Using Exhibit 11-4 Meals for the Homeless Statement of Functional Expenses. (1)

Question

Using Exhibit 11-4 Meals for the Homeless Statement of Functional Expenses.

(1)    Calculate program expenditure ratio and interpret it.

Using Exhibit 11-4 Meals for the Homeless Statement of Functional Expenses.

(1)    Calculate program expenditure ratio and interpret it.

EXHIBIT 11-4 Meals for the Homeless Statement of Functional Expenses for the Year Ending December 31, 2017 Program Services Support Services Management Meals Counseling and General Fundraising Total Expenses Salaries and benefits Food Supplies nad brochures Office expenses Rent Professional fees Bad debts Depreciation Total expenses $35,000 $35,000 $40,000 $17,000 $127,000 17,000 6,000 6,000 18,000 3,000 4,000 10,000 $23,000 $191,000 17,000 2,000 1,000 1,000 1,000 14,000 1,000 1,000 1,000 2,000 3,000 2,000 3,000 1,000 4,000 10,000 $83,000 $38,000 $47,000

Explanation / Answer

Program Expenditure Ratio is calculated by Non Profit making organization, by below formula;

Program Expenditure Ratio= Program Operating Expenses / Total Overheads.

Program operating Expenses are total of all Administrative expenses and Fund-raising Expenses.

Please refer below calculation for answer;

As per norms, It's reasonable for Non Profit Making organizatons to spend 40% or lower on operating expenses. If Operating Expenses for Non Profit Organization is higher than 40%, then management shall look into spend.

As eals for Homeless has Program Expenditure ratio is less than 40% i.e. 37%, it can be rated higher.

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