Managerial Accounting Assignment: HLW Membership Plan Evaluation

This report analyzes the current and proposed membership plans and fee structures of Hawthorn Leisure Works (HLW), a tennis and fitness facility. The current plan, with individual, family, and student memberships and hourly court fees, leads to poor cash receipts, especially during winter. To address this, HLW plans to eliminate hourly fees and introduce individual and family memberships with annual fees collected in advance. The report compares the two plans, highlighting how the new structure aims to improve cash flow, attract new members, and ensure profitability throughout the year by eliminating the cash deficit during off season. The analysis concludes that an efficient management plan is crucial for HLW's sustainability and profitability, referencing various managerial accounting and finance sources.

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.

 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.
CONTD.

 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.
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. 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.
4. Analyse the difference between present management plan and new management plan
with new fee structure

 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.
CONCLUSION

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