New City Band Case Solution
1 Financial Management For Public, Health, And Not-For-Profit Organizations, 7th Ed. © Sage CQ 2023
Q1: Operating Budget Inputs Fixed New City Contribution Per Concert New City Contribution Number of Concerts Donations per Concert Endowment Return on Endowment Conductor Stipend Fixed Insurance Premium Per Concert Insurance Premium Fixed Annual Music Cost Per Concert Music Costs Number of Musicians Musician Stipend per Concert Percent of Planned Concerts Played
$ $
3,000 125 20 $ 100 $ 100,000 3.50% $ 3,000 $ 500 $ 25 $ 200 $ 40 60 $ 5.00 80%
Financial Management For Public, Health, And Not-For-Profit Organizations, 7th Ed. © Sage CQ 2023
2
Base Budget
Q1: Operating Budget
Revenue City Contributions Fixed Annual Contribution Per Concert Contributions Public Contributions Endowment Earnings Total Revenue Expenses Conductors Stipend Musicians Stipend Insurance Fixed Insurance Premium Per-Concert Insurance Premium Music Costs Music Acquisitions Performance Rights Total Expenses Surplus/(Defi cit)
$
3,000 2,500 2,000 3,500
$
11,000
$
3,000 6,000
$
500 500
$
200
$
800
$
11,000
$
-
Financial Management For Public, Health, And Not-For-Profit Organizations, 7th Ed. © Sage CQ 2023
3
Q2: Flexible Budget
Revenue City Contributions Fixed Annual Contribution Per Concert Contributions Public Contributions Endowment Earnings Total Revenue Expenses Conductors Stipend Musicians Stipend Insurance Fixed Insurance Premium Per-Concert Insurance Premium Music Costs Music Acquisitions Performance Rights Total Expenses Surplus/(Deficit)
Base Budget
Flexible Budget (80% Concerts)
$
$
3,000 2,500 2,000 3,500
3,000 2,000 1,600 3,500
F or V
F V V F
$
11,000
$
10,100
$
3,000 6,000
$
3,000 4,800
F V
$
$
500 500
500 400
F V
$
200
$
200
$
800
F V
$
11,000
$
9,540
$
-
$
560
640
Financial Management For Public, Health, And Not-For-Profit Organizations, 7th Ed. © Sage CQ 2023
4
Q3: Contribution Margin per Concert Marginal Revenue per Concert Variable City Stipend Variable Contributions Total Marginal Revenue Marginal Expenses per Concert Musician Stipends Performance Royalties Per-Concert Insurance Premiums Total Marginal Expenses
$
125 100
$
225
$
300 40 25
$
365
Contribution Margin= Marginal Revenue-Marginal Expenses Contribution Margin per Concert
$
(140) 5
Financial Management For Public, Health, And Not-For-Profit Organizations, 7th Ed. © Sage CQ 2023