Group 2 Report

London Youth Symphony

Principles of Accounting


DORIA, Arniebelle M.
FRANCISCO, Marvin P.
GATCHALIAN, Andrea Mae D.
HAUTEA, Lorenzo Martin J.
UY, Reinhard D.

Prof. Aaron C. Escartin

August 8, 2013




I. Point of View

The point of view of Daina Janitis will be taken for this case being that she is the
President of the London Youth Symphony (LYS) with a vast experience and knowledge
in managing the company. She also has access to data necessary in coming up with
the solution.

II. Statement of the Problem

How will the London Youth Symphony financially sustain its operation for the
upcoming year, 2005, through an increase in enrollment rates?

III. Statement of the Objective/s:

To establish a proposal that increases LYS enrollment rates (at least 40 enrollees)
To maintain a minimum bank account balance of $30,000 and break even in 2006
To provide LYS all its necessary needs (e.g. labor force, equipment)

IV. Assumptions:

1. Most musicians are hired during Kiwanis Festival

The hiring of additional musician caused inconvenience to the company as well as to the
parents. The hiring resulted to an increase on LYS expense particularly on payment for
the hired musicians and renting fees.

2. Annual Renting Fee

LYS needs to rent Wortley Baptist Church annually in order to practice for its concerts
and competitions. LYS uses the facility every Saturday

3. Relationship of Tuition Fee to Enrollment Rates

The increase of LYS tuition fee resulted to a decrease on its enrollment rates. If LYS
continues to increase its tuition fee for 2005, it may not reach the objective of the case to
have at least 40 enrollees.

4. Young Strings enrollees

Currently, there are 46 enrollees for the YS program. As stated in the case, this number
is expected to remain constant with the same tuition fee price of $145 per student.

5. Discrepancy between number students listed in the program and paid enrollees

Although the program has sufficient number of students enrolled, not all of them pay.
This results to a negative effect on LYS costs and income.

V. Alternative Courses of Actions (ACA)

The following are the Alternative Courses of Actions in solving the problem:

1. Full scholarship for 70 (maximum) LYS enrollees and 46 (maximum) YS
enrollees
2. Assimilate with the FC and school bands/orchestra
3. Rebranding London Youth Symphony

VI. Analysis of every ACAs

ACA 1. Full scholarship for 70 (maximum) LYS enrollees and 46 (maximum) YS enrollees

QUANTITATIVE ANALYSIS:

Assumption for year 2005:
Granting that the institution has a healthy financial status that could cover all its
operating expenses for a year without charging tuition fees, it would be expected that a
significant increase in the number of interested applicants would arise. However, to be
able to grant full scholarships to all enrollees without incurring losses, LYS has to limit its
total number of enrollees to 70 and YS to a maximum of 46 enrollees. This could be
done by imposing a stringent screening tests for talent or mental aptitude or whatever
criteria the institution decides upon.

Basis of number of students for year 2006
Data at year 2002
Tuition Fee is $325
Number of enrollees are 50 students

Data at year 2003
Tuition Fee is $425
Number of enrollees are 26 students

50-26/50*100% = 48%
425-325/425*100% = 24%

48%/24% = 2 it is elastic, demand is sensitive to price changes in LYS
unlike in YS, which is inelastic.


For the year 2006, all enrollees of LYS should pay their tuition fees already.
Basing from the graph, the 70 enrollees under LYS program should pay
$240.00/enrollee and the 46 enrollees under YS program should pay $145.00.

INCOME STATEMENT
(for years ending August 31)
2006 2005
REVENUES
Tuition Fees
London Youth Symphony 16,800.00 -
Young Strings 6,670.00 -
23,470.00 -

GRANTS, SPONSORHIP AND DONATIONS
Trillium Foundation - -
London Arts Council Grant - 12,000.00
Corporate Sponsors 5,000.00 5,000.00
LYS Musician Family Donations 700.00 700.00
5,700.00 17,700.00

FUNDRAISING
Bingo Revenue 5,958.00 7,447.00
Other Fundraiser 800.00
5,958.00 8,247.00

PERFORMANCE PROCEEDS
LYS Concert Ticket Sales 6,476.00 6,476.00
LYS Paid Performance 5,740.00 5,740.00
YS Door Donations 413.00 220.00
12,629.00 12,436.00

INTEREST 17 17
TOTAL REVENUES 47,757.00 38,400.00

2006 2005
EXPENSES
Honoraria
LYS Musical Directors 12,528.00 12,528.00
Manager 6,000.00 6,000.00
YS Conductor 4,500.00 4,500.00
LYS Sectonal Coaches 1,550.00 1,550.00
LYS Music Librarian 1,000.00 1,000.00
Program Designer -
25,578.00 25,578.00

