Craddock Cup case study
Question Number 1
In determining whether to keep or drop the Craddock Glass, the over head expense allocations of City field rental, CYSL incomes and CYSL rent must be revised. In determining whether to keep or drop the Craddock Glass, the share of Metropolis filed local rental fee of $1200 coming from CYSL towards the Craddock Glass should be eliminated. CYSL rented 10 soccer fields through the city pertaining to 40 weeks a year to get a total cost of $48000. However , set up Craddock Cup was dropped, the leasing fee of $48000 can not be avoided. Therefore , the cost of Town field leasing fee is a irrelevant expense, The allocation of the cost of CYSL incomes should also be revised. The 15% of Rivaldo's salary($6300) should not be allotted as the price of the Craddock Cup. The cost of Rivaldo's salary is not the relevant expense. If the CYSL dorp the Craddock Cup, the income of Rivaldo still can not be avoided. However , the Jansten's salary is a relevant price. Jansten worked soley around the Craddock Glass. If the CYSL drop the Craddock Cup, the earnings of Jansten can be avoided. So the portion of CYSL salaries is $12000. The allocation cost of CYSL hire and utilities should be taken away. The cost of lease and utilities is the. irrelevant cost. Even if the Craddock Glass is ceased, the CYSL rent and utilities continue to cannot be avoided. So , in determining whether to keep or drop the Craddock Cup, the manager should not consider the expense expense allocations of Metropolis field rental, CYSL incomes and CYSL rent.
| | |Relevant Profit and Cost Data for The Caeddock Cup | |Registration fees money 9440 | |T-shirts 4800 | |Concessions 17280...