Question 1: The public Budgeting and finance Association is planning its annual conference. The conference hotel has quoted the following prices for services:
Thursday afternoon: Conference facilities rental: $425
Coffee-break service: $10 per person
Audiovisual equipment rental: $55
Evening reception: $25 person
Friday: Conference facilities rental: $750
Coffee-break service, morning and afternoon: $15 per person
Continental breakfast: $15 per person
Luncheon: $20 person
Audiovisual equipment rental: $150
Saturday: Conference facilities rental: $375
Coffee-break service: $15 per person
Coffee-break service: 10 per person
Audiovisual rental: $75
Program materials and marketing would cost about $550. The association charged $130 for each participant last year and would like to use the same price this year.
a) Prepare a break-even chart for the conference and determine the break-even attendance level.
b) Suppose the association wanted to encourage student participation by charging a rate that would cover only the cost directly caused by their attendance. What price would you change?
c) Prepare a line-item budget for the event if you expect 110 people to attend.
Question 2: Grantsville is a medium-sized Midwestern town, not quite rural, not quite urban, and not quite a willing participant in the twenty-first century. As the new clerk-treasurer, you are eager to bring new aggressiveness to the city administration, so long as none of the “Old Guard” gets mad. You suspect that a non-irritating first step would be the development of a cash plan and short term investment strategy for the city. You further believe that an appropriate start would be with the four largest funds in the city financial structure: general, parks and recreation, motor vehicle, and cumulative capital. The following data emerge from your search.
Fund Balance for January 1
General fund………………………. $620,860
Parks and recreation…………………$62,968
Motor vehicle……………………….. $102,015
Cumulative capital…………………..$639,611
Revenue Estimates
Property tax. Collections are received by the city on May 1 and November 1.
Because of a discount for early payment, five eighths of the collections come in the first installment. Delinquency has historically been about 2 percent of the levy.
Levy:
General fund…………… $2,985,200
Parks and recreation……$718,300
Cumulative capital…….. $385,400
Parking meters (general fund). Revenues run about $6 per month, except in September and October (football season), when they run about 5 percent higher, December, when they are about 10 percent higher, and July, when they are about 15 percent lower.
Building permits, inspection fees (general fund). Estimated at 130,000 for the year. The engineer’s office transmits collections to you at the end of each quarter. You estimate the seasonal collections as QI, 85.0; QII, 105.0; QIII, 125; QIV, 85.0.
Traffic fines (half to general fund, half to motor vehicle). Estimated at $6,500 per month. The court remits at the end of each month.
Swimming pool admissions (parks and recreation). Estimates are based on prior years.
May………………….. $800.00
June………………….. $950.00
July………………….. $1,750.00
August………………. $2,500.00
September…………... $750.00
Community auditorium rental (parks and recreation). Estimates are based on prior year.
July 4 Freedom Celebration……………………….. $800.00
Labor Day Customs show…………………………. $1,500.00
Casual rentals (square dances, Rotary, etc.)………. $ 150.00/month
State shared tax (motor vehicles). The state department of revenue provides data.
March 31………………… $114,000
June……………………… $125,000
September……………….. $115,000
December 31……………..113,000
Expenditures, as Appropriated by City Council
Payrolls: Paydays are every other week. The first payday is January 7.
General fund……………..95,000 biweekly
Parks and recreation……………. $15,000
Also, temporary summer lifeguards, playground supervisors, etc., from
May 15 to September 10………………………..$20,000 biweekly
Motor vehicle fund……………………………...$ 10,200 biweekly
Other regular expenditures. Checks to suppliers and other no employees are issued only on alternate Thursdays. The first such date is January 13.
General fund………………………………........ $25,000
Parks and recreation……………………………$ 4000/disbursement
Additional summer payments
(May 10-September 15) $ 3,000/disbursement
Motor vehicle $ 7,000/disbursement
Cumulate capital
Bond service due May 15 ($ 150,000) and November 15 ($125,000)
Special expenditures
General fund: two police cars at $14,500 to be paid for October 1
Motor vehicle fund: Dump truck with sand-salt distributor and snow plow at 34,000 to be paid October 1
From these data, prepare a complete cash budget for the year and include end-of-year balances. Estimate what amounts are available for investment and what fund shortages will occur. Identify any management strategies to prevent the fund shortages, if possible.