Advanced Management Accounting
The Craddock Cup
February 11, 2015
“On my honor, as a student, I have neither given nor received unauthorized aid on this academic work.”
Jose Rivaldo the general manager of the Craddock Youth Soccer League (CYSL) is committed to providing high quality soccer activities to youth in his surrounding area. Not only is he the manager of CYSL, but he is heavily involved with the planning of a regional soccer tournament called, The Craddock Cup. The tournament usually attracts 32 premier girls and boys soccer teams. Although players and their families have considered the tournament a great success, Rivaldo believes the tournament is beginning to lose money.
As a consultant after reviewing the estimates and preparing the outcomes of the different events that the board has mentioned, here are the issues that need to be analyzed.
1. Recalculation of allocated over-head expense that is directed towards the Craddock Cup.
2. Calculation of the expected financial impact of adding 32 more teams to the tournament.
3. Determining the break-even amount for registration fees that would have to be charged for the increase in teams, advertising expense, college recruiters and face books.
In determining whether or not to keep the Craddock Cup, I have reviewed the profit statement that you have constructed and have found a few discrepancies that I would like to bring to your attention. The first of which is the expense allocation of the City field rental from CYSL to the Craddock cup of $1,200. This allocation should be eliminated. CYSL rents 10 soccer fields from the city for 40 weeks a year for a total fee of $48,000. Although the Cup requires the use of the fields for one week during the year, the $48,000 total cannot be avoided if the Cup no longer exists. The second is the allocation of salaries. Rivaldo’s salary...