Stratton County Community College is adding a band program that will be open to college students and also to the community. The music department chair has asked you to prepare a specialpurpose budget for the program for the next two semesters. Prepare the budget for the full academic year using an accrual basis using the following information:
The band will derive revenue from three sources. Students enrolled in band classes will pay $425 per semester. The college has two semesters each year. Community members will pay $50 per semester to play in the band but will not receive course credit. The only other revenue will come from the sale of tickets to the six concerts that the band intends to give each academic year.
The faculty expects to have 35 students enrolled in band classes each semester and also expects another 20 people from the community to play in the band each semester. Based on discussions with other universities, Stratton expects its concerts to attract 300 people on average and expects to charge $2.50 per ticket.
To run the band program, Stratton will have to hire a graduate assistant at a cost of $15,000 per academic year (two semesters). It will also have to rent an average of 10 brass and 15 woodwind instruments per semester. Brass instrument rentals will average $90 per semester per instrument and woodwinds will cost $50 per instrument per semester.
The band will rent rehearsal space from the local high school at a cost of $250 per night. The band will meet one night each week for 15 weeks in each semester.
The department will also pay $100 to clean the hall after each concert and $50 per concert for student ushers. It will also spend $200 on promotion for each concert and $75 per concert for insurance. Ticket and program costs will average $0.75 per attendee.
Finally, the department needs to buy a tuba at a cost of $4,000, a baritone saxophone for $2,500, and a full set of percussion instruments at a cost of $7,500. It figures that the instruments will last only 5 years and will not be able to be sold for anything after 5 years. The department will also need to buy 30 sets of band music pages at an average cost of $150 per set. The music pages often get lost, so the department wants to treat the sets as an expense in the year they are acquired.