15.3.1 Revenues

(Last Modified on November 2, 2010)

The revenues for auxiliary enterprise operations consist of sales, rents, fees, and commissions. Any other revenues incidental to the operation of an auxiliary enterprise also should be included.

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15.3.2 Expenditures

(Last Modified on December 29, 2010)

The expenditures for auxiliary enterprise operations consist of cost of goods sold, direct operating costs, and indirect operating costs.

Cost of Goods Sold

The cost of goods sold should be developed in the accounting records for all auxiliary enterprise activities engaged in selling merchandise or food. Implicit in this determination is the use of appropriate purchase accounts, inventories and inventory adjustments at the close of each accounting period. The percentage of the cost of goods sold may be significant in evaluating management effectiveness.

The cost of goods sold must be booked monthly by enterprise prior to providing data to the data warehouse. The amount of the entry may be calculated using actual or perpetual inventories, or may be calculated using a historic percentage of sales method during months when an actual inventory is not available

Direct Operating Costs

Direct operating costs include:

• Salaries and wages of all employees in the various auxiliary enterprise operations
• Staff benefits for all employees
• Travel, operating supplies, and expenses
• Charges for any share of debt service and/or lease rentals that are borne by the particular auxiliary enterprise operation

Equipment purchases shall be budgeted and recorded in the Auxiliary Enterprise fund group. Depreciation expenses for equipment will also be recorded in this fund group

Indirect Operating Costs

Indirect operating costs are defined as costs incurred by the institution that are allocated to auxiliary enterprises on an equitable basis. An example would include costs relating to the operation and maintenance of physical plant. Each USG institution is required to allocate a portion of its cost of operating and maintaining the physical plant to auxiliary enterprises unless it is directly charging these costs to auxiliary enterprises.

Costs to be allocated to auxiliary enterprises should be accumulated within resident instruction in separate cost centers so that the total allocated amount from each area can be readily determined. Major account code identity must be maintained. The amounts in these cost centers relating to auxiliary enterprises are then transferred to each operating unit within auxiliary enterprises on an allocated basis.

Note: This would not apply to any direct charges associated with physical plant or other administrative activities.

The percentage being allocated to auxiliary enterprises must be included with the budget request, and must be approved by Fiscal Affairs. This percentage must be used for the entire fiscal year, unless permission to change is granted by Fiscal Affairs.

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