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Financial Planning: Budgeting For-Profit and Non-Profit

So your new accountant could practice the budgeting process in your for-profit company, you want her to compare budgeting methods for two different kinds of entities.

You give her information for a for-profit and for a nonprofit entity and ask her to complete the following:

Given the assumptions and data in this Excel file (attached):
complete next year's budgeted figures for each entity within the same Excel worksheet (yellow cells)
include your reasoning for most of the budgeted figures (green cells)
Because of a bad recession, government grants were not cut by 50% but are eliminated completely for next year's budget and fundraising efforts—despite an increase in expenses—did not improve at all.

Explain what you would recommend that the museum manager do.


Solution Preview

The two museums are dramatically different. The for profit museum is growing by 25% in revenues but most of the expenses are fixed so the increase in revenues is mostly adding to profit. The nonprofit museum, by contrast, has non-recurring revenue (grants) unrelated to its patronage that is expensive to replace. I would recommend that the nonprofit increase the ticket prices to provide more support from patrons and less from grants.


The for-profit museum is in the enviable position of having substantial growth in patronage ...

Solution Summary

Your tutorial is 354 words and a spreadsheet. The two entities are contrasted and one is found in better shape than the other. Reasons are given for this conclusion.