Performance Expenses
Hall & Equipment Rental 2,850.00 2,850.00
Hired Musicians - -
Out-of-Town Facility 400.00 400.00
Finders Fee 325.00 325.00
Souvenirs Programs 1,389.00 1,389.00
Photography and Flowers 703.00 703.00

Dress Rehearsals Pizza Supper
669.00 666.00
LYS Reception 201.00 201.00
Posters and Tickets 191.00 191.00
6,725.00 6,725.00

Insturments
English Horn 1,517.00
Instrument Damage -
Clarinet -
Timpani Mallets -
Bow for Double Bass -
1,517.00

Fundraising Expenses
Bingo Hall Rental and Expenses 2,872.00 2,872.00
Bingo Licence Fee 900.00 900.00
Other Fundraising Expenses 565.00
4,337.00 3,772.00

Uniform Expenses

LYS

1,200.00 1,200.00
YS 1,200.00 1,200.00
2,400.00 2,400.00

Insurance (Aon Reeed Stenhouse Inc.) 3,019.00 2,931.00

General and Administrative Expenses
Telephone 480.00 -20.00
Website - -
Advertising 200.00 200.00
Photocopying 167.00 167.00
Office Supplies 473.00 473.00
Postage 465.00 465.00
Post Office Box Rental 175.00 175.00
Software - -
Bank Charges and Cheques - -
1,960.00 1,460.00

Music
Music Purchases 1,468.00 1,468.00
Printing 325.00 325.00
Recording Expenses - -
1,793.00 1,793.00

Musicians Workshops
Annual Dues, Licences and Membership
Licences (SOCAN) 285.00 285.00
Orchestra Canada 93.00 93.00
London Arts Council 50.00 50.00
428.00 428.00

Accountant - 500.00

Total Expenses 47,757.00 45,587.00

Net Income/(Loss) - (7,187.00)

As of the end of 2005, current assets of LYS will be $67,546, meaning, that by
increasing the number of enrollees to at least 70 at $240 tuition fee, LYS could now
afford an operating deficiency in 2005 and can now maintain a bank account higher than
the balance of $30,000 and break even in 2006.

ACA 2. Assimilate with the FC and with School Bands/Orchestra

In the case of London Youth Symphony, the entity is facing an uncertain future
as it admits that its funds can only cover its expenses for only a year or so. As such,
revenue would have to be made through a reform of its current practices.

This reform may come in the form of assimilating FC and school
bands/orchestras. The concept of assimilation has been defined as the integration of a
smaller entity to a bigger counterpart. The assimilation by LYS of smaller entities would
lead to benefits and disadvantages that would be elaborated in the following points.

1. Re: Teachers
During recent years, LYS maintains that it has been steadily losing teachers to
Forest City. The high attrition rates could be attributed to inadequate compensation. This
problem is made worse by the fact that during the previous years, the teachers have
been the ones recruiting new students. As such, a decrease in the number of teachers
would lead to a decrease in enrollment of students, which would have dire
consequences.
As it is, the decrease in teachers is detrimental to the survival of LYS. As such,
assimilation with the entity hiring the teachers would help solve the problem of losing the
much-needed manpower.

2. Re: Importance of String players
As it is, LYS relies on YS for a steady supply of string musicians. However,
history dictates that YS has never been able to sufficiently produce enough string
players, with (2) to (3) players each year being the average carry over. Likewise, in the
symphony orchestra the string section is essential, as it requires the most number of
capable musicians in order for the orchestra to fully function. Thus, LYS assimilation
with its counterparts would solve the deficiency in numbers.

3. Re: Increase in student enrollment
An obvious effect of assimilation would be an increase in student enrollment.
This single aspect would have a wide range of implications that would affect the balance
sheet. Facts suggest, that there is a utilizable population of 100+ music students
studying within Forest City. The assimilation with the said city and its high schools would
have the potential of bringing these students into the fold of LYS. This would therefore
increase realizable profit of LYS.

4. Re: International Youth Orchestras
The major benefit of an FC student joining the LYS program is that they would be
able to experience the full orchestral pieces (beyond just strings) under the baton of a
professional conductor. Hence, they would have the privilege to participate in an
international youth orchestra.

5. Re: Disadvantages of Assimilation
Assimilation, brings about the merging of two cultures. The first would be an
orchestral approach that is espoused by LYS and the second would be a soloist
approach pioneered by FC. In this interplay of clashing ideals there are bound to be
disputes. However, there are also gains to be realized.

