AC4321 Management Accounting Case 2
AC4321 Management Accounting
S04 Group4
Hui Yan Shan 53034152
Kwan Mei Yee 53023082
Siu lai Kwan 52692231
SU Chingting 52480431
ZENG Mengyun 52639616
Zhou Yunqi 52638828
1.
CRC will improve its ability to plan its cash receipts. For the new membership and fee structure, it is more predictable in a sense that CRC get the prepaid membership fees at the beginning of the year. In addition, by using new membership and fee structure, cash receipts are also more certain. Since there are also a lot of variable factors that affect the cash receipts by using hourly court fees. These variable factors include peak hours, peak season and the sports trend (e.g. people may be suddenly more passionate in playing football in football match seasons). But for new membership and fee structure, these variations are eliminated. Thus cash receipts are not dependent upon variables. However, whether customers continue to renew their memberships depends on their own needs.
2.a.
Before making the decision on whether the new membership plan should be adopted or rejected, CRC’s management should take into account some critical factors in its evaluation.
The customers’ acceptance to the new plan: The changes of the pricing policy directly affects the benefits of the members. The new membership plan will be favorable to active customers but worse-off to those who has low usage of courts as they are required to pay more in total under the new pricing arrangement. The attitude of the market should be carefully examined.
The cost for making such changes to the membership plan. To make sure both the potential customers and current members are well noticed about the details of the proposed membership plan, extra administrative and marketing costs on promotional purpose will be inevitably incurred. For example, cost of printing leaflets for the distribution.
Projected return on investment and costs of loan: It is likely that CRC has to borrow money in short term for
S04 Group4
Hui Yan Shan 53034152
Kwan Mei Yee 53023082
Siu lai Kwan 52692231
SU Chingting 52480431
ZENG Mengyun 52639616
Zhou Yunqi 52638828
1.
CRC will improve its ability to plan its cash receipts. For the new membership and fee structure, it is more predictable in a sense that CRC get the prepaid membership fees at the beginning of the year. In addition, by using new membership and fee structure, cash receipts are also more certain. Since there are also a lot of variable factors that affect the cash receipts by using hourly court fees. These variable factors include peak hours, peak season and the sports trend (e.g. people may be suddenly more passionate in playing football in football match seasons). But for new membership and fee structure, these variations are eliminated. Thus cash receipts are not dependent upon variables. However, whether customers continue to renew their memberships depends on their own needs.
2.a.
Before making the decision on whether the new membership plan should be adopted or rejected, CRC’s management should take into account some critical factors in its evaluation.
The customers’ acceptance to the new plan: The changes of the pricing policy directly affects the benefits of the members. The new membership plan will be favorable to active customers but worse-off to those who has low usage of courts as they are required to pay more in total under the new pricing arrangement. The attitude of the market should be carefully examined.
The cost for making such changes to the membership plan. To make sure both the potential customers and current members are well noticed about the details of the proposed membership plan, extra administrative and marketing costs on promotional purpose will be inevitably incurred. For example, cost of printing leaflets for the distribution.
Projected return on investment and costs of loan: It is likely that CRC has to borrow money in short term for