¶ … annual program budget for the Stratton Township Park including golf operations; the pool; concerts; other park activities including tours, nature visitors, and general concessions; and administrative costs. Show the line-item details for each function by natural account and summarize the budget for the park as a whole
Stratton Township Park
Annual Financial Budget
Incomes
Item
Description
Description
Amount
Amount
Parking fees
Green fee
Caddy
Admission Fees
Annual Fee
Annual Fee
Swimming
Swimming Feeds
Nature
Individual Fee
Group Fee
Concession fee
Five stands
Nineteenth Hole
Swimming Hole
Swimming hole snack bar
300*3.5*130
136,500
Nature visitor
312,000
Golfers
728,000
Concert Fees
Concert
100,000
Stand expense
25,000
Gross Income
2,592,260
Expenses
80,000
Full Time Employee Salaries
Park Manager
45,000
Assistant Manager
350,000
Management Staff
35% * (80,000 + 45,000 + 350,000)
166,250
Benefits for employees
Total
641,250
General Park Operations
Depreciation for the year
450,000
Depreciation costs
Central Supply and utility
110,000
Supplies and Utility
Total
560,000
$50 * 130 days *10 caddies
65,000
Golf Course Operations
Caddies
2 season schedulers
20,000
Reservations and Scheduling
3 check-in staff members
24,000
Check-in Desk
Parts and Supply
60,000
Seasonal Cost for Parts and Supplies
Fuel and Utility
60,000
Total Fuel and Utility Costs
Total
229,000
160,000
Depreciation Expenses
Depreciation for the year
13*1,000
13,000
Pool Manager
Salary
12*2,000
26,000
Depreciation Pool Expense
14,560
Head Lifeguards
54,600
Six other life guards
4,550
Chemicals
21,385
Electricity
30,550
School donation
50*60
3,000
Concession Expenses
Depreciation
60,000
Maintenance
You may assume that the volume of users will not change with increases in pricing. You may also assume that the course will operate for a full 130 days
In this aspect, the calculation made is for the break-even fee amounts for the Golf course and pool. It is known that at the breakeven point, the total revenue (TR) amount is equivalent to the total expense or total cost (TC) (Brigham and Ehrhardt, 2013). In this case, there are the fixed revenues and variable revenues that do not have any relation to the green fees or the pool prices. This revenue will be designated as separate variable revenue (SVR). This revenue will be taken into account within the calculations:
Total Revenue = Total Cost (Weygandt et al., 2008).
This equation can be rewritten as follows
Variable revenue (VR) * Quantity + separate variable revenue (SVR) + Fixed Revenue (FR) = Fixed Cost (FC) + Variable Cost (VC) * Quantity
By subtracting SVR as well as FR from both of the sides of the equation and making rearrangement, the equation becomes:
VR * Q = (FC -- FR) + (VC * Q -- SVR)
By dividing both sides of the equation by Q, the equation changes and becomes
VR = (FC -- FR) + (VC * Q -- SVR) / Q
Fixed Expenses
Full-time Park Manager
80,000
Assistant Manager
45,000
Maintenance Staff
350,000
Total Depreciation
450,000
925,000
Variable Costs
Central Supply and Utility
10,000
Utility and Fuel Costs
100,000
110,000
Variable Revenue
Parking Fees
240,000
Green fee
507,000
Caddie
74,880
821,880
Sales = Fixed Costs + Variable Costs
2,592,260 = 925,000 + 110,000 x x = $15.16
b. Do you think the park can realistically charge these fees to park users? What might the consequences of raising fees be economically, politically, and in a public relations sense?
They cannot realistically charge these fees to the park users. There are a number of consequences that would come about by increasing the fees not just economically, but politically as well as in a public relations manner. For starters, these increased fees would have a disparaging impact on the park. This is because raising fees would imply a loss of consumers due to greater expenses. In addition, politically, the park can also place…
