Question

The executive director of Mutt Rescue (MR) animal shelter has asked you to prepare an annual budget for the coming fiscal year as well as a flexible budget based on a 5 percent increase in the number of dogs taken into MR’s shelter during the year. She has given you the following guidelines.
Number of dogs rescued and placed by MR: 800
Average length of stay for a dog in the shelter: 12 days
Daily cost of feeding one dog: $ 1.10
Number of veterinary visits per dog on average: 1.2
Cost per veterinary visit: $ 45
Cost of spay/ neuter and transportation per dog rescued: $ 60
Cost of the kennel and related equipment: $ 400,000 Useful life of the kennel and related equipment: 20 years
MR uses straight- line depreciation
Salvage value of the kennel and related equipment: $ 0
MR has three full- time employees. An executive director, who earns $ 40,000 per year, an evaluator/trainer who earns $ 30,000 per year and a kennel manager, who earns $ 25,000. Fringe benefits are equal to 25 percent of each employee’s annual salary.
MR expects to place all of the dogs that it takes into the program by the last day of the fiscal year. It charges an adoption fee of $ 225 per dog. Experience has shown that 15 percent of the people elect to make an additional donation to MR at the time of adoption. Historically, these extra donations have averaged $ 175. In addition, MR has an active fund- raising program and expects to raise $ 40,000 in donations during the fiscal year.

Answer 1

In the books of Mutt Resue(MR)
	Annual Budget		Flexible Budget
	Amount( & )		Amount( & )
Income
Adoption fee(800*225)	1,80,000.00		1,89,000.00	(840*225)
Extra donations(175*800*15%)	21,000.00		22,050.00	(175*840*15%)
Active fund- raising program	40,000.00		40,000.00
Total	2,41,000.00		2,51,050.00
Expenses
Feeding (1.10*12*800)	10,560.00		11,088.00	(1.10*12*840)
Veterinary visits(1.2*45*800)	43,200.00		45,360.00	(1.2*45*840)
Spay/ neuter and transportation(60*800)	48,000.00		50,400.00	(60*840)
Depreciation of kennel and related equipment	20,000.00		20,000.00
Salary	1,18,750.00		1,18,750.00
Total	2,40,510.00		2,45,598.00
Budgeted Profit	490.00		5,452.00
Workings
No of Dogs
	Annual	Flexible
	100%	105%
	800.00	840.00
Depreciation
cost	4,00,000.00
life	20
	20,000.00
Salary	basic	FB(basic*25%)	total
executive director	40,000.00	10,000.00	50,000.00
evaluator	30,000.00	7,500.00	37,500.00
kennel manager	25,000.00	6,250.00	31,250.00
			1,18,750.00