Real-Life Math -- Solution
Here are 2 answers that we came up with.
ANSWER A
Full-time staff yearly totals
Senior reporters = 2 x $4,700 x 12 months
Senior reporters = $9,400 x 12
Senior reporters = $112,800
Beat reporters = 4 x $3,200 x 12 months
Beat reporters = $12,800 x 12
Beat reporters = $153,600
Copy editor = $4,400 x 12 months
Copy editor = $52,800
Subtotal = $112,800 + $153,600 + $52,800
Subtotal = $319,200
Part-time and freelance staff yearly totals
Copy editor = $2,150 x 12
Copy editor = $25,800
Freelance use at $110 a day = 64 days x $110
Freelance use at $110 a day = $7,040
Add a 22 per cent projected increase
$7,040 x 1.22 = $8,588.80
Freelance use at $220 a day = 29 days x $220
Freelance use at $220 a day = 29 days x $220
Add a 22 per cent projected increase
$6,380 x 1.22 = $7,783.60
Subtotal = $25,800 + $8,588.80 + $7,783.60
Subtotal = $42,172.40
Helicopter use
60 hours at last year's rate
60 x $890 = $53,400
Grand total = $319,200 + $42,172.40 + $53,400
Grand total = $415,172.40
This budget reflects a middle-of-the-road policy. It still has some worrisome points, however. For instance, what if the price of gas doubles?
ANSWER B
Full-time staff yearly totals
Same as above: $319,200
Part-time and freelance staff yearly totals
Copy editor = $2,150 x 12
Copy editor = $25,800
Freelance use at $110 a day = 64 days x $110
Freelance use at $110 a day = $7,040
Add a 35 per cent projected increase
$7,040 x 1.35 = $9,504
Freelance use at $220 a day = 29 days x $220
Freelance use at $220 a day = $6,380
Add a 35 per cent projected increase
$6,380 x 1.35 = $8,613
Subtotal = $25,800 + $9,504 + $8,613
Subtotal = $43,917
Helicopter use
60 hours at last year's rate
60 x $890 = $53,400
Remember: fuel and lubricants account for 24 per cent of operating costs. It is expected that fuel prices will rise 70 per cent over last year's price.
Last year's fuel costs = $53,400 x 0.24
Last year's fuel costs = $12,816
Expected increase = $12,816 x 0.70
Expected increase = $8,971.20
Subtotal = $53,400 + $8,971.20
Subtotal = $62,371.20
Grand total = $319,200 + $43,917 + $62,371.20
Grand total = $425,488.20
This budget reflects the most realistic use of resources, even though it is the highest. You have budgeted for a bigger increase in the use of freelancers, since last year you spent more than you had originally expected. Plus, you've accounted for a large increase in fuel costs.