Part I Marquoya College (MC) is a medium- sized private school located in the Midwest. In the past, MC administrators established a budget for the next academic year by adding a specific percentage (e. g., 6%, 8%) to the tuition revenue and operating expenses. This year MC has asked for your assistance in developing its budget for the next academic year. You are supplied with the following data for the current year.
Enrollment ...............4,300 students
Tuition ................$ 3,300/ year
Full-time faculty ............250 (72% tenured)
Fees .................$ 280/ year
Average faculty salary ..........$ 36,000/ year
Full tuition only scholarships ........400 students
For the next academic year, enrollment is expected to increase by 300 students with each student taking an average of 32 credit hours. Tuition will increase by $ 100/ year. Prepare a schedule computing the next academic year€™s tuition and fee revenue budget. Explicitly show the effect of scholarships.
Part II The additional students will require MC to hire 20 adjunct faculty members. Each adjunct will teach 18 credit hours and will be paid at the rate of $ 750/ credit hour. Full- time faculty members will receive a 5 percent pay increase. Additional merit increases to be awarded to individual faculty members will amount to $ 280,000. Prepare a schedule computing the next academic year€™s budget for faculty salaries. The payroll budget should reflect payroll taxes using a rate of 10 percent.
Part III The current budget is $ 1,200,000 for operation and maintenance of plant and equipment, including $ 190,000 for salaries and wages. Experience of the past three months suggests that the current budget is realistic. However, expected increases for next year are $ 10,000 in salaries and $ 50,000 in other expenditures for maintenance of plant and equipment. The IRS has determined that MC has unrelated business income. In the year just past MC paid $ 48,000 of federal income taxes and a penalty of $ 2,000. MC€™s administrators feel that proper allocation of costs and timely payments to the IRS will result in a total tax liability of $ 36,000. Estimates for other costs include:
Mortgage payments........$ 264,000 (Reducing principal by $ 100,000)
Administrative and general.....1,440,000 (Including salaries of $ 1,200,000)
Library.............1,800,000 (Including salaries of $ 1,000,000)
Health and recreation........750,000 (Including salaries of $ 300,000)
Athletics.............320,000 (Including salaries of $ 60,000)
Insurance and retirement benefits.548,000
Capital improvements ......1,300,000
Where applicable, use a payroll tax rate of 10 percent. Anticipated revenues, other than tuition for the next academic year, are as follows:
Endowment receipts (e. g., interest, dividends).......$ 514,000
Net income from auxiliary services............$538,000
Athletics ......................$ 1,580,000
MC€™s remaining source of revenue is an annual alumni support campaign. Last year, the alums were very generous (MC€™s basketball team was ranked high throughout the cage campaign) and contributed over $ 600,000.
MC borrowed $ 200,000 from the Golden Dome Bank for summer operations on June 15. The principal plus interest (at an annual rate of 8%) is to be paid on September 15.
On the basis of the tuition and fee revenue budget and faculty salaries budget computed in parts I and II, prepare a schedule computing the amount which must be raised during the annual support campaign in order to cover the expenditures budgeted.
Part IV Using anticipated alumni support of $ 750,000, pre-pare a cash budget for the first quarter (Sept., Oct., Nov.) of the MC fiscal year. (Round all calculations to the nearest hundred dollars.) The following patterns of cash flows are anticipated:
MC must maintain a cash balance of $ 3,000. Financing can be arranged at the Golden Dome Bank at a rate of 8 percent. Borrowing occurs in $ 1,000 increments. All loans are repaid as soon as possible, but a minimum of one month€™s interest is charged. Estimated cash on September 1 is $3,700.

Nov. Dec. Jan Mar-Aug. 15% Sept. oct Tuition revenue Fee revenue Endowment income Net income from 15% 20% 5096 25% 15% 5% 30% 5096 -25% 10% 10% 5090 40% , 10% 10% 10% 10% auxiliary services Athletic revenue Alumni support Faculty salaries Operation and 10% 2% 10% 8% 50% 12% 10% 10% 10% 25% 10% 10% 10% 6% 10% 10% 5% 3% 10% 8% 15% 50% 40% 46% 2% 10% maintenance of plant and equipment Insurance and 10% 10% 10% 10% 25% 10% 10% 10% 15% 10% -25% 40% retirement Athletic expenditures Capital improvements Federal income tax All others 5% 80% 1096 10% 10% 40% 10% 50% - 12 equal receipts/disbursements