Managerial Accounting Report: Hawthorn Leisure Works - Fee Analysis

This managerial accounting report examines Hawthorn Leisure Works (HLW) and its fee structure, focusing on the impact of different fee models (hourly court fees vs. annual membership fees) on cash receipts and revenue. The report analyzes the financial implications of a new membership plan introduced by HLW, which shifts from hourly court fees to advance annual membership fees. It calculates earned revenue under both the old and new plans, considering factors like prime and non-prime time occupancy and campaign participation. The analysis highlights the changes in revenue and potential improvements in cash flow management resulting from the new plan. The report also discusses the application of activity-based costing and the importance of volume analysis in pricing decisions, as well as the role of cash flow statements in enhancing profitability. The report concludes by summarizing the benefits of the new fee structure for HLW.

Running head: QUESTIONS 1
Managerial Accounting
Student Details:
5/25/2019

QUESTIONS 2
Answer 1
The management can be held liable for the better management or administration of the functions of the
company. The managers are also liable to manage the available funds to avoid deficiency of liquid funds
as well as the problem related to the funds or finance. In the relation of this, the management adopts
the procedure related to the budgeting. In this way, the given case study makes focus on the concept
related to the over pricing decisions.
The cash receipt is considered as the specialized account, which accounts for the credit sales or cash
sales received and assesses the cash inflow. In Hawthorn Leisure Works (HLW), there are two major
elements. These two main elements affect the cash receipts. These two major elements are the hourly
court fee as well as the membership fee per annum. The membership fees paid per annum are more
direct with the fixed fee, which is received as per annual basis. For that reason, the annual membership
fee is regarded to be element, which is fixed as well as the invariable. On the other hand, in relation to
the hourly court fee, the fixed price per unit differs from eight dollars to twelve dollars and the
transactions perform each day. The complete price would differ as a hourly court fee is based over the
variables like the numbers of hours used up in a club, numbers of people, period of a year, as well as
the moment of a day, whether this is a non-prime time or a prime time. For that reason, the cash flow
produced by a hourly court fee is not fixed. In the addition of this, it is changeable. This majorly covers
the greater field of a cash receipts in comparison of the annual membership fee.
Additionally, with a new application of a new plan of membership, Hawthorn Leisure Works (HLW)
would be capable to enhance the capability for planning the cash receipt. The main reason behind this is
that with the hourly court fee taken out; just annual membership fee is remaining to be received. In this
way, it can say that the elements influencing the cash receipt is extremely decreased. The annual
membership fee is fixed as well as stable that would result in producing greater and lesser expected
cash flow. The probable loss of the regular cash from a hourly court fee is also eradicated from the
application of a new plan related to membership. Further, the changes are not expected. These changes
are restrained. As a result, the realization of the changes would only take place after the period of time
that may lead to the chance of Hawthorn Leisure Works (HLW) going in the financial debt.
Furthermore, the Hawthorn Leisure Works (HLW) established the new plan related to the
membership is introduced from the month October. In this plan related to the membership, the certain
changes are initiated in the structure of fee like the members are required to pay the fee related to a
membership in the advance. These changes create a removal of a current plan related to the payment.
According to this current membership plan, they take fees per hours against a utilization of a court
(Langfield-Smith, et. al, 2015). This new membership plan needs the proper cash management of cash,
which help them in handling the receipts of cash against the fees charged and provide appropriate level

QUESTIONS 3
of support for accessible cash management as well as create reduction in the cost related to the
administration or management (Linassi, Alberton & Marinho, 2016).
The New plan is also very useful as well as the beneficial for the top level administration as they
attain complete payment in one time and by which they create proper decisions in relation to use of the
charged fee (Lidia, 2014). It turns out to be simple for them to take the decision as they possess fund in
the hand. In this way, the application of this new membership plan there is effectual improvement is
noted down in the capability of Hawthorn Leisure Works in the framework of handling the cash and
other functions related to the receipts of cash (Guerrero-Baena, Gómez-Limón & Fruet Cardozo, 2013).
In this way, the cash receipt would be better planned with an advancement of the cash flow
management and making draft of financial plans of the upcoming period like evading shortage of cash or
idle of cash would be more effectual. The application of a new fee structure would not influence the
whole profits of Hawthorn Leisure Works. In actual fact, this would also have the greater chance of
enhancing the profits or the lessening over the upcoming debt and current debt.
Answer 2
Calculation of earned revenue by the utilization of old plan related to membership fee collection such as-
Receipt from the fee related to membership-
Particulars Calculation amount
individual 500*45 22500
family 1000*100 100000
student 500*30 15000
Total 137500
Receipts from court fee-
Particulars Calculation amount ('000)
prime time (2000 *90%) 181 days * 4 Hrs @ 12 86.4
non-Prime time (2000 *50%) 181 days * 7 Hrs @ 8 56
off-season (2000 *30%) 184 days * 6 Hrs @ 6 21.6
Total 164
The total receipts from two different fees receipts is $301,500 ($137,500 + $ 164,000)
Calculation of receipts after the application of new plan is below such as:

QUESTIONS 4
Receipt from the fee related to membership-
New members 1400 members
In campaign-
Particulars Calculation amount
individual 700 * 250 * 45% 78750
family 700 * 450 * 45% 141750
Total 220500
In no campaign-
Particulars Calculation amount
individual (700-315)*300 115500
family (700-315)*500 192500
Total 308000
Total receipts according to new applied plan: -
Particulars amount
In campaign 220500
In no campaign 308000
Total receipts 528500
According to new plan implementation there are certain assumptions are developed like -
Particulars Percentage
Prime time occupancy 90%
Non-Prime time occupancy 50%
Off-season occupancy 30%
As per the above analysis, it can concluded that the changes in the plan related to fee collection
or the new plan related to membership come into effect and encouraging influences on the dealing out
as this results in increment in the revenues as this states enhanced value as 227,000 $ (Bunn, Koc &
Sapio, 2015).

QUESTIONS 5
In this way, in conclusion it can say that the activity based costing method considered as
consistent method of allocating the cost amongst various departments. The administration requires to
consider the volume analysis in the policy related to the pricing (Fathi & Elham Sadat Mousavi Dozdahiri
2015). They were required to put focus on these factors, which helps in increasing the profits. To handle
the cash flow and create optimum use of in hand cash association make the statement of cash flow.
They also use this for enhancing the profit’s level (Bhimani, 2012).

QUESTIONS 6
References
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Bunn, D., Koc, V. & Sapio, A. (2015). "Resource externalities and the persistence of heterogeneous
pricing behavior in an energy commodity market", Energy Economics, 48, 265-275.
Fathi, Z. & Elham Sadat Mousavi Dozdahiri (2015). "A survey of activity-based costing in hotel
industry",Management Science Letters, 5(9), 855-860.
Guerrero-Baena, M.D., Gómez-Limón, J.A. & Fruet Cardozo, J.V. (2013). "The capital budgeting process:
A methodological approach based on financial and intellectual value creation", Intangible
Capital, 9(4)
Langfield-Smith, K., Thorne, H., Smith, D.A. & Hilton, R.W. (2015). Management accounting: information
for creating and managing value, 7e [] edn, NSW: McGraw-Hill Education
Lidia, T.G. (2014). "Difficulties of the Budgeting Process and Factors Leading to the Decision to
Implement this Management Tool", Procedia Economics and Finance, 15(9), 466-473.
Linassi, R., Alberton, A. & Marinho, S.V. (2016). "Menu engineering and activity-based costing: An
improved method of menu planning", International Journal of Contemporary Hospitality
Management, 28(7), 1417-1440.