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Budget Simulation
Completed by: Jennifer Huska (100271267) Course: FINC1301 CRN: 32826
Professor: Luisa MacNeily Semester: Winter 2018

Definition of a budget:

A budget is a financial document that contains an itemized summary of estimated or

intended expenditures for a given period of time. In essence, it's a plan for allocating
financial resources.

Upon completion of this assignment, you will be able to:

 Complete a budget.
 Add, subtract, multiply and divide decimals.

Part 1. Complete a business budget.

Instructions: Take a moment to think about the costs of running an office. Complete a
business budget base on the scenario below.

Scenario:
Title: Administrative Assistant.

Company: Ladhani & Penn Law.

Task: Your boss, Anne Penn, has asked you to create a monthly budget for the 2018
law office. You have a total budget of $61,500.00. Below are some details that will help
you create the budget. Complete all the columns and provide explanations for the
variance. The Firm’s total Revenue is projected to be $650,000

for 2018. If the individual expenses exceed the company budget total, identify
where you would suggest any expense reduction.

 monthly rent – $2350.00, remains unchanged

 There are five lawyers in 2018, with the recent hire of Sara McLeod. The office
maintains two office administrators. All employees receive company paid parking
spaces. Each parking spot cost $32.00 a month.
 Each fax and copy costs $0.03 per page, based on last year monthly print total
was 2500 pages, A slight increase of 10% total cost is expected this year.
 Photocopy lease is $2640. Annually, unchanged

Jennifer Huska (100271267) Budget Simulation Assignment FINC1301 / Winter 2018

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 Unchanged refreshments for office normally paid through Petty Cash is

estimated to be unchanged at $50 month
 The Marketing Department estimates the expense to increase this year due to a
new hire. Website remains at $700. Monthly, Business Cards is estimated to
increase by 10%, Advertising is the same as the Website.
 The Company plans a first-time client party and golf tournament in late June,
estimating 50 clients to participate at $7000.
 Office Expenses aren’t expected to fluctuate from last year.
 Annual Building Expenses for Enbridge gas average $ 1,700. Water $1,500. And
Hydro $4,000. This is unchanged from previous years
 Liability insurance Premium remains the same at $4,272. Annually
 Property Tax is expected to remain the same at $6,000. Annually
 Telephone and Internet is expected to remain equal to last year’s expense.
 Last year’s total monthly Lawyer salary expense was based on 4 lawyers, with
salaries evenly distributed. The total monthly expense in 2017 was $32,000.00
each month. Recently the Firm hired Ms. Sara McLeod. (costs are inclusive of
CPP and EI employer expense)
 Admin staff annual salaries remain unchanged at $72,000. for both
administrators
 Lawyer Commissions will remain as previous years, 2% of sales for each lawyer,
distributed annually.
 Bonuses are at the Directors discretion, and normally a lump sum equal to one
month’s salary. They are distributed once per year. Assume all lawyers receive a
bonus in 2018.

Jennifer Huska (100271267) Budget Simulation Assignment FINC1301 / Winter 2018

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Ladhani & Penn Law

Business Budget
June 2018 June 2017
Planned Actual
Expense Category Expense Expense Difference Explanation
Monthly Rent
Building Rent / Lease 2350 2350 0
Photocopier Lease (monthly)
Equipment Rent / Lease 220 220 0
Office amenities
Coffee 25 25 0
Other 25 25 0
Marketing Expenses
Brochure 0 0 0
Website 700 700 0 Remains same.
Marketing Dept. estimates 10%
Business Cards 275 250. 25 / 10% increase due to a new hire.
Advertising 700 700 0 Remains same as Website.
Company’s first-time client party
Promotional Trip 7000 0 7000 and golf tournament.
Administrative Expenses
Slight increase of 10% total cost
Fax/Copies 82.50 75 7.50 / 10% expected this year.
Postage 250 250 0
Office Supplies 100 100 0
Two office administrators
Parking 64 64 0 receive parking spots.
Lawyer Expenses

Five lawyers (recent new hire

Sara McLeod) receive parking
Parking 160 128 32 spots.
Lump sum equal to one month’s
Bonus 320, 000 128, 000 192, 000 salary distributed once per year.
Operating Expenses
Expected to remain equal to last
Telephone & Internet 250 250 0 year’s expense.
Utilities 600 600 0 Gas, Water & Hydro.
Insurance 356 356 0
Property Tax 500 500 0
Recent new hire of Sara
Lawyer Salaries 64, 000 32000 32, 000 McLeod.
Remain as previous years, 2%
of sales for each lawyer (recent
Commission 1280 640 640 hire of Sara McLeod).
$72,000 for both admins.
Admin Salaries 12, 000 12, 0000 0

Miscellaneous 0 0 0
Changes = New hire Sara
Total Expenses 410,937.50 179,233.00 231,672.50 McLeod (parking, lawyer

Jennifer Huska (100271267) Budget Simulation Assignment FINC1301 / Winter 2018

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salaries, commissions,
parking, bonus, etc.).
Photocopier increase of 10%.
Business cards increase of
10%. Company has first-time
client party & golf tournament.

Expense Reductions 

Bonus – This section exceeds the company’s budget total by a large amount. My
suggestion for reducing this expense would be to reduce the bonus amount that each
lawyer receives as they make enough money as it is with their salaries alone.
The bonus could even be taken away and only be given out if they reach a specific
target amount for a certain number of clients or something like that.

Jennifer Huska (100271267) Budget Simulation Assignment FINC1301 / Winter 2018