Analysis of HLW Club's New Membership Plan and Fee Structure

This report provides a detailed analysis of the Hawthorn Leisure Works (HLW) club's managerial accounting practices, specifically focusing on the impact of a new membership plan and fee structure. The report assesses how these changes are expected to improve cash receipts, particularly during off-peak seasons, and estimates the impact on sales revenue for the coming financial year. It identifies key factors HLW needs to consider during the evaluation process, including understanding current membership models, demographics, and financial analysis techniques such as trend analysis, horizontal and vertical analysis, and ratio analysis. The analysis explores the differences between the present and new management plans, highlighting the shift from hourly court fees to annual membership fees and the potential for increased revenue and member retention. The report emphasizes the importance of promotional campaigns and special fee reductions to attract and retain members, ultimately aiming to enhance the club's financial stability and long-term success. The study also highlights the key factors that HLW must consider before evaluating the new membership plan, including the current model of the membership, sports reach and demographics.

Managerial Accounting

INTRODUCTION...........................................................................................................................3
1. Assessment of HLW new membership plan and fees structure will improve its cash receipts
......................................................................................................................................................5
2. Estimating the impact on the sales revenue due to the change in the fee structure for coming
financial year................................................................................................................................6
3a. Identifying the factors that the HLW need to consider at the time of evaluation..................7
3b. Explaining the financial analysis that HLW need to make for completing its evaluation.....7
4. Analyse the difference between present management plan and new management plan with
new fee structure..........................................................................................................................8
CONCLUSION................................................................................................................................9
REFERENCES..............................................................................................................................10

INTRODUCTION
Managerial accounting is the field of the study that emphasizes on the information that is
required by management of company. It is the practice and the procedures that help in
developing the reports and the documents for the management in making the decisions in smooth
functioning of the enterprise. It is the tool that is used by the managers for measuring the success
of its business and any failures if any can be controlled by taking the suitable actions. For
achieving the goals effectively and efficiently, managerial accounting is the best technique. It
assists the managers in making the appropriate analysis of their departments or the specific
project in terms of its performance and whether it is going as per the set strategies or not.
Managerial accounting provides for the optimum use of the resources which in turn helps in
cutting the cost or results in low cost per unit of the production. This helps in gaining higher
profitability and growing success in the long run. Through the managerial accounting, HLW can

improve its processes and could make the investment decisions that generate higher returns. The
present study is based on the Hawthorn Leisure Works, a club that facilitates the fitness facilities
to the members of the club and also offers the tennis court services. Furthermore, it describes the
impact on the cash receipts and the impact on sales because of the change in membership plan
and the fee structure. Moreover, it also includes the key factors that the club needs to consider
before the evaluation and the several kinds of the financial analyses in respect of the complete
evaluation. The study also describes the practices relating to the cash management in adopting
the new structure and the membership plan.
1. Assessment of HLW new membership plan and fees structure will improve its cash receipts
Hawthorn leisure works offers tennis courts and other physical fitness facilities to its
members. It has around 2000 members. The management plan and fee structure of HLW leads to
poor cash receipts that are too especially in winter months. For the purpose to solve this issue the
club is trying to introduce new management plan and fee structure can improve the cash flows of
the club and can make it profitable throughout the year.
Yes, HLW’s new membership plan and fee structure would certainly improve its ability to plan
its cash receipts. In the present situation there are two sources of revenue available to HLW
which are annual membership and court fee. The annual membership is divided into three
categories which are individual, family and student. Under this management plan, the annual
member fee of individual was charged as $ 45, for students it was charged as $ 30 and for family
the fee was $ 100. Half of the members of the club is family and other half is constitute of both
students and individual. The hourly court fee is $ 8 and $ 12 depending on the season and prime
time – non prime time (Brewer, 2015).
The court has hourly court fee as in case people who do not want membership too can play and it
can create profit. The timing of the court id 12 hours which is from 9 am to 9 pm but the peak
season of tennis court is from October to April and it makes the club covers 90 to 100 percent of
court capacity during 5am to 9 pm and on the contrary 50 to 60 percent is covered from 9 am to
5 pm. Now the club charges $ 6 in off season which fills just 20 to 40 percent of the capacity
which is too low to generate income (Boučková, 2015). In present plan, the membership expires
in September and company earns by renewing memberships but it also gives an option of not
taking a membership and play on hour basis which is the main issue when off season arrives. In
winters, the cash flow declines as due to cold very few people arrive to play in the court and

