Reference no: EM133088496

Question - Future Stars Preschool daycare operates a not-for-profit morning daycare that operates nine months of the year. Future Stars has 161 kids enrolled in its various programs. Future Star's primary expense is payroll. Teachers are paid a flat salary for each of the nine months as follows:

Salary Data

Teachers of two-day program $438/month

Teachers of three-day program $651/month

Teachers of four-day program $872/month

Teachers of five-day program $1,040/month

Director's salary $1,250/month

Future Stars has eight, two-day program teachers, five, three-day program teachers, seven, four-day program teachers, and three, five-day program teachers. There is one overall Director of the organization.

In addition to the salary expense, Future Stars must pay payroll taxes in the amount of 7.65% of salary expense. Future Stars leases its facilities from a local church, paying $2,200 per month plus 10.75% of monthly tuition revenue. 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 nine-month school year) for art supplies and other miscellaneous supplies are $10 per child. Revenue for the entire nine-month school year from tuition and registration fees is projected to be $291,865. The monthly tuition revenue is $26,710.

Required -

1. Prepare Future Stars Preschool daycare monthly operating budget. Round all amounts to the nearest dollar.

2. Using your answer from (1.), create Future Stars Preschool daycare's budgeted income statement for the entire nine-month school year assuming that revenue for the nine-month period is what has been stated in the problem.

3. As Future Stars is a not-for-profit preschool, what might Future Stars do with its projected net income for the year?