Analyze the following scenario: River County is planning several capital acquisitions for the coming year. These include the purchase of two new garbage trucks at $150,000 each, one new bulldozer at $240,000, three new riding lawn mowers at $16,000 each, and construction of an activity center in the part for $650,000. The expected lifetime of the various capital items is 10 years for the garbage trucks, 8 years for the bulldozer, 5 years for the lawn mowers, and 40 years for the activity center. Prepare a capital budget for the items to be acquired, showing their estimated lifetimes, and their per unit and total costs.
Clearly label the calculations for the required components of the capital budget using Excel. Use formulas to show the interrelationships and format the cells to insert a comma if there is more than three numbers and round to the nearest whole number. Explain your budget to the county council.
To prepare a capital budget for the items to be acquired, you will need to calculate the per unit and total costs for each item, as well as their estimated lifetimes. Here's how you can do this using Excel:
Step 1: Open Microsoft Excel and create a new spreadsheet.
Step 2: In the first column, enter the names of the capital items: garbage trucks, bulldozer, riding lawn mowers, and activity center.
Step 3: In the second column, label the next row as "Estimated Lifetime" and enter the respective lifetimes of each item (10 years for garbage trucks, 8 years for the bulldozer, 5 years for the lawn mowers, and 40 years for the activity center).
Step 4: In the third column, label the next row as "Per Unit Cost" and enter the respective costs of each item ($150,000 for garbage trucks, $240,000 for the bulldozer, $16,000 for the lawn mowers, and $650,000 for the activity center).
Step 5: In the fourth column, label the next row as "Total Cost." In the cells below, use the formula "=B2*C2" and drag it down to calculate the total cost for each item. This formula multiplies the estimated lifetime by the per unit cost.
Step 6: Format the Total Cost column to insert a comma if there are more than three numbers and round to the nearest whole number. You can do this by selecting the column, right-clicking, and selecting "Format Cells." Then choose the "Number" tab, select "Custom" category, and enter "#,##0" in the box. Click "OK" to apply the formatting.
Step 7: Calculate the total budget by summing up the Total Cost column. In a new row below the Total Cost column, label it as "Total Budget." In the cell next to it, use the formula "=SUM(D2:D5)" to sum up the total costs of all the capital items.
Step 8: Format the Total Budget cell in the same way as the Total Cost column.
Once your capital budget spreadsheet is complete, you can now explain it to the County Council. Start by explaining the purpose of the capital budget, which is to plan and allocate funds for the acquisition of various capital items to support the needs of the community.
Next, highlight the specific items included in the budget - two garbage trucks, one bulldozer, three riding lawn mowers, and an activity center. Explain their respective lifetimes, per unit costs, and total costs. Emphasize that the per unit cost multiplied by the estimated lifetime gives the total cost for each item.
Finally, present the total budget, which is the sum of the total costs for all the items. This represents the amount of funds needed to acquire and maintain the capital assets in River County.
Remember to provide the council with a clear and concise overview of the capital budget spreadsheet, explaining the calculations used, the formatting applied, and the overall significance of the budget.