Accounting Business Reporting for Decision Making

390 Accounting: Business Reporting for Decision Making

for the 2017 year. Elite junior coaching fees in 2016 were $50 per week for 52 weeks of the year but will be

increased by 30 per cent in the next year. The mature aged fitness customer group is very popular. In 2016

there were approximately 150 members each paying $10 per week for 48 weeks of the year. Nicholas

believes he can increase adult fees by 25 per cent without loss of customers. In the new year Nicholas plans to

take the junior elite squad on a circuit of local tournaments. Through sponsorships, share of prize monies and

parent contributions Nicholas expected a net return from tournaments in 2017 of $40 000.

As shown in illustrative example 9.1, the sales budget can now be prepared to determine the estimate

of total revenue for 2017.

ILLUSTRATIVE EXAMPLE 9.1

Advantage Tennis Coaching sales budget

Advantage Tennis Coaching

Sales budget for the year ended 31 December 2017

Squad Fees Calculations Weeks $

Junior

Junior elite

Adult fitness

(300 × 1.20) × $25

(20 + 5) × ($50 × 1.30)

150 × ($10 × 1.25)

26

52

48

234 000

84 500

90 000

Tournaments (net) 40 000

Total revenue $ 448 500

For a service entity such as Advantage Tennis Coaching another important budget will be the labour budget

as this would represent a high percentage of total operating costs in a service entity. The following employees

are currently employed and the annual wage represents the Enterprise Bargaining Agreement for 2017:

• manager and head coach × 1 @ $70 000 per annum


• senior coaches × 2 @ $40 000 per annum each


• junior coaches (casual) × 4 @ $20 per hour × 100 hours each


• receptionist (part-time, 20 hours per week) × 1 @ $30 000 per annum.

The annual wage includes all salary oncosts and benefits. To meet the planned growth in numbers of

new juniors Nicholas will employ the equivalent of 10 junior elites as junior coaches. A decision was

made to employ the junior coaching staff on a casual basis due to the uncertainty relating to how suc-

cessful Nicholas will be in attracting new young players. If the predicted growth is not achieved junior

coaching hours will be reduced accordingly.

Illustrative example 9.2 shows the labour budget for the year ended 31 December 2017.

ILLUSTRATIVE EXAMPLE 9.2

Advantage Tennis Coaching labour budget

Advantage Tennis Coaching

Labour budget for the year ended 31 December 2017

Employee category Total salary cost

Manager and head coach

Senior Coaching staff

Junior Coaching staff (casual)

Part-time receptionist

1 × $70 000

2 × $40 000

10 × $20 × 100 hrs each

20 hours per week

$ 70 000

80 000

20 000

30 000

Total salary and benefits $ 200 000