Management Accounting: HLW Revenue Analysis Report - University

This management accounting report analyzes the budgeted revenue of Hawthorn Leisure Works (HLW), a fitness center with sports facilities, including a tennis court. The report compares HLW's old revenue plan, based on membership and court fees, with a new plan focusing solely on membership fees. It assesses the financial impact of the new plan, considering factors like membership retention and promotional discounts. The analysis includes detailed revenue calculations for both plans, highlighting the shift in revenue from court fees to membership fees. A comparative analysis of the old and new plans reveals a significant increase in revenue under the new plan. The report concludes with a recommendation to implement the new plan, supported by the analysis of key factors such as membership numbers and fee structures. References from accounting textbooks are included.

Management Accounting
Management Accounting

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Assessment Task B
Introduction:
The case is all about the budgeted revenue of Hawthorn Leisure Works (HLW). Hawthorn
Leisure Works (HLW) is a fitness centre which also have some space for sports activities
they have a tennis court in that space. HLW want to change their revenue structure and for
that they want to have a brief analysis between their old and new plan. The old plan of HLW
comprised of membership fee and the court fee which is to be paid by the members on the
basis of the usage of the court.
This task is about the budgeted forecast of revenue of HLW. Budgeting is to be done by the
companies to know about the future prospects from the planning of the management or by the
implementation of any new plan by them (Anderson, Sweeney, Williams, Camm and
Cochran, 2015). Budgets are all based on the past years figures and planning and forecasting
which is done by the top management people. Budget estimates the future upcoming things of
the companies (Braun, Tietz, Harrison, Bamber and Horngren, 2014).
In the present case there are total 2000 members out of them only 70% members want to
continue their membership in the plan. They also have some promotional Discounts for their
members if they agree to pay the annual membership fee in lump sum amount. Out of those
2000 members 45% members agree to pay the promotional discount. We need to analyse the
revenue from old plan and from the new plan. The new plan consists of only membership fee
unlike the old plan there is no court fee. The table below is the brief description of the old
plan as well as the statement of revenue from the old plan:
Annual Membership Fees(Old Plan)
Individual $ 45.00
Student $ 30.00
Family $ 100.00
Total Members 2000
Family 1000

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Individual 500
Student 500

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Peak Tennis Season October to April Court fees
Days 181
Capacity (5pm to 9pm) 90%-100% $12 per hour
Capacity(9am to 4pm) 50%-60% $8 per hour
Off season May to September
Days 184
Court Usage(Capacity) 20%-40% $ 6 per hour
No. of Courts 10
Court Hours (per day) 12
Old Plan( Revenue) Amount ($)
Membership Fees
Individual 22500
Student 15000
Family 100000
Court Fees
Peak Season
5pm-9pm ($ 12 per hour) 86880
9am-4pm ($ 8 per hour) 69504
Off Season ($ 6 per hour) 52992
Total Revenue 346876

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Part (a): Revenue under New Plan:
In this part we need to present the revenues that HWL will earn with the implementation of
its new plan. The members who are planning to continue the membership under the new plan
are 70% of 2000 that is 1400 and out these 1400 members 45% members are willing to take
the promotional offer given by HLW that is they will pay the annual membership fee in the
advance for the whole year (Weygandt, Kimmel and Kieso, 2015). The table below presents
the new plan of membership fee and the revenue under the new plan:
New Plan (Annual Membership Fees)
Non Promotional (for complete year) Amount ($)
Individual 300
Family 500
Promotional( for complete year)
Individual 250
Family 450
New Plan (Revenue) Amount ($)
Membership Fees
Normal Offer
Individual 75000
Family 125000
Promotional Offer
Individual 112500

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Family 202500
Total Revenue 515000
The above table explains that the revenue from new plan is $ 515000 and the no. of members
declined from 2000 to 1400. Still the revenue from the new plan increased in comparison to
old plan.
Part (b): Comparison Between new and old plan
The changes in the fee structure had some effect on the revenues of HLW but the effect is on
the positive side (Edmonds, Edmonds, Tsay and Olds 2016). The revenue from the old plan
and new plan are depicted below as we made a comparative analysis of both the old and the
new plan:
Old Plan( Revenue) Amount ($)
Membership Fees
Individual 22500
Student 15000
Family 100000
Court Fees
Peak Season
5pm-9pm ($ 12 per hour) 86880
9am-4pm ($ 8 per hour) 69504
Off Season ($ 6 per hour) 52992
Total Revenue 346876

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New Plan (Revenue) Amount ($)
Membership Fees
Normal Offer
Individual 75000
Family 125000
Promotional Offer
Individual 112500
Family 202500
Total Revenue 515000
The above table clearly shows that the revenue under the new plan is much higher than the
old plan and there is considerable increase in the revenue under the new plan as compared to
the revenue under the old plan (Hawkins, 2015).
The assumption made by us is regarding the consumption of court capacity. We had taken the
upper range of the court consumption at the time of calculation of court fee. For the
calculation of court fee either we need to take the upper range or the lower range or the
average of the consumption rate.
Part (c): Choice between old and new plan
This analysis is completely based on the decision making that is either to implement the new
plan or to continue with the new plan of HLW. The revenue under the old plan is calculated
by membership fee and court fee and the revenue under the new plan is comprised of only
membership fee. The revenue that we get from the old plan was $ 323492 and the revenue
under the new plan is $ 515000. We can conclude that the revenue from the new plan is much
higher than the revenue from the old plan. Hence we can conclude that it will be better off for
the company to accept the new plan.
The key factor we did considered before taking the decision to implement the new plan are:

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 The fall in no. of members with the implementation of the new plan.
 The increase in membership fee per member.
 The reduction in the membership with the discontinuance of the court fee.
Conclusion:
We should implement the new plan as the revenue from the new plan are higher than the old
plan.