Description So your new accountant could practice the budgeting process in your for-profit company, you want her to compare budgeting methods for two different kinds of entities. You give her information for a for-profit and for a nonprofit entity and ask her to complete the following: Given the assumptions and data in this Excel file: complete next year’s budgeted figures for each entity within the same Excel worksheet (yellow cells) include your reasoning for most of the budgeted figures (green cells) Because of a bad recession, government grants were not cut by 50% but are eliminated completely for next year’s budget and fundraising efforts—despite an increase in expenses—did not improve at all. Write a memo of 300–400 words explaining what you would recommend that the museum manager do. Assumptions For-Profit Nonprofit 1 20% of marketing expenses are fixed; the rest are variable; all other expenses are fixed 1 Ticket sales are low because the restricted government grants are to subsidize ticket prices just to children 12 and under. 2 Next year they plan to double their fixed marketing expenses and as a result will increase ticket sales by 25%. 2 It is expected that total children and adult traffic will increase 25% as the result of increased marketing expenses. 3 Gift shop sales vary directly with ticket sales; gift shop COGS is 50% of sales but is expected to grow to 55% of sales. 3 20% of marketing expenses are fixed; the rest are variable; all other expenses are fixed 4 The adult:child ratio of visitors will remain the same as this year. 5 The fundraising effort will help pay for gift shop inventory such that COGS for the gift shop will drop from 50% to 40%. 6 Gift shop sales will continue to vary directly with ticket sales. 7 Next year they plan to double their fixed marketing expenses, and as a result will increase ticket sales by 25%. 8 To be able to subsidize the increase ticket sales they will have to double fundraising to $200,000
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