club’s hourly fee strategy does not work in winters because no one arrives. The other issue is
being difference of membership fee between individual and students which needs to be change
by the club so that individuals who are other than students do not feel that students have
advantage.
To increase the cash receipts the club is thinking to implement new plan in October in which will
eliminate per hour court fee and will charge only annual membership fee and will have only two
groups which will be individual and family with annual fee of $300 and $500 respectively. The
annual fee would be collected in advance so that there is no chance of fraud or cash deficit.
Members under this new plan will be able to use the court according to their wish at any time so
it will provide ease to customers in order to use the court according to their free time. As the club
was facing low cash receipts therefore to attract new customers the club would do special
promotional campaign to attract new members and to retain existing members as well. The club
believes that with new strategy the student members would turn into individual members which
will increase the cash receipts of the company and 70 percent of the existing members will stay
with the club. All the members compulsory need to join in the new management plan else they
would not be considered as part of the club. Also the most active member of the club will have
benefit of special fee reduction which will keep the members satisfied and loyal towards the club
(Malmi, 2016). Also, the special promotion that will be on August and September will attract
member to take annual fee and this way even when the members do not come in winters, it will
not lead to cash deficit for the club as new plan would focus on taking advance fee which will
improve cash receipts.
2. Estimating the impact on the sales revenue due to the change in the fee structure for coming
financial year.
The changes made by the HLW in its fee structure and membership might affect its sales
revenue to the large extent as some members may leave the membership because of the high fees
which hinders the growth in its revenue (Appelbaum and et.al.,2017). HLW estimated that
majority of the members will be continuing the membership and the membership of the student
will be getting converting into the individual membership. Through this the revenue of the club
increases as more and more members will be joining the club specifically the young members.
HLW also estimated that those members who are most active will be paying in advance the
annual fee and could get a benefit of paying the reduced fee. Management of the HLW estimated
that the loss of the members that results in declining revenue would be met by the proportional
amount as yearly fee at the time of joining (Butler. and Ghosh, 2015). Thus, change in the plan

and the fee structure of the HLW could lead a great impact on the sales of the club which in
affects its revenue.
3a. Identifying the factors that the HLW need to consider at the time of evaluation
Revenue assessment
Particulars November
Decem
ber
Janu
ary March
Apr
il
M
a
y June
Jul
y
Aug
ust S
Membership fees 10711 10711 10711 10711
107
11
1
0
7
1
1 10711
107
11
1071
1
Court fees (non-
prime time) 23040 23808 23808 23808
230
40
Court fees (prime
time) 28800 29760 29760 29760
288
00
During off-season
2
2
3
2 2160
223
2 2232
Total revenue 62551 64279 64279 64279
625
51
1
2
9
4
3 12871
129
43
1294
3
Revised plan
Particulars Members
Fees paid in
advance
(700*45% = 315)
Fees of
remaining
people
(700*55%
= 385) Total
Family 700 141750 192500 334250
Individuals &
students 700 78750 115500 194250
528500

Assumptions- For making the above analysis several assumptions has been made like as
management assumed that 70% of the present members will be continuing their membership so
presently 2000 members are there that is 2000*70% equates to 1400 members. Another
anticipations are made that 900 members will be considered as the active members. As there are
10 courts for each club so total 20 members can play at one point of time. The court fees for per
hour for the 2 financial year assumed to be $8 and $12. This court fee depends on prime and the
non-prime time where prime time is lower than non prime time. Prime time is of 5 hours and
non-prime time is of 8 hours. During the time of off season, the court fees charged for $6 per
hour.
The major and the most important factor that HLW must consider are to determine that
what is wrong in the current model of the membership. The present model in relation to charging
on per member is sustainable because of the changing participation priorities of the bowlers who
were moving from the traditional membership. Tennis is the sport that has faced challenges
relating to bowls which result in modification of their membership for similar reasons. For
facilitating the background to issue, HLW has taken the step towards changing the membership
plan and the fee structure (Warren Jr, Moffitt and Byrnes, 2015). This trend caused for
responding the decline in the base of the membership by increasing the membership fees of the
individual and the family. This helps the club in maintaining their sales revenue base. For
diversifying the categories of the membership in order to maximize the membership so that
revenue raises which in turn leads to development of the infrastructure of the HLW. The other
factors that the club must take into account before the evaluation is to highlight the sport reach of
the bowls with the government and the funding bodies for generating greater investment and to
promote the bowls as the most attractive sponsorship (Di Vaio and Varriale, 2018). Getting clear
understanding of demographics and the geographical participants is an important factor for
improving the planning in relation to the events, services and the facilities. Increasing the
membership fees on the basis of per capita is also a biggest factor that HLW has to take into
account. It needs to focus on facilitating the fixed fee for the members. Thus, these are the
factors that HLW should take into consideration before evaluating the new membership plan.
3b. Explaining the financial analysis that HLW need to make for completing its evaluation
Financial analysis refers to the practice of highlighting the flaws and the financial
strength of the business by throwing a deep insight on the elements of the income statement and
the balance sheet (Holmes and Rasmussen, 2018). It will help HLW in producing a summary of
the data so that important analysis could be made. Various methods that enables HLW in making
its financial analysis are-
Trend analysis- HLW by reviewing its financial statements for more than 3 periods on an
incremental pattern which means assessing the increasing change in the statements through trend
analysis. It helps the firm in analyzing the increase in the income and the decreased expenses.

