Political Science 673: Public Budgeting and Finance (Online)
Assignment #2: The Budget Process
Spring 2021 Andrew L. Morelock
This assignment is due on Sunday, January 31, 2021 by 11:59pm (Central Time). Upload your completed assignment to Canvas. Please submit your work as a Microsoft Word file.
Answer the following:
1.) Jackson Regional Medical Center (JRMC) is developing an operating budget for the month ending June 30, 2022.
The Center expects to perform 90 surgical procedures during the month. JRMC’s average charge (price) per surgical procedure is $3,300.
The cost of disposable surgical supplies is $475 per surgical procedure.
JRMC contracts with surgeons at a fee of $2,500 per surgical procedure.
The monthly salaries for the Center’s receptionist, bookkeeper, and two surgical nurses total $13,500.
The Center’s occupancy costs, which include space rental, insurance, and all utilities, are $8,100 per month.
Average monthly communication costs are $1,250.
Office and operating room equipment was installed at a cost of $240,000. The equipment is expected to have a 5-year life and has no salvage value.
o Remember, the cost of expensive assets are allocated over the course of their useful life. Here, you only need to be concerned with the “depreciation expense” of the equipment for the month of June.
In the table below, prepare JRMC’s operating budget for the month of June 2022.
Jackson Regional Medical Center Operating Budget June 2022
Revenues
Procedures
Total Revenues
Expenses
Professional Fees
Surgical Supplies
Salaries
Occupancy
Communications
Depreciation
Total Expenses
Profit/(Loss)
2.) Serengeti Adventure is a not-for-profit organization. Serengeti Adventure acquired the county zoo, with the provision that the county would provide a subsidy for its operations. The county provides $9,800 per month. The rest of the zoo’s revenues comes from admission charges, which are as follows: $20 for a family admission (the average family has four people), $3 per child in school groups, $5 per child ticket when not in a school group, and $8 per adult ticket.
Each ticket entitles the visitor to ride on the “Tram Around the Park.” However, only one-third of all visitors actually ride the tram.
The zoo expects the following number of tickets sold per month:
Adult: 750
Child: 950
Schoolchild: 1,100
Families: 300
The zoo has the following monthly expenses in four general areas:
Administration: $9,500
Zoo staff: $14,750
Tram rides: $1 per person who rides the tram
Maintenance: $1 per visitor
Determine the operating budget per month. Show revenues and expenditures by line item, and show expected surplus or loss.
Use the table provided below.
Serengeti Adventure Operating Budget
Visitor Type Monthly Number of
Admission Tickets Price per
Admission ($) Admission
Revenues Total
Admitted
Adult
Child
School child
Families
Total
Budget
Revenues
County Grant
Admissions
Total Revenues
Expenses
Administration
Staff
Tram Costs
Maintenance
Total Expenses
Surplus/(Loss)
3.) Eger Township is preparing its budget for the fiscal year ending June 30, 2022. The township has a Management Department, a Public Works Department, a Recreation Department, and a Public Safety Department.
The proposed budget calls for spending money on the items listed in Exhibit 3-1 (pp. 103-104 of your textbook).
The necessary information is provided below.
Based on the information in the exhibit, prepare a line-item expenditures budget (by function) for the township. Show each type of supply item separately. Use the table provided below.
Eger Township
Budgeted Expenditures
For Year Ending June 30, 2022
Program Functions Support Function
Park
Police
Protection Fire
Protection Garbage
Collection Snow
Removal Road
Repair Mainten-
ance Concerts Athletics Manage-
ment Total
Expenditures
Salaries
Fringe Benefits
Supplies: Office
Supplies: Parks
Supplies: Concerts
Supplies: Athletic
Supplies: Salt
Supplies: Blacktop
Supplies: Fire Truck
Supplies: Uniforms
Rent
Gas & Electric
Telephone
Depreciation Exp.
Interest
Total Expenditures
4.) Now that you have the numbers for each department, by function, combine categories to create a simplified line-item expenditures budget for the township.
Group all types of supplies together as one line-item.
Use the table below.
Eger Township
Budgeted Expenditures
For Year Ending June 30, 2022
Expenditures
Salaries
Fringe Benefits
Supplies
Telephone
Gas & Electric
Rent
Interest
Depreciation
Total Expenditures
5.) The State Department of Labor is working on its revenue budget for the year ending June 30, 2022. The state uses a system of account numbers to simplify its bookkeeping processes. The system uses four digits to the left and four digits to the right of the decimal point. The basic structure for an account would appear as 0000.0000.
The first digit in the number (on the extreme left) represents whether the account is describing an asset (resource owned by the state), a liability (obligation owed by the state), a revenue, or an expenditure.
The code would be as follows:
1. Asset
2. Liability
3. Revenue
4. Expenditure
The second and third digits specify the department.
01. Legislature
02. Governor’s Office
03. Judiciary
04. Agriculture
05. Transportation
12. Labor
The fourth digit represents the subdivision within each department. For the Department of Labor, these are as follows:
1. Economic Planning and Development
2. Economic Assistance and Security
3. Manpower and Employment Services
The first two digits to the right of the decimal point represent specific line-item revenue sources and expenditure codes:
01. Direct State Appropriations
02. Grants-in-Aid
11. Salaries and Wages
12. Materials and Supplies
13. Maintenance
The third and fourth digits to the right of the decimal point represent programs. For the Labor Department, the programs are as follows:
01. Administration and Support Services
02. Unemployment Insurance
03. State Disability Insurance
04. Vocational Rehabilitation Services
05. Workplace Standards
06. Employment Services
For example, account 3122.0104 represents revenue for the Department of Labor intended for the Economic Assistance and Security Subdivision of the department. The revenue comes from state appropriations and is intended for use in the Vocational Rehabilitation Services program. (See below).
Using the tables above, answer the following questions:
a. What type of account is described by a code of 3123.0106?
b. What type of account is described by a code of 4121.1101?
c. How much money is budgeted for a revenue account within the Department of Labor, within the Economic Planning and Development subdivision, that has a grants-in-aid revenue source, and is earmarked for “administration and support services”?
d. How much money is budgeted for a revenue account within the Department of Labor, within the Manpower and Employment Services subdivision, that has a direct state appropriations revenue source, and is earmarked for “workplace standards”?