Case Analysis
Case 1
Riverside Leisure Centre
Introduction
The Riverside leisure centre was opened in 1973 with a leisure pool, sports hall, 4 squash courts and changing rooms. June West is the new and very ambitious manager.
Squash courts 1 and 2 have been recently refurbished and are fully booked most of the day. The other two squash courts next to the fitness room are now in urgent need of repair and are rarely booked.
The fitness room is too small. It is clear that the leisure centre is losing members because the fitness room is too busy. Other leisure centres locally are reporting a big increase in membership of their fitness rooms.
June believes it is important to increase the size of the fitness room by incorporating one or both of the squash courts that are rarely booked.
Laura is the management accountant for the leisure centre and she has been asked to evaluate the alternative proposals.
Proposals
(i) Alternative 1- Incorporate squash court No. 4
Increase the size of the fitness room by incorporating squash court 4. This would increase the size of the fitness room from 2,200 sq. ft to 2,700 sq. ft. Squash court 3 would remain and it would be refurbished immediately.
(ii) Alternative 2 – Incorporate squash courts 3 and 4
Increase the size of the fitness room by incorporating squash courts 3 and 4. This would increase the size of the fitness room from 2,200 sq. ft to 3,200 sq. ft.
Capital costs
The capital costs of the alternatives include building works, services, equipment, and professional fees. Estimates are given below:
Building works
Alternative 1
Alternative 2
Doors
P 1,100
P 1,100
Remove existing walls
P 2,200
P 3,600
New ceilings
P 1,900
P 3,200
Fire exit
P 3,300
P 3,600
Decoration
P 7,100
P 10,600
Total
P 15,600
P 22,100
Services
Alternative 1
Alternative 2
Electrical
P 4,000
P 5,700
Lighting
P 2,000
P 3,200
Air conditioning
P 14,000
P 12,000
Total
P 20,000
P 20,900
Equipment
Alternative 1
Alternative 2
Riverside Leisure Centre
Introduction
The Riverside leisure centre was opened in 1973 with a leisure pool, sports hall, 4 squash courts and changing rooms. June West is the new and very ambitious manager.
Squash courts 1 and 2 have been recently refurbished and are fully booked most of the day. The other two squash courts next to the fitness room are now in urgent need of repair and are rarely booked.
The fitness room is too small. It is clear that the leisure centre is losing members because the fitness room is too busy. Other leisure centres locally are reporting a big increase in membership of their fitness rooms.
June believes it is important to increase the size of the fitness room by incorporating one or both of the squash courts that are rarely booked.
Laura is the management accountant for the leisure centre and she has been asked to evaluate the alternative proposals.
Proposals
(i) Alternative 1- Incorporate squash court No. 4
Increase the size of the fitness room by incorporating squash court 4. This would increase the size of the fitness room from 2,200 sq. ft to 2,700 sq. ft. Squash court 3 would remain and it would be refurbished immediately.
(ii) Alternative 2 – Incorporate squash courts 3 and 4
Increase the size of the fitness room by incorporating squash courts 3 and 4. This would increase the size of the fitness room from 2,200 sq. ft to 3,200 sq. ft.
Capital costs
The capital costs of the alternatives include building works, services, equipment, and professional fees. Estimates are given below:
Building works
Alternative 1
Alternative 2
Doors
P 1,100
P 1,100
Remove existing walls
P 2,200
P 3,600
New ceilings
P 1,900
P 3,200
Fire exit
P 3,300
P 3,600
Decoration
P 7,100
P 10,600
Total
P 15,600
P 22,100
Services
Alternative 1
Alternative 2
Electrical
P 4,000
P 5,700
Lighting
P 2,000
P 3,200
Air conditioning
P 14,000
P 12,000
Total
P 20,000
P 20,900
Equipment
Alternative 1
Alternative 2