Question

RIZZIO TECH IS A FOR- PROFIT VOCATIONAL SCHOOL. THE SCHOOL BASES ITS BUDGETS ON TWO MEASURES OF ACTIVITY (I.E. COST DRIVERS), NAMELY STUDENT AND COURSE. THE SCHOOL USES THE FOLLOWING DATA IN ITS BUDGETING:

FIXED ELEMENT PER MONTH VARIABLE ELEMENT PER STUDENT VARIABLE ELEMENT PER COURSE

REVENUE $0 $416 $0

FACULTY WAGES $0 $0 $2,300

COURSE SUPPLIES $0 $77 $25.00

ADMINISTRATIVE EXPENSES $57,900 $16 $27

IN SEPTEMBER, THE SCHOOL BUDGETED FOR 1,820 STUDENTS AND 173 COURSES. THE ACTUAL ACTIVITY FOR THE MONTH WAS 2,020 STUDENTS AND 178 COURSES.

REQUIRED:

PREPARE THE SCHOOL'S PLANNING BUDGET FOR SEPTEMBER

Answer 1

The planning budget will be prepared as follows:

	Planning Budget
Revenue	757120
Expenses:
Faculty wages	397900
Course supplies	144465
Administrative expenses	91691
Total expenses	634056
Net operating income	123064

Above figures have been calculated as follows:

	Planning Budget
Revenue	=416*1820
Expenses:
Faculty wages	=2300*173
Course supplies	=(77*1820)+(25*173)
Administrative expenses	=57900+(16*1820)+(27*173)
Total expenses	=397900+144465+91691
Net operating income	=757120-634056