Question

South Hampton University is preparing its budget for the upcoming academic year. This is a specialised private university that charges fees for all degree courses. Currently, 30 000 students are enrolled on campus. However, the university is forecasting a 5 per cent growth in student numbers in the coming year, despite an increase in fees to $3 000 per subject. The following additional information has been gathered from an examination of university records and conversations with university managers:
1. South Hampton is planning to award scholarships to 200 students, which will cover their fees.
2. The average class has 80 students, and the typical student takes 4 subjects per semester. South Hampton operates 2 semesters per year.
3. The average academic staff salary is $120 000 per annum including on-costs.
4. South Hampton’s academic staff are evaluated on the basis of teaching, research, administration and professional/community service. Each of the academic staff teaches the equivalent of three subjects during the academic year.
Required:
a. Prepare a revenue budget for the upcoming academic year.
b. Determine the number of staff needed to cover classes.
c. Assume there is a shortage of full-time academic staff. List at least five actions that South Hampton might take to accommodate the growing student numbers

Answer 1

Solution:

a) Preparing a revenue budget for the upcoming academic year:

Given no. of students in the current year = 30,000

Growth rate = 5%

No. of students in the Upcoming year = 30000 + 30000*5%

= 31,500

Revenue budget:

Particulars	Calculation	Amount ($)
Income from students	31500 * 3000per subject * 4subjects * 2semisters	756,000,000
Less: Staff salary	120,000 *525 (no.of staff refer b)	63,000,000
Less: scholarships	200Students * 3000per subject * 4subjects * 2semisters	4,800,000
Net Income		688,200,000

b) Number of staff needed to cover classes:

No.of clasess = 31500students / 80 per class

= 393.75 (or) 394

Given  Each of the academic staff teaches the equivalent of 3 subjects during the academic year

student takes 4 subjects per semester

Number of staff needed to cover classes = 394 * 4 / 3

= 525.33 or 525

Note: if it is to be be taken mathematically it will be 525 numbers to cover class but 0.33 staff cannot be appointed so it will be considered as 1 and the number of staff required will be 526 and accordingly the above revenue budget income changes. staff salary becomes 526*120,000 = 63,120,000 and net income will be 688,080,000.

c) Actions that South Hampton might take to accommodate the growing student numbers:

1. outsourcing the staff

2. Motivating staff to take extra lectures by paying incentives

3. Appoint the staff on per hour basis

4. increasing the subjects taught per day

5. advertise the work culture of the organisation and attract the persons to join the organisation