Advantages Disadvantages
Holistic Approach Increase of Employee expenses
Possibility of Attracting students from FC &
School Bands
Possibility of tuition fee hike in order to
adequately compensate additional staff
Increase Revenue (In the form of new
enrollees)
Decrease in existing LYS students who
cannot afford such hikes conditions
Loss of autonomy by being sucked into the
school system


Analysis
Applying the foregoing, there are clear advantages. The main thrust in this
endeavor is the ability of a student to compete in an international level. Moreover, the
increase of enrollees would redound to the benefit of LYS and help unburden its financial
woes. However, the main drawback is that LYS would lose its identity or autonomy as it
will get sucked into the schools it assimilates with. As such, there is a need to review
other alternatives in order to prevent loss of identity.

ACA 3. Rebranding London Youth Symphony

To increase LYS, a rebranding of the program can be made. The rebranding of
the program would involve changes that would provide a positive effect on the programs
revenue. This ACA is different from the second ACA because there will be no
assimilation that will happen and will only involve changes within the company.

These changes are:

1. Renting Aeolian Hall
LYS rents Wortley Baptist Church for its rehearsals and spends $2,850.00 every
year unlike London Community Orchestra that rents Aeolian Hall for $2,400.00/annually.
If LYS decides to rent Aeolian Hall, it will be able to save $450.00 every year. Although
Aeolian Hall needs some minor repairs, its facilities are still capable in meeting the
needs of the LYS. In addition, the hall may also be used as a performance venue saving
LYS the burden of looking for concert venues and additional costs. Lastly, if LYS would
hold its concerts in Aeolian Hall, it would open the opportunity for LYS to have a
concession booth during its concerts which would bring additional revenue amounting to
at least $150.00.
In terms of scheduling which day LYS can rehearse, the venue is free every
Saturday afternoons which is beneficial for the musicians being that most of them are
students. This will also attract other musicians to join the program because it would not
conflict with their other priorities. In addition, they can also schedule its concerts every
Sundays, which Wortley Baptist Church cannot offer provided that it will not conflict the
scheduled concerts of London Community Orchestra.

2. Hiring Daina Janitis as Manager

The board unanimously agree that a Manager is needed to properly address LYS
needs and expressed its support to have Janitis appointed as Manager. By appointing
Janitis, LYS would be able to $4,000 which they would have to pay if they hired a different
manager. If Janitis will be hired, she will be able to focus on sending solicitation letters
addressed to the corporation which is one of the responsibilities that she has to do as
Manager.

3. Persuading corporations to sponsor LYS
The case acknowledges that corporation sponsors plays a big part when it comes to
increasing LYS revenues thus having a paid manager would mean having someone who
will focus on attracting corporations to sponsor the programs. To entice the corporations to
sponsor, in return LYS can provide constant public recognition for the sponsors which will
also be a mode of advertisement to them.

4. Hiring an accountant
Although LYS would have to pay an accountant $500 to audit its statements, this
would be offset by the $12,000 grant given by London Arts Council. It was stated in the
case that LAC is willing to provide $12,000 grant if LYS would hire an accountant. In the
end, the action would bring revenue amounting to $11,500.

5. Providing different tuition fee payments
Assuming that LYS collects payments on annual basis only, this results to some
students not being able to afford the one time payment of the program. To encourage the
students to pay the tuition fee, LYS can provide alternative time payments that would fit
bests to the students capability of paying. This action would result in an increase in
revenues. .

INSERT STATEMENT

VII. Conclusion
Basing from the quantitative analysis of the given data, the application of the first
ACA can sufficiently meet the objectives of increasing LYS enrollment rates of at least
40 enrollees; providing LYS all its necessities in terms of labor force and equipment;
and, maintaining a minimum bank account balance of $30,000 and break even in 2006.
In computing for the maintained minimum bank account balance of $30,000.00,
the existing bank account of 2004 in the amount of $43,173.00 was subtracted with the
financial losses in 2005 for $7,187.00, hence, the remaining balance in LYS bank
account for year-end 2005 is 35,986.00.
In the year 2006, the projected revenue was expected to be in the amount of
47,757.00 and the projected total expenses were also expected to be in the same
amount. Hence, there will be no profit or gain for LYS at year-end 2006, such situation
being the break-even point.

VIII. Recommendation
The best alternative course of action would be Alternative Course of Action
number 1. This particular action would solve the problem of LYS and meet their
objectives. Offering a full scholarship in 2005 would encourage the students to enroll in
the program, however, LYS would experience loss in its revenue. For break even to take
place, LYS would have to let its students pay $240 for LYS enrollees and $145 for YS
enrollees.