EXTENDING YOUR KNOWLEDGE L04 ???5-1 Business Decision Case The Reserve Club is a

Question

EXTENDING YOUR KNOWLEDGE L04 ???5-1 Business Decision Case The Reserve Club is a traditional private golf and country club that has three different categories of memberships: golf, tennis & swimming, and social. Golf members have access to all amenities and programs in the Club, Tennis & Swimming members have access to all amenities and programs except use of the golf coursc, and Social members have access to only the social activities of the club, exchuding golf, tennis, and swimming. All members have clubhouse privileges, including use of the bar and restaurant, which is operated by an outside contractor. Dur ing the past ycar, the average membership in cach category, along with the number of club visits during the ycar, was SERVICE AND Members Visits Golf Tennis & Swimming Social 260 50 120 9,360 1,500 2,160 Some members of the Club have been complaining that heavy users of the Club are not bearing thcir share of the costs through their membership fees. Dess Rosmond, General Manager of the Reserve Club, agrces that monthly fees paid by the various member groups should be bascd on the annual average amount of cost-related activities provided by the club for the three groups, and he intends to set fees on that basis for the coming courts, and swimming pool have been calculated by the Club's controller as follows: year. The annual direct costs of operating the golf course, tennis Golf course... Swimming pool..._... Tennis courts $900,000 50,000 25,000 The operation of the bar and restaurant and all rclated costs, including deprcciation on the bar and restaurant facilitics, are excluded from this analysis. In addition to the above costs, the Club incurs general overhcad costs in the following amounts for the most recent (and typical) ycar.

Explanation / Answer

A. as per the information is given, it would be best to assign the overheads like maintenance expenses on the basis of the number of visits of different sections and depreciation and other expenses on the basis of a number of members.

B. Indirect Labour for Club management stuff: Number of Members

    Utility: numbers of visits

   Website maintenance: number of visits

   Postage: Number of members

Computers Maintenance: Number of visits

Clubhouse Maintainance and depriciation: number of members

Liability Insurance: Number of members

Security Contarct: Number of Members

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