Assumptions
For-ProfitNonprofit
120% of marketing expenses are fixed; the rest are variable; all other expenses are fixed1Ticket sales are low because the restricted government grants are to subsidize ticket prices just to children 12 and under.
2Next year they plan to double their fixed marketing expenses and as a result will increase ticket sales by 25%.2It is expected that total children and adult traffic will increase 25% as the result of increased marketing expenses.
3Gift shop sales vary directly with ticket sales; gift shop COGS is 50% of sales but is expected to grow to 55% of sales.320% of marketing expenses are fixed; the rest are variable; all other expenses are fixed
4The adult:child ratio of visitors will remain the same as this year.
5The fundraising effort will help pay for gift shop inventory such that COGS for the gift shop will drop from 50% to 40%.
6Gift shop sales will continue to vary directly with ticket sales.
7Next year they plan to double their fixed marketing expenses, and as a result will increase ticket sales by 25%.
8To be able to subsidize the increase ticket sales they will have to double fundraising to $200,000. This will require an additional fundraising expense of $50,000 beyond this year’s level,plus an additional $20,000 of salaries for additional headcount.
9Due to the lower tax revenue of the city government from the recession, the museum’s grant will be cut by half.
For-Profit Dinosour MuseumNonprofit Dinosaur Museum
Income StatementStatement of Activities
This YrNext Yr BudgetReasonThis YrNext Yr BudgetReason
Ticket sales$600,000Operating revenues
Gift shop sales200,000Ticket sales$100,000
Total sales800,000Gift shop sales200,000
Total Operating Revenue300,000
Salaries & benefits100,000
Gift shop COGS100,000Operating Expenses
Marketing100,000Salaries & benefits200,000
Maintenance90,000Gift shop COGS100,000
Skeleton depreciation20,000Marketing100,000
Building lease20,000Maintenance80,000
Utilities40,000Skeleton depreciation10,000
Interest on debt40,000Building lease120,000
Utilities50,000
Interest on debt40,000
Total expense510,000Total operating expenses700,000
Before tax income290,000Operating income-400,000
Tax @ 40%-116,000-165,000Non-operating Revenue
After-tax income174,000247,500Fundraising100,000200,000
Govt. Grants200,000100,000
[Fundraising expenses]-40,000-90,000
Net non-operating revenue260,000210,000
Increase in net assets-140,000-175,000
Net assets at beg. of yr.490,000350,000
Net assets at end of yr.350,000175,000