036

Compensatory revenue (@ $ 1,775 per student)

213,000

177,500

117,150

Transportation Revenue (@ $ 170 per student)

20,400

17,000

11,220

TRA Reduction (@ $ (-) 42.44 per student)

-5,093

-4,244

-2,801

Food Reimbursement (@ $ 246.50 per student)

29,580

24,650

16,269

Federal Title I Funds (@ $ 368 per student)

44,160

36,800

24,288

Total revenue

727,567

606,306

400,162

Variable Expenses

Staff Development (@ $ 100 per student)

12,000

10,000

6,600

Field Trips (@ $ 40 per student)

4,800

4,000

2,640

Instructional Material & Equipment (@ $ 150 per student)

18,000

15,000

9,900

Instructional Supplies (@ $ 60 per student)

7,200

6,000

3,960

Printing and Copying (@ $ 98 per student)

11,760

9,800

6,468

Food Service (@ $ 246.50 per student)

29,580

24,650

16,269

Total variable Expense

83,340

69,450

45,837

Fixed Expenses

Advertising

3,000

3,000

3,000

Computer Equip

25,000

25,000

25,000

Dues and Subscriptions

1,000

1,000

1,000

Office/General Supplies

4,000

4,000

4,000

Payroll & Salaries

200,600

200,600

200,600

Benefits

35,566

35,566

35,566

Professional Fees (Accounting & Legal)

3,000

3,000

3,000

Principal/Business Mgr Contract

15,000

15,000

15,000

Contract Services

2,000

2,000

2,000

Internet Access

1,000

1,000

1,000

Building Lease

102,471

102,471

102,471

Utilities - Water, Electric etc

21,000

21,000

21,000

Cleaning Services

6,000

6,000

6,000

Maintenance & Repairs

2,000

2,000

2,000

Telephone

5,180

5,180

5,180

Insurance (Property & Liability)

4,000

4,000

4,000

Grass Removal

4,000

4,000

4,000

Transportation

17,000

17,000

17,000

Technology Enhancement

7,000

7,000

7,000

458,817

458,817

458,817

Break Even

Revenue Per Student

6063.058

6063.06

6063.061

Variable cost Per Student

695

695

695

Fixed Cost Student

3823.475

45881.7

6951.773

Number of students 120

Number of students 100

Number of students 66

General Benefits Of Preparing This Budget

The following are the general benefits of preparing budget

Improve the targets and offer guideline for achieving the goals.

Identification of the company weakness and implementation of the new plan and future growth can easily be highlighted for top management

Providing operational efficiency, help to achieve good planning of business and show the results to be obtained for implement the plans.

Requires management to specify the objectives in the medium and long term.\

Requires management to discuss future problems so that they can identify the different alternatives.

Directs the effort and investment into the most profitable alternative of all.

Stressed the need for coordination between all elements of the company as budgeting quickly reveals the weaknesses of an organization.

It serves as a communication ...