The Craddock Cup Case Alternatives and Analyse

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Background: The Craddock Youth Soccer League (CYSL) provides high-quality soccer activities for potential young soccer players, it also held the Craddock Cup which attracted a number of premier high school soccer teams who participated every year. Main issue: CYSL founds that holding the Craddock Cup does not incurred profits and loses more money each year. Alternative 1: Spend an additional $1000 on marketing and advertising, which may attract more teams to come to the tournament, resulting in more income for CYSL from charging higher registration fee. Quantitative Techniques to use + reason: They can use breakeven point to calculate how many soccer teams have to registration for the total revenue to equal the total costs. The breakeven number of soccer team is using CYSL fixed costs divided by contribution margin per team. The reason for using this method is that it helps managers find how much registration fee must be sold to avoid a loss and how they can achieve the operating income targets underlying their strategies and plans. Qualitative issues to discuss + Reason: Higher registration fee could lead to high school soccer teams complaining about CYSL for having profit purposes other than high quality competition spirit, which may cause the teams to have negative emotions. Therefore, it may damage the reputation of the Craddock Cup. Suggested reading: CH3, page68 Alternative 2: Cut down some of the Craddock Cup budget, minimise the cost of the event. Quantitative: Using Activity-based costing system to decide which area is covercosted or undercosted. For each activity cost pool, cost driver is used as the cost-allocation base, then apply to actual usages for different activities by using cost allocation base. It helps strategic decision-making, identify activities in all functions of the value chain, calculate costs of individual activities and

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