"Accounting First" team project
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Transcript of "Accounting First" team project
City Racquet Club
Evaluation
Accounting First (Team 1)
Christiana Alagbe, Denisa Dobrin, Brandon LeBlanc, Adrienne Motlagh,
Horia Stoica, Donovan True
New England College of Business and Finance
MBA505 – Professor Rowe
02/03/13
Click for narrated presentation
Overview
Background
Evaluation:
1. Key factors that CRC should consider in its evaluation of the new membership plan
and fee structure
2. Schedule 1 & 7: CRC’s new membership plan and fee structure improvements in cash
receipts
3. Other types of analyses we offer to perform for CRC in order for them to make a
complete evaluation of the new membership plan and fee structure
4. Explanation of how CRC’s cash management would differ from the present if the new
membership plan and fee structure were adopted
5. Strategic advantages and disadvantages to implementing this membership plan and
fee structure
Summary
References
Background
Current Annual Membership
Fees
Individual $40
Student $25
Family $95
Hourly Court Fees $6 – $10
City Racquet Club
Proposed Annual Membership
Fees
Individual $250
Family $400
Evaluation #1
• How does a higher up-front cost change consumer demand?
• Effect on membership level?
• Staffing levels at CRC?
• Revenues
Key Factors of Consideration
Evaluation #2
CRC
Revenue Budget
For the year ending December 31st 20x1
1st 2nd 3rd 4th Year
Individual
Number of members 734 250 150 65 1199
Annual membership rate $200 $250 $250 $250
Revenue $146,800 $62,500 $37,500 $16,250 $263,050
Family
Number of members 610 126 150 65 951
Annual membership rate $300 $400 $400 $400
Revenue $183,000 $50,400 $60,000 $26,000 $319,400
Total Revenue $329,800 $112,900 $97,500 $42,250 $582,450
CRC
Cash Receipt Budget
For the year ending December 31st 20x1
Feb-Apr May-Jul Aug-Oct Nov-Dec
1st 2nd 3rd 4th Year
Sales revenue (from schedule 1) $329,800 $112,900 $97,500 $42,250 $582,450
Collections in quarter of sale $329,800 $112,900 $97,500 $42,250 $582,450
Total cash receipts $329,800 $112,900 $97,500 $42,250 $582,450
Evaluation #2
Analyses to make a complete evaluation of the new membership plan and fee structure
• Cost Behavior Analysis• Helps assess the impact of alternate scenarios on
profit
• Profit sensitivity analysis • A measurement of the affect of changes to
dependent variables when changes occur in the related independent variables
• Profit Multiplier Profile Analysis• Assists in measuring the impact of key changes
(price, membership levels etc.) on profit
Evaluation #3
• Marginal Cost Analysis (Break-even, profits and losses)• Assessing market profitability and the potential for
competition to enter the market
• Market Share Analysis• Market share can lead to market power through lower
average costs and improve CRC’s influence in controlling the market price
• Price Elasticity Analysis• Understanding pricing elasticity for services to
maximize revenues through properly pricing services within the market
Evaluation #3
• Analysis of Unequal Cash Flows• Accurately determine the future value
• Variance Analysis• Can help determine the cost of unused resources
Evaluation #3
Evaluation #4
Strategic Perspective: Cash management outlook if membership plan adopted
• Cash flow for the club will change
• No additional revenue during the year
• More even distribution of funds depending on season
• A more accurate prediction of optimal cash balances in the club
Advantages of implementing membership plan and fee structure
• Members will better utilize the court time without budget constrains
• The implementation will attract new members
• New plan will lead to effective cash management
Evaluation #5
Disadvantages of implementing membership plan and fee structure
• Loss of revenue
• Potential loss of members
• Incurred costs can affect new membership costs
Evaluation #5
Summary
• New marketing strategy
• Revision of budget
Recommendations
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