Question

Parking lot staff budget Adventure Park is a large theme park. Staffing for the theme park involves many different labor classifications, one of which is the parking lot staff. The parking lot staff collects parking fees, provides directions, and operates trams. The staff size is a function of the number of daily vehicles. Adventure Park has determined from historical experience that a staff member is needed for every 200 vehicles. Adventure Park estimates staff for both school days and nonschool days. Nonschool days are higher attendance days than school days. The number of expected vehicles for each day is as follows:

School Days Nonschool Days
Number of vehicles per day 3,000 8,000
Number of days per year 165 200

Parking fees are $10 per vehicle. Each parking lot employee is paid $110 per day.

Required:
a. Determine the annual parking lot staff budget for school days, nonschool days, and total.
b. Determine the parking revenue for school days, nonschool days, and total.
c. If depreciation expense and other expenses for running the parking lot were estimated to be $2 million per year, determine the parking lot's budgeted profit.

Answer 1

Answer: See explanation

Step-by-step explanation:

a. Determine the annual parking lot staff budget for school days, nonschool days, and total.

For school days:

Number of staff required per day = 3000/20 = 15

Number of staff days per year = 15 × 165 = 2475

Annual parking lot staff budget = 2475 × $110 = $272250

For non school days:

Number of staff required per day = 8000/20 = 40

Number of staff days per year = 40 × 200 = 8000

Annual parking lot staff budget = 800 × $110 = $880,000

Total annual parking lot staff budget = $272250 + $880000 = $1152250

b. Determine the parking revenue for school days, nonschool days, and total.

For school days:

Total number of vehicles per year = 3000 × 165 = 495000

Parking revenue = 495000 × $10 = $4950000

For non school days:

Total number of vehicles per year = 8000 × 200 = 1600000

Parking revenue = 1600000 × $10 = $16000000

Total parking revenue = $4950000 + $16000000 = $20950000

c. If depreciation expense and other expenses for running the parking lot were estimated to be $2 million per year, determine the parking lot's budgeted profit.

Parking revenue = $20,950,000

Less: Parking lot staff payroll = $1152250

Less: Depreciation and other expenses = $2000000

Budgeted profit = $177977500