Horizontal and the vertical analysis- In horizontal analysis, HLW will be comparing the
sequence of the reporting periods. On the other hand, vertical analysis allows the club analyzing
the financial information in the proportional manner. In the vertical analysis each item of the
financial statement is been recorded as the proportion of the other items (Greenberg and Wilner,
2015). This helps in implying all the gross sales and the total assets of the HLW.
Ratio analysis- This technique of the financial analysis can be used by HLW in making
the comparative study of the number with that to another number. It helps in making the
comparison of the current with that of the previous performance and assist in taking corrective
measures for improving the performance in the future. Ratio analysis helps in meeting the set
expectations. It helps in assessing the profitability, liquidity and the efficiency within the
business.
Cash flow statement- It is the statement that enables the HLW in making the financial
analysis of the cash related resources that had been generated or been utilized by it. It records the
cash inflows and the outflows for the particular period (Panadiy, 2018). HLW for improving its
cash flow planning it has introduced its new membership plan and the fee structure.
4. Analyse the difference between present management plan and new management plan with new
fee structure
The present management plan and fee structure of the club is efficient during prime
seasons but is not effective during winters and leads to decrease in cash receipt for the company
(Gitman, Juchau and Flanagan, 2015). The current plan was divided into three groups which
were individual, students and family memberships whereas the new plan will be focused on only
two groups which will be individual and family membership plan which will be reduced to $250
and $450 in case the members pay advance for their membership plan which will attract
customers for advance payments.
In current plan there is two way of earnings for the club, the one is from annual
management plan and the other is from hourly court fee in which people can come and can play
tennis by applying the rent of the court for an hour (Benson, and et.al., 2015). The hourly fee is $
8 and $ 12 based on the season and prime and non prime time. On the other hand the new plan
will have just one way of earning that is from annual membership plan and will eliminate hourly
court fee as during off season the expenses of the club cannot be meet as people do not come to
play in winters due to cold, vacations and many more reasons. Also, annual membership plan
will lead to profits as even when the members do not come to pay it will not matter because the
fee will be already charged and will be deposited in advance therefore it will not lead to cash
deficit form the club (Andrew Linn and Yi, 2017).
In current plan the there are two shifts which is from 5 am tom 9 pm and 9 am to 5 pm, but in
new plan there would be no such shifts instead the members would be allowed to use the court
during any time of the year. Also it will allow special discounts to the people who were

associated with the club from the past and will do special promotional campaign to attract
members and to retain existing members as well which will lead to increase in profits (Zanoni,
Thoelen and Ybema, 2017).
The new plan would also focus on members who would pay advance the fee in advance
will be allowed with reduction in fee but the other members will have to renew their membership
in October according to the new management plan. Members who would not rejoin will not be
considered as active in the club and their names would no longer be associated with the club.
This will lead to loss of members but would be a start of implementation of a strong plan which
will make the management of the club stable and efficient (Andrews, 2017).
CONCLUSION
The report is about Hawthorn leisure works that offers tennis court and other physical
activities services to its members. Form the above analysis, it is depicted that the club faced low
cash receipts because of its poor management plan and hence has adopted new management plan
with few changes in fee structure and membership of the members. It can be concluded from the
above analysis that if plan of the management is efficient then it can lead to sustainability and
profitability.

REFERENCES
Books and journals
Appelbaum, D. and et.al.,2017. Impact of business analytics and enterprise systems on
managerial accounting. International Journal of Accounting Information Systems. 25. pp.29-44.
Butler, S.A. and Ghosh, D., 2015. Individual differences in managerial accounting judgments
and decision making. The British Accounting Review. 47(1). pp.33-45.
Di Vaio, A. and Varriale, L., 2018. Management innovation for environmental sustainability in
seaports: Managerial accounting instruments and training for competitive green ports beyond the
regulations. Sustainability. 10(3). p.783.
Greenberg, R. K. and Wilner, N. A., 2015. Using concept maps to provide an integrative
framework for teaching the cost or managerial accounting course. Journal of Accounting
Education. 33(1). pp.16-35.
Holmes, A. F. and Rasmussen, S. J., 2018. Using Pinterest to stimulate student engagement,
interest, and learning in managerial accounting courses. Journal of Accounting Education. 43.
pp.43-56.
Panadiy, O., 2018. Influence of Parameters of Agricultural Enterprises Activity on the
Organization of the Managerial Accounting. Accounting and Finance. (2). pp.31-36.
Warren Jr, J. D., Moffitt, K. C. and Byrnes, P., 2015. How Big Data will change
accounting. Accounting Horizons. 29(2). pp.397-407.