CASES 9-45 AND 9-46 1
Case 9-45 Using Budgets to Evaluate Business Decisions and Case 9-46 Participative Budgeting
Grand Canyon University: ACC650
, CASES 9-45 AND 9-46 2
Case 9-45 Using Budgets to Evaluate Business Decisions
1. Currently, City Racquetball Club or (CRC) is deriving its revenue from two sources.
These two sources are the annual membership fees which are $40 for individuals, $25 for
students and $95 for families. The second revenue source is from the hourly court fees
which vary from $6 to $10 depending upon the season and time of day. Under the current
plan the annual membership fees are a fixed cost, however, the hourly court fees vary
year to year based on court usage during peak season and off-season.The new
membership plan and fee structure would improve CRC’s ability to plan its cash receipts
because the cash flows would be more predictable and because the annual fee would be a
fixed rate without having the variable rate of the hourly court cost.
2. a. According to Amanda Jesnoewski the key factors that CRC’s management should
consider in its evaluation prior to adopting or rejecting the new membership plan and fee
structure include:
1. The cost, which include the fixed cost of the annual membership fees and the
direct cost, which are the expenses incurred by delivering the services.
2. Ensuring the current customers are comfortable and willing to pay the higher
prices for the services.
3. The positioning of the company. Where does CRC want to be in the market and
where does CRC currently sit in the market?
4. Evaluating the competitors in the market. Doing research to determine what the
competition is charging, what customers they are attracting with their prices, and
how are they positioned in the market.
Case 9-45 Using Budgets to Evaluate Business Decisions and Case 9-46 Participative Budgeting
Grand Canyon University: ACC650
, CASES 9-45 AND 9-46 2
Case 9-45 Using Budgets to Evaluate Business Decisions
1. Currently, City Racquetball Club or (CRC) is deriving its revenue from two sources.
These two sources are the annual membership fees which are $40 for individuals, $25 for
students and $95 for families. The second revenue source is from the hourly court fees
which vary from $6 to $10 depending upon the season and time of day. Under the current
plan the annual membership fees are a fixed cost, however, the hourly court fees vary
year to year based on court usage during peak season and off-season.The new
membership plan and fee structure would improve CRC’s ability to plan its cash receipts
because the cash flows would be more predictable and because the annual fee would be a
fixed rate without having the variable rate of the hourly court cost.
2. a. According to Amanda Jesnoewski the key factors that CRC’s management should
consider in its evaluation prior to adopting or rejecting the new membership plan and fee
structure include:
1. The cost, which include the fixed cost of the annual membership fees and the
direct cost, which are the expenses incurred by delivering the services.
2. Ensuring the current customers are comfortable and willing to pay the higher
prices for the services.
3. The positioning of the company. Where does CRC want to be in the market and
where does CRC currently sit in the market?
4. Evaluating the competitors in the market. Doing research to determine what the
competition is charging, what customers they are attracting with their prices, and
how are they positioned in the market.
