Question

The country has an initiative for students in underperforming schools. To get funding, schools provide each student with eight 2-hour-long group teachering sessions each month. Also, parents must agree to pay $10 per month for each child they register for the program. The county will pay each school $200 per enrolled child, per month.

Schools must provide one teacher for every five students enrolled in the program, at a cost of

$50 per hour at a teacher’s home school, or $60 per hour if the teacher has to commute from another school in the system.

Schools that participate also need to acquire a site license for a self-study computer program, at a cost of $2,400 per year regardless of the number of students. The school also incurs a cost of $1.50 per child, per teachering session, for workbooks that are tied to the self-study program.

Generally, the county takes one month to pay bills submitted by schools. Parents pay all tuition bills at the beginning of each month. Participating teachers are paid for all after-school programs at the end of each month. The full cost of the software must be paid by the end of the first month of the program. Workbooks are paid for in the month they are used.

You are the budget manager for Typical County School (TCS). Five teachers in your school have agreed to be teachers. Since you expect to need 15 teachers by the end of the year, you will also use 10 teachers from other schools, as needed. Your calculations indicate an expected 25 students in the program during the first month it is offered. 41 in the second month and 52 in the third month. As budget manager:

1. Prepare operating budgets for each of the first three months of the program.
2. Summarize the three monthly budgets into a quarterly operating budget
3. Starting from a zero cash-balance, prepare a cash budget for the first quarter (three months) of the program. You do not have to prepare monthly cash budgets.

Answer 1

WN1		1		2		3
No of teachers needed in each month		25/5 =5		41/5 = 8.2		52/5 =10.4
		From own school		9 (5 from own and 4 from other )		11 (5 from own and 6 from other )

2. Number of hours taught by teachers = 8*2= 16 hours. Number of sessions = 8

		1		2		3
WN	Parents paid fees	$250		$410		$520
		(25*$10)		(41*$10)		(52*$10)
3	County payment	0		$5,000		$8,200
				200*25		(200*41)
4	teacher expense	$4,000		$7,840		$9,760
	For no of teachers see WN 1	(5*$50*16hrs)		(5*$50*16hrs)+(4*$60*16hrs)		(5*$50*16hrs)+(6*$60*16hrs)
5	Book expense	$300		$492		$624
		($1.5*25*8sessions)		($1.5*41*8sessions)		($1.5*52*8sessions)

Quaterly Operating Budget
No of students	25		41		52
Parents paid fees (same as above)	250		410		520
County payment (Accruel basis)	5000		8200		10400
Total Revenue (A)	5250		8610		10920
teacher expense (same as above)	4000		7840		9760
Site License (Accruel basis ) 2400/12=$200	200		200		200
Book expense (same as above)	300		492		624
Total Expense (B)	4500		8532		10584
Operating Income (A-B)	750		78		336

. 1. County Payment (Accruel Basis ) = 25*$200=5000 , 41*$200=$8200, 52*$200= $10400

Quarterly Cash Budget

Opening Cash Bal			0
Fees paid by Parents			1180
(250+410+520)
County Payment			13200
(5000+8200)
Total Receipt			14380
Teacher's Fees			21600
(4000+7840+9760)
Site License			2400
Book expense			1416
(300+492+624)
Total Payment			25416
Net Cash			-11036