Capital Budgeting in Galaxy Science Centre

1398 Words3 Pages

Capital Budgeting in Galaxy Science Centre

Capital Budgeting encourages managers to accurately manage and control their capital expenditure. By providing powerful reporting and analysis, managers can take control of their budgets.

The purpose of this paper is to investigate capital budgeting decision under Galaxy Science Centre (GSC), which is non-profit organization. The need for such an analysis emerges from the case that only provides general information concerning the impact of capital budgeting decisions in the presence of strategic interactions among GSC. We are facing significant problems in different conditions, then through all given figures to make the best recommendations fro GSC.

Five issues will be told in this report. The first issue identifies which types of capital expenditure projects will be selected to achieve GSCЎ¦s objective, and the performance result. Second, to obtain a computer system, GSC can be either financed by bank loan or leased from Computer Company. Third, use the probability technique to calculate the budgeted admission price for the first year. The forth issue, concerns with how GSC can breakeven without support from the government. The last issue considers overall elements to set up a price policy for the gift shop. We attempt to figure out these issues as existing puzzle.

Issue 1

Galaxy Science Centre (GSC) is a non-profit organization, every dime it spends should be used according to their goal. The goal of GSC is to educate the general public, to support the science programs of local schools and to provide a science centre for the municipality. Therefore, the most amount of budget should be allocated to the Public relation department. The Public relation department is responsible...

... middle of paper ...

...management can compare actual results and targeted result easily.

„« Select option two to lease the XTZ system from Acem computers Ltd, since it carries lower PV.

„« The admission price for the first year should be $6 in order to cover the total cost.

„« Without government support fund in second year onwards, if GSC wants to breakeven, we will suggest using case 1 with a combination of gift shop. With a $520,000 as promotion expenditures, GSC still has a $20,000 lost that need to be covered. Generate profit from gift shop can get out of the lost. In case 2, it is non-sense to charge the preschool children a ticket price since it will conflict will our primary goal, which is to educate the general public. In case 3, it is difficult to persuade government to grant a $1,000,000 each year. Once the government stops funding, GSC may need to close down.

Show More
Related

  • Star Appliance Case Study

    1773 Words  | 4 Pages

    Based on the optimal capital structure analysis, they should pursue as 70% debt proportion, which will give them the lowest cost of capital at 11.58%. Currently Star has no debt in their capital structure, so these new projects should begin to add debt to the company. However, no matter what debt and equity proportions are chosen for each project, the discount rate of 11.58% should be used, as the capital budgeting decisions should be independ...

    Read More

  • Budget Allocation Analysis: Allstar's Budget

    1662 Words  | 4 Pages

    Budget Allocation: After learning from the mistakes in the stage 1, Allstar changed its Budget Allocation method to be more in line with the market trend, and also factored the lifecycle stage of the product. The allocation of the budget in Periods 3,4 & 5 was Advertising 35%, Promotion 35% and Sales Force 30%. Allstar tried to balance its budget effectively and it showed up in the Social Media comment section, “No trouble finding it, Good price, Good Value, like the display, Easy to find”. Similarly the value for Allround+ was being noticed by the targeted segment.

    Read More

  • Cost Analysis and Organization for Inglis University Library

    1672 Words  | 4 Pages

    This memo is in response to the views of the Inglis University Library donations department. The idea of the this case is to help readers develop a better understanding of what the donations department of the library are being used for and what the effects are of those decisions. For example, the donations can be used to hire part-time employees to help keep up with the growing number of books. However, the increase in books and profit has increased unit cost that was claimed to be already too high. The case helps to comprehend cost concepts and how to organize it into data for proper analysis. This memo will explain how to analyze and evaluate the costs and then explain the results in a managerial way whether or not the additional funds should be rejected.

    Read More

  • Lakeland Radio Target Audience

    974 Words  | 2 Pages

    As the General Manager, my job is to plan, monitor, and control the radio station’s finances. In order to achieve our finical goals, a budget must be created to properly managing our $300,000 startup

    Read More

  • Operational Plan For Australian Hardware Company

    753 Words  | 2 Pages

    As the company investment is based on the profit generated in last year’s so the budget of the project will be defined after annual report is published which define the annual revenue of this company.

    Read More

  • Budget Analysis

    1842 Words  | 4 Pages

    A company's budget serves as a guideline in planning and committing costs in order to meet tactical and strategic goals. Tactical goals such as providing budgetary costs for daily operations, and strategic objectives that include R&D, production, marketing, and distribution are all part of the budgeting process. Serving as a guideline rather than being set in stone, the budget is a snapshot of manager's "best thinking at the time it is prepared." (Marshall, 2003, p.496) The budget is a method in which to reign-in discretionary spending, and will likely show variances between what costs have been anticipated and what costs are actually incurred.

