Pacific Park School Ms. Audrey Hollingsworth, director of the Pacific Park Schoo
ID: 2394223 • Letter: P
Question
Pacific Park School Ms. Audrey Hollingsworth, director of the Pacific Park School (PPS), was reviewing the results of the school's Summer Camp Program in preparation for the upcoming academic year. On her desk was a report (Exhibit 1) showing that instead of the $6,000 surplus she had budgeted, the Summer Camp Program had operated at a $50 loss While the loss was not great, she had been planning to use the surplus to make some much needed improvements in the school's playground facilities. She now would need to either postpone these plans or find alternate sources of financing. Unhappy with this prospect, she resolved to determine exactly why the $6,000 surplus had evaporated EXHIBIT 1 Summer Camp Program: Budgeted and Actual Revenues and Expenses Budget ActualVariance Expenses: Teachers and aides .. 40,00040,250 Supplies Administration (250) 2,500 (200) 150 (50) $(6,050) 2,700 12,000 13,500 (1,500) 4,350 Total Surplus (deficit) . $ 6,000 Background Pacific Park School was established in 1981 as an alternative to the many custodial day-care programs that operated in the city and its nearby suburbs. It accepted chil dren as young as two years of age and worked with them until they reached the age of five, when they enrolled in a regular school Located in the annex of a church, the school had five classrooms and a playground Enrollment during the academic year was limited to 50, and admission was extremely competitive. PPS enjoyed an excellent reputation in the community, and its graduates were virtually assured of admission to one of the city's prestigious private schools. Parents could enroll their children on either a half-day or a full-day schedule. In either case, a wide variety of activities was available, and children could choose among them in a relatively unstructured way. Classrooms resembled those of a well run elementary school, with amenities such as books, paints, blocks, toys, an aquar ium, and small animals, such as turtles. Since most of the children could not read each child had his or her own symbol (such as a triangle) that was used to indicate certain responsibilities (such as feeding the turtle). In all of their activities, the chil dren were supervised by certified teachers and aides, who interacted with them con stantly. Low child-teacher ratios were carefully maintainedExplanation / Answer
Answer Part 1
Revenue Variance
Answer Part 2
Tuition revenue and admin expense has been calculated on per week basis, whereas supplies expense has been calculated on per child week basis and rent is calculated on per month basis. Thus, from the above analysis we can make out that there is no uniformity in deciding the basis upon which the expenses should be apportioned. Earlier it was decided to prepare budget on child week basis but, only one item head namely, supplies expense has been apportioned on child week basis. Also number of child weeks has also not been predicted accurately as we can analyse from supplies variance table in part 1 of the answer provided above. The number of teachers and aides have been wrongly forecast apart from the salary per week that would be payable to them. All the abovementioned shortcomings has converted the budgeted profit of $6000 into a loss of $50.
Answer Part 3
Ms. Hollingsworth should decide and appropriate basis on which the budget should be prepared which should be easy to calculate for example on revenue, supplies, teachers salary, rent etc can be calculated on per day basis or per child basis or per week basis. The present way of preparing budget on child week basis has complicated the formulation of budget to which actual expenses could be matched in order to calculate variances.
Answer Part 1
Revenue Variance
Budgeted Actual Variance $ Number Tuition Amount $ Number Tuition Amount $ Budgeted of child per week of child per week minus weeks weeks Actual 500 $130 65000 450 $135 60750 (4250)Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.