Managerial Accounting Assignment: Questions and Answers
1. Prepare a revenue budget for the upcoming academic year.
2. Determine the number of staff needed to cover classes.
3. Assume there is a shortage of full-time academic staff. List at least five actions that South Coast might take to accommodate the growing student numbers.
4. You have been requested by the university’s deputy vice chancellor (DVC) to construct budgets for other areas of operation (such as the library, grounds, cafeteria, and maintenance). The DVC noted: ‘The most important resource of the university is its academic staff. Now that you know the number of staff needed, you can prepare the other budgets. Academic staff are indeed the key driver – without them we don’t operate’. Does the DVC really understand the linkages within the budgeting process Explain.
Operating budget comprises the sales budget and series of cost budget, which specifies how organizations operations will be conducted to accomplish budget demand for goods and services. The operating budget comprises budget for projected revenue based on forecast demand for different courses for its goods and services. The main factors which are considered while developing a budget depends on the nature of the organization and comprises internal factors and external factors. Internal factors comprise sales level, new products planned, applied pricing policy, promotions and advertisements. External factors comprise general economic trend, political and legal events, expected activities of competitors and customers. Revenue budget is part of the operational budget. It represents the company’s forecasted sales and expenditure comprising capital expenditures. It is necessary to access that whether an organization possess adequate financial means for conducting the operation, grow business and eventually make a profit. An organization might face uncertainties without planning as it might not be able to judge or ascertain how much has been taken out for expenditure. Revenue budget ensures that resources are efficiently allocated and through doing the same, they save time effort and money. It would be appropriate to state that the revenue budget assists in ascertaining projected revenue which would be earned by an organization while they sell their products and services. It is a tough job, specifically for small business to evaluate figures in case no historical data is available. It is necessary to formulate the business plan as it represents the fair picture of organization current business structure. Revenue budget constructs or presents the same in a straight forward manner.
Particular Amount in $
No of students for the upcoming year (increased by 5%) 15750
Receipts from students
(working note 1) 378000000
Academic staff salary 31500000
120000*262.5 (working note 2)
The amount distributed as scholarship
Working note 3 4320000
Surplus over expenditure 342180000
Working Note 1
No. of students 15750
Fees per student 3000
Total receipts 15750*2*4*3000
Working Note 2
No of staff required = Total no of students/ Average no. of students in class
= 196.37 no. of classes
No. of staff = 197*4/3
= 263 approximately
Working Note 2
No. of students = 180
Semester = 2
Subject = 4
Fees per student = 3000
Total receipts = 180*2*4*3000
No of staff required for covering classes will be ascertained in following manner:
No. of classes = Total no. of students of in academy / Avg. no. of students in class
No. of staff = 197 *4/3
= 263 teachers are required to cover all students.
The actions which can be taken by South Coast to accommodate the growing student body:
• Appointment of staff per timer on expertise basis: Recruiting staff on expertise basis would assist in ascertaining the subjects or courses which can be covered without any issues. Thus, at initial level management gets knowledge about the key areas which require more concern, i.e. the subjects whose teachers are available as well as required to be recruited. It will eventually provide easing in managing students.
• Part-time instructors can be appointed: Part-time instructors seem to be a nominal alternative for institutions to deal with enhanced no. of students as it will not create an additional burden on institution. As it will not require to keep specific staff for long term. Part-time teachers would be available for the time institution needs it, and in case of permanent teacher are capable of dealing with the available strength of students, they will not be part of the organization any more.
• Enhancement in class size can be done, which will eventually reduce no. of sections: It is the easiest method which can be applied to deal with the issue relating to accommodating growing student body. In the present scenario, institutes have to deal with the impact of COVID-19 situation. Thus increasing class size would requireenhanced technology tools and functions so that learning’s or lessons could be reached to the students. It is a fact that technologic knows –how to virtually make a connection with students is necessary but not sufficient to continue teaching and learning endeavour. Thus, it is necessary to connect emotionally, which is beyond being connected with electronic means to make an interactive connection with students.
• Courses can be shifted to the summer term: The courses provided by South Coast can be shifted to the summer term. It will provide time to institute to arrange faculty toincrease no. of students. As possibility might exist that students who are having issues have been enrolled now as they do not have other option for accomplishing course would register for the summer term. The specific idea would allow the institute to provide education service to similar no. of students but in gap or intervals.
• Enhancement in faculty teaching load: The specified action would enhance the responsibility or burden of teachers. For instance, to provide adequate knowledge to students sections could be increased, which will eventually increase the periods taken by staff for respective courses. It would be appropriate to state that it will increase the burden on teachers, but at the same time as they are receiving a reward for their efforts, it can be stated as a fair deal. Further, increase in no. of students does have a direct relation with practical and theoretical problems relating to course; thus teachers will have to make sincere efforts to accomplish their role efficiently which can be done through enhancing teacher load.
• Enhancement in no. of subjects per day: Increase in no. subjects per day would result in accomplishing course within the specified time. Moreover, adequate time would be available for making discussion relating to problems of different chapters and revision. Even it would assist students in understanding the place where they stand regarding their course and effort required to be made to attain their goals and targets.
Managers do have responsibility for accountability of operations and outcomes of one part of the organization, i.e. budgeting process. The budgeting process assists in communicating to managers regarding their expectation to achieve and even to board members regarding the manner of achieving those objectives. Even budgeting assists in ascertaining the resources expected to be consumed in the attainment of specified objectives. It does provide information which guides managers for evaluating their progress regarding predetermined objectives and taking corrective action to attain the same. It would be appropriate to state that within the responsibility of accounting framework, budget is applied to ascertain what the manager is accountable for, evaluating the extent to which manager confirms expectations and to provide analysis of results which present causes and effect of good and bad performance.
In the present case, it can be stated that DVCdoes understand the connection or linkage within the budgeting process. As the no. of students and resultant tuition fees are the main key drivers. This is analogous to sales which are the initial point in the budgeting process. However, the decision is judgemental as other factors do have equal importance as no. of students and tuition fees have.