Please answer the following questions in detail showing all work. Please note that the question from the Mikesell textbook is from the 9th edition.
1. Answer question 9 on page 222 of the Mikesell textbook (for “c”, just show if there would be a surplus or deficit with 110 people attending
The Public Budgeting and Finance Association is planning its annual conference.
The conference hotel has quoted the following prices for services:
Thursday
Fixed:
Thursday afternoon Conference facilities rental: $425
Audiovisual equipment rental:$55
Variable
Coffee-break service:
$10 per person
Evening reception: $25 per person ($35 total)
Friday
Fixed:
Conference facilities rental: $750
Audiovisual equipment rental: $150
Variable
Coffee-break service, morning and afternoon: $15 per person Continental breakfast: $15 per person
Luncheon: $20 per person ($50 Total)
Saturday
Fixed:
morning Conference facilities rental: $375
Audiovisual rental: $75 Program materials and marketing would cost about $550.
Variable:
Continental breakfast: $15 per person Coffee-break service: $10 per person ($25 total)
The association charged $130 for each participant last year and would like to use the same price this year.
a. Prepare a break-even chart for the conference and determine the break-even attendance level.
b. Suppose the association wanted to encourage student participation by charging a rate that would cover only the costs directly caused by their attendance.
What price would you charge?
c. Prepare a budget for the event if you expect 110 people to attend.
Answer question 3 on page 220 of the Mikesell textbook (2 points)
This table shows the staffing and pay rates of the Marshall City Fire Department:
Employee Grade Number in Grade Salary
Chief 1 $105,000
Shift commander 3 70,000
Firefighter 1 12 39,000
Firefighter 2 26 30,000
Clerical (part-time) 3 15,000
The city is part of the federal Social Security system. The city and the employee each pay Social Security payroll taxes of 6.2 percent of all salary paid up to
$90,000 per employee to finance federal retirement and disability insurance and
1.45 percent of all salary paid to finance Medicare. The city pays a portion of the cost of health insurance for each full-time employee, an amount equal to
$180 per month. Employees are part of a pension system financed by a city payment of 20 percent of the employee’s salary and an employee payment of
5 percent of the employee’s salary. Full-time employees receive an allowance for uniforms of $750 per year.
Estiae the city’s full cost of fire department labor during the fiscal year, assuming no change in staffing. Separate that cost into salary and fringe-benefit components.
2. The State of Ohio is considering the following two mutually exclusive projects (i.e., you can’t do both projects) to fund out of its new capital budget. Assuming the State of Ohio has a discount rate of 5%, make a recommendation on which project the State should choose and justify the recommendation numerically. (2 points)
Project A Project B
Year Cash Flow Year Cash Flow
0 -$250,000 0 -$240,000
1 $45,000 1 $5,000
2 $75,000 2 $120,000
3 $95,000 3 $120,000
4 $118,000 4 $72,000