Analyzing Unit VII Homework

¶ … annual program budget for the Stratton Township Park including golf operations; the pool; concerts; other park activities including tours, nature visitors, and general concessions; and administrative costs.

Show the line-item details for each function by natural account and summarize the budget for the park as a whole Stratton Township Park Annual Financial Budget Incomes Item Description Description Amount Amount Parking fees Green fee Caddy Admission Fees Annual Fee Annual Fee Swimming Swimming Feeds Nature Individual Fee Group Fee Concession fee Five stands Nineteenth Hole Swimming Hole Swimming hole snack bar 300*3.5*130 136,500 Nature visitor 312,000 Golfers 728,000 Concert Fees Concert 100,000 Stand expense 25,000 Gross Income 2,592,260 Expenses 80,000 Full Time Employee Salaries Park Manager 45,000 Assistant Manager 350,000 Management Staff 35% * (80,000 + 45,000 + 350,000) 166,250 Benefits for employees Total 641,250 General Park Operations Depreciation for the year 450,000 Depreciation costs Central Supply and utility 110,000 Supplies and Utility Total 560,000 $50 * 130 days *10 caddies 65,000 Golf Course Operations Caddies 2 season schedulers 20,000 Reservations and Scheduling 3 check-in staff members 24,000 Check-in Desk Parts and Supply 60,000 Seasonal Cost for Parts and Supplies Fuel and Utility 60,000 Total Fuel and Utility Costs Total 229,000 160,000 Depreciation Expenses Depreciation for the year 13*1,000 13,000 Pool Manager Salary 12*2,000 26,000 Depreciation Pool Expense 14,560 Head Lifeguards 54,600 Six other life guards 4,550 Chemicals 21,385 Electricity 30,550 School donation 50*60 3,000 Concession Expenses Depreciation 60,000 Maintenance 40,000 Supplies 30,000 Total 130,000 1,887,895 Total Expenses Profit 704,365 Question 2: Based on the information in the budget, find the break-even green fees for the golf course and the break-even admissions charges for the pool.

You may assume that the volume of users will not change with increases in pricing. You may also assume that the course will operate for a full 130 days In this aspect, the calculation made is for the break-even fee amounts for the Golf course and pool. It is known that at the breakeven point, the total revenue (TR) amount is equivalent to the total expense or total cost (TC) (Brigham and Ehrhardt, 2013).

In this case, there are the fixed revenues and variable revenues that do not have any relation to the green fees or the pool prices. This revenue will be designated as separate variable revenue (SVR). This revenue will be taken into account within the calculations: Total Revenue = Total Cost (Weygandt et al., 2008).

This equation can be rewritten as follows Variable revenue (VR) * Quantity + separate variable revenue (SVR) + Fixed Revenue (FR) = Fixed Cost (FC) + Variable Cost (VC) * Quantity By subtracting SVR as well as FR from both of the sides of the equation and making rearrangement, the equation becomes: VR * Q = (FC -- FR) + (VC * Q -- SVR) By dividing both sides of the equation by Q, the equation changes and becomes VR = (FC -- FR) + (VC * Q -- SVR) / Q Fixed Expenses Full-time Park Manager 80,000 Assistant Manager 45,000 Maintenance Staff 350,000 Total Depreciation 450,000 925,000 Variable Costs Central Supply and Utility 10,000 Utility and Fuel Costs 100,000 110,000 Variable Revenue Parking Fees 240,000 Green fee 507,000 Caddie 74,880 821,880 Sales = Fixed Costs + Variable Costs 2,592,260 = 925,000 + 110,000 x x = $15.16 b.

Do you think the park can realistically charge these fees to park users? What might the consequences of raising fees be economically, politically, and in a public relations sense? They cannot realistically charge these fees to the park users. There are a number of consequences that would come about by increasing the fees not just economically, but politically as well as in a public relations manner. For starters, these increased fees would have a disparaging impact on the park.

This is because raising fees would imply a loss of consumers due to greater expenses. In addition, politically, the park can also place fines to the park by excessively charging the consumers. In addition, in a public relations sense, the company might lose the relation of the general public. Question 3: Determine the impact of shutting down the golf course, the pool, the concert series, and the tours, and show the overall marginal impact of making each of these changes.

Be sure to include all marginal revenues and all marginal expenses in your calculations In order to solve this question, it is imperative to determine the marginal impact that these changes have. Basically, this takes into account determining what marginal revenues would be gone and what marginal expenses may be avoided as a result of these actions, and thereafter, determining whether the net impact of these changes increases or decreases the Stratton Town Park's need for a subsidy from the Township.

For starters, all revenues that are linked with these operations would be lost if they were shut down. The expenses that would be evaded encompass the direct operating costs for the programs. These consist of: i. Salaries for facility management ii.