South Hampton University is preparing its budget for the upcoming academic year. This is a specialised
private university that charges fees for all degree courses. Currently, 30,000 students are enrolled on
campus. However, the university is forecasting a 5 per cent growth in student numbers in the coming
year, despite an increase in fees to $3,000 per subject. The following additional information has been
gathered from an examination of university records and conversations with university managers:
? South Hampton is planning to award scholarships to 200 students, which will cover their fees.
? The average class has 80 students, and the typical student takes 4 subjects per semester. South
Hampton operates 2 semesters per year.
? The average academic staff salary is $120,000 per annum including on-costs.
? South Hampton’s academic staff are evaluated on the basis of teaching, research, administration
and professional/community service. Each of the academic staff teaches the equivalent of three
subjects during the academic year.
Required:
a) Prepare a revenue budget for the upcoming academic year. (3 marks)
b) Determine the number of staff needed to cover classes. (3 marks)
c) Assume there is a shortage of full-time academic staff. List at least five actions that South Hampton
might take to accommodate the growing student numbers. (4 marks, maximum 200 words)
Your client owns an apartment building in Los Angeles for which he paid a price of $500,000 which was his original basis. During the ten years he has owned the building, he has taken depreciation deductions which total $120,000. An investor has offered to buy the building from your client for a price of $850,000 which is agreeable to your client if the client can avoid paying taxes on his gain.
April 23, 2015
9:49 am
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