Question

Alice is operating a small nonprofit that provides subsidized tutoring services to high school students in underserved areas. Approximately 60% of the direct costs of tutoring are billed to schools attended by the clients, while approximately 20% are billed directly to the students. The remainder comes from general operating funds provided by foundations and individual donations. Assume that Alice knows the following:

• Of the funds billed directly to schools, two-thirds are paid in the month following the delivery of service, with the remainder paid the next month (that is, two months following delivery of services).
• Of the funds billed to families, 80 percent are paid in the month following the delivery of service; 10 percent are paid the following month, and 10% are not paid at all.
• In January, February, and March, the agency accrues expenses for services provided of $30,000; $36,000; and $27,000 respectively.

Based on this information, what would Alice expect the cash budget to show as direct operating receipts for the month of March?

Answer 1

	January	February	March
Total cost	$        30,000	$     36,000	$     27,000
To College	$        18,000	$     21,600	$     16,200
To Families	$          6,000	$       7,200	$       5,400
To Donations	$          6,000	$       7,200	$       5,400
Computation of receipt in March
Donations-same month			$       5,400
College
Feb fee collected in March-2/3			$     14,400
Jan fee collected in March-1/3			$       6,000
Families
Feb fee collected in March-80%			$       5,760
Jan fee collected in March-10%			$          600
Total collection in March			$     32,160