The Toliza Museum of Art

Abstract:
Juan Antonio Jimenez is the new Executive Director of the Toliza Museum of Art located in Spain. Jimenez is concerned that the museum lost money in 2008 and wants to understand what the financial results for the current year (2009) are likely to be. The museum has an extensive collection of contemporary and classical art which are shown as Regular Exhibits. The museum also hosts traveling Special Exhibits made up of items loaned by other galleries for a short period of time. The case asks students to use variance analysis to examine the causes of the 2008 losses based on the current cost allocation and to do a straightforward revenue projection based on a scenario where concessionary ticket prices are increased. The second half of the case uses activity based costing to reallocate costs and examine whether the Special Exhibits were profitable in 2008.

Learning Objective:
Students will develop core budgeting skills by calculating quantity, price and overall variances on a number of different metrics; interpreting the significance of variances in a non-profit setting; simple revenue forecasting reallocating expenses based on an activity based costing approach; understanding the importance of picking an appropriate cost driver; interpreting the significance of activity based costing and using financial analysis to advise senior management in a non-profit setting.