1. Prepare a monthly operating budget for the DMV for the fiscal year ending August 31, 2014. Determine the operating surplus and deficit for each month and for the year as a whole. Use one page or worksheet in your spreadsheet to list all of the base information, and another for the operating budget. [ Hint: It may be easier to prepare the budget if you add a third page or worksheet to calculate the number of transactions each month.]

2. To what do you attribute the changing surplus/ deficit pattern during the year?

3. What would happen to the overall deficit or surplus if the number of vehicles failing inspections increased from 15 percent to 30 percent? Keep in mind that vehicles must be re- inspected, so this would also increase the total number of inspections. Does this give the DMV a reason to make its standards tougher? Is this good policy?

4. Suppose the DMV can choose when to implement the new digitized licensing system.

a. What would happen to the finances of the DMV if the new licenses are implemented at the beginning of the year and issued throughout the year?

b. What would happen if the new licenses are not implemented at all during the com-ing year? In either case, assume the total number of licenses issued for any month does not change. Is that assumption realistic? How does it affect your results?

5. What other changes would you suggest that might help the DMV's situation?

What are the advantages and disadvantages of the various suggested changes? Select the approach that you believe is best, create a worksheet showing the resulting budget, and provide an explanation defending your choice of changes.