Budgeting Exercise 11: 
Profit by Cost Centre
Exercise Overview
This exercise introduces the concept of "cost centres" and the apportionment of operating costs between costs centres or departments within a business.
The scenario organisation/ business is a Sports Complex that has four departments (or cost centres):
- A leisure pool (swimming pool)
- A sports hall
- A sauna and jacuzzi
- Squash courts
Exercise Instructions
In this exercise, your task is to work out the profitability of each of the four departments (cost centres) using the information and the Excel Workbook provided.
While you are given actual figures for sales generated by each department, you must work out a fair allocation of operating costs such as electricity, insurance, maintenance and and nine (9) other costs to each department.
You are given three methods for allocating operating costs to the departments (cost centres) of the business. These methods are:
- Area of floor space
- Staffing levels
- Capital cost
Using data given for floor space, staff and capital costs, you must perform some arithmetic to find out how each department in the Sports Centre contributes to the overall business profitability.
Download the Activity Sheet for Budgeting Exercise 11
Download the Excel Workbook for Budgeting Exercise 11
The time required to complete this exercise when using the Excel template is 20 minutes or less depending on the Excel skills of the learner.