Evansville Preschool operates a not-for-profit morning preschool that operates eight months of the year. The preschool has 190 kids enrolled in its various programs. The preschool’s primary expense is payroll. Teachers are paid a flat salary each of the eight months as follows:
Teachers of two-day program ……………………………………………… $ 428 per month
Teachers of three-day program …………………………………………… $ 657 per month
Teachers of four-day program ……………………………………………… $ 856 per month
Teachers of five-day program ……………………………………………. $1,075 per month
Preschool director’s salary ………………………………………………… $1,500 per month
Evansville Preschool has 9 two-day program teachers, 4 three-day program teachers, 5 four-day program teachers, and 4 five-day program teachers. The preschool also has a director.
In addition to the salary expense, the preschool must pay federal payroll taxes (FICA taxes) in the amount of 7.65% of salary expense. The preschool leases its facilities from a local church, paying $4,050 every month it operates. Fixed operating expenses (telephone, Internet access, bookkeeping services, and so forth) amount to $890 per month over the nine-month school year. Variable monthly expenses (over the eight-month school year) for art supplies and other miscellaneous supplies are $13 per child. Revenue for the entire nine-month school year from tuition, registration fees, and the lunch program is projected to be $241,300.
Requirements
1. Prepare Evansville Preschool’s monthly operating expenses budget. Round all amounts to the nearest dollar.
2. Using your answer from Requirement 1, create Start Evansville Preschool’s budgeted income statement for the entire eight-month school year. You may group all operating expenses together.
3. Start Evansville is a not-for-profit preschool. What might the preschool do with its projected income for the year?