    Read More

  • NASA Cost Benefit Analysis

    1009 Words  | 3 Pages

    $3.3 billion, the cost of sending American astronauts to the International Space Station on a Russian rocket, the Soyuz. Even though the United States was instrumental in fabricating and installing major components of the International Space Station (ISS), the United States is now reliant on the Russian space program to send Americans to the ISS. Recent budget cuts by the Obama administration and the Senate have resulted in the NASA budget having its lowest percentage of the national spending since 1959. It is estimated the cost per seat on a Soyuz rocket is about $82 million, and this number will continue to rise until 2018. Although some people have argued raising NASA's budget is a waste of money, the benefits of increasing the budget are

    Read More

  • Mongolian Grill Analysis

    1767 Words  | 4 Pages

    Our decision is that Mr. Butkus should choose to implement both options. The additional capacity is definitely needed, and the demand to fill the capacity is also present. We calculated the possible revenue that could be earned under two sections: Low additional demand and High additional Demand. The additional revenue generated in these two scenarios are $42 900 and $31 200, respectively. Also, the in both of these scenarios, the time needed to pay for the cost of the required expansions are less than a year.

    Read More

  • The Importance of Capital Budgeting

    1818 Words  | 4 Pages

    Capital budgeting is one of the primary activities of a company. Most of the company uses capital budgeting for decision making process of selecting and evaluating long-term investment. The company have to make a right decision with respect to investment in fixed asset such as purchasing of new equipment and delivery vehicles, constructing additions to buildings and many more. The decision must be right because of the project involve huge amount of cash outflow and it is committed for many years.

    Read More

  • Cost Accounting Case Study

    2272 Words  | 5 Pages

    The overall purpose of cost accounting is to advise top administration and the management team on the most suitable and cost effective methods and actions to employ based on cost, capability and efficiencies of a given product or service. It can be defined as the method where all the expenditures used during execution of business activities are gathered, categorized, examined and noted down (Horngren & Srikant, 2000). Once these numbers are gathered and recorded the information is used to determine a selling price and/or to identify possible investment opportunities. Although the principal aim or function of cost accounting is to help the business administration with their decision making and business planning process, the cost accounting data

    Read More

  • Essay On Capital Asset Pricing Model

    1344 Words  | 3 Pages

    Finally, Welch (2008) established from his research that 75% of finance academics recommend using the CAPM for commercial capital budgeting purposes, 10% commend the Fama French model and only 5% recommend an APT model. Therefore, Sharpe and Lintner’s CAPM is a beneficial framework.

    Read More

  • Orchestra Case Study

    1584 Words  | 4 Pages

    The problem facing the orchestra is the quality of the instruments supplied by the school. Some of the students are playing on instruments with holes in them or instruments that won’t stay in tune for the forty-five minute class hour. The solution to this problem would be to request AMOUNT for the orchestra to replace the instruments in the worst conditions. The benefits of this grant would be:

    Read More

  • Distance Learning versus Traditional Learning

    1207 Words  | 3 Pages

    ...tance education entirely beyond the possible profits, not economic returns in the short term, and we can not expect non-profit educational institution as an independent public schools bear the long-term market cultivation. The problems there are many ways, one of which is and businesses, the market pressures passed on to the market-operated business that, of course, also be part of the transfer of interests. In fact, many experimental colleges have explored a variety of ways to solve the funding problem. In addition to the central government of satellite television networks, telecommunications networks and computer network hardware and some experimental resource construction investment, the consortium also includes donations from the company attract investment, the telecommunications sector offers, the local government investment, schools and other teaching points.

    Read More

  • Discounted Cash Flow Valuation

    1092 Words  | 3 Pages

    The purpose of this paper is to give a clear understanding of discounted cash flow valuation. The paper will explain what a discounted cash flow valuation is and its importance in financial business decisions regarding investment strategies. This paper will give a detailed discussion about discounted valuations for both present and future multiple cash flows with respect to even and uneven schedules using clear step-by-step examples. Also included will be some advantages and disadvantages in using the discounted cash flow valuation method for corporate business. Finally, the paper will give a summary of important highlights discussed in the body of the paper.

    Read More

  • The Importance Of Economics On Personal Life

    1804 Words  | 4 Pages

    It requires an adequate and sound organizational structure, that is, there must be a definite assignment of responsibility for each function of the enterprise. Budgeting compels all the members of management, from the top to bottom to participate in the establishment of goals and plans. Budgeting compels departmental managers to make plans in harmony with the other departments and of the entire enterprise. Budgeting helps the management to put down in figures what is necessary for a satisfactory performance. Budgeting helps the management to plan for the most economical use of labor, material and capital. Budgeting tends to remove the cloud of uncertainty that exists in many organizations, especially among lower levels of management, relative to basic policies and objectives. Budgeting promotes an understanding among members of management of their co-workers' problems. Budgeting force management to give adequate attention to the effects of general business conditions. Budgeting aids in obtaining bank credit as banks commonly require a projection of future operations and cash flows to support

    Read More

More about Capital Budgeting in Galaxy Science Centre

Open Document