ACC/ACF 2200 – Introduction to Management Accounting

Overview

Located in Clayton, Melbourne, the Monash Monsters Basketball Club (MMBC) has been a pillar of university basketball in Victoria since its founding twelve years ago. It began as a single men’s team competing in the Victorian University Basketball League (VUBL) and has grown into a program with both men’s and women’s teams competing at elite university levels across Australia.

Operating from the Monash Sports Centre, MMBC faces strong competition from other top-tier university clubs, including Melbourne University Lightning, RMIT Ravens, La Trobe Falcons, and Deakin Ducks. This rivalry extends beyond gameplay into talent recruitment, coaching, and community support.

Team Structure and Operations

MMBC runs two primary teams — the Monash Monsters Men’s team and the Monash Monsters Women’s team — both competing in the VUBL. Seasons run from March to October.

The men’s team has reached the grand final three times in the last five years. The women’s team, introduced four years ago under university gender equity initiatives, reached its first grand final last season.

Each team has twelve active players, plus development squad members who train regularly. Training occurs four times a week, supported by individual skill sessions. Coaching staff include head coaches, assistant coaches, and specialists, with administrative oversight provided by Executive Director Cynthia.

Facilities and Infrastructure

The Monash Sports Centre includes two full-sized basketball courts with electronic scoreboards, shot clocks, and professional lighting. It also has team rooms, medical treatment areas, and equipment storage.

• Court 1: Primary competition venue, seating up to 2,500 spectators, with broadcast facilities.

• Court 2: Training and development court, accommodating up to 800 spectators for women’s games and special events.

MMBC has invested heavily in technology, collaborating with Monash University researchers to develop systems for player tracking, game statistics, and video analysis. These have improved efficiency but introduced the need for technical maintenance.

 

Revenue Streams and Financial Structure

MMBC earns revenue through:

• University funding

• Corporate sponsorships and advertising (approximately $450,000 per year)

• Membership fees

• Game-day operations (tickets, food, drinks, merchandise)

• Development programs, such as basketball camps and clinics (approximately $185,000 annually).

Attendance figures show men’s games attract between 1,800–2,200 spectators, while women’s games draw 800–1,200 spectators. Ticket prices are set using a cost-plus pricing model, adding a 25% markup to calculated costs.

Current Costing System and Game Operations

Currently, all overhead costs are allocated using a single departmental rate based on direct coaching hours. This method worked when MMBC was smaller but now misrepresents cost distribution between the men’s and women’s programs.

• Direct coaching hours: 2,400 for men’s program and 1,600 for women’s program (total 4,000 hours).

• Direct coaching costs: $480,000 for men’s, $320,000 for women’s (total $800,000).

• Total allocated overhead: $1,600,000.

Each team hosts 12 games per season, with one season per year.

Direct game-day costs per match include:

• Referee fees: $2,800 (same for both teams)

• Security: $1,200 for men’s, $600 for women’s

• Game-day staff: $3,500 for men’s, $1,800 for women’s

• Utilities: $1,800 for men’s, $900 for women’s

Thus, total direct costs per game amount to $9,300 for men’s and $6,100 for women’s games.

Operational Challenges and Limitations

Cynthia, the Executive Director, notes several key issues:

• Women’s games have higher ticket prices due to the flawed costing system, despite lower actual costs.

• Overheads are no longer accurately driven by coaching hours, as technology and facility complexity now influence costs.

• The new technology infrastructure requires technical maintenance rather than manual labour.

Detailed Cost Structure Analysis

MMBC’s total overhead costs of $1,600,000 are distributed as follows:

• Facility Operations and Maintenance: $480,000

• Technology Systems and Support: $320,000

• Administrative and Management: $430,000

• Marketing and Community Programs: $105,000

• Shared Services and Equipment: $265,000

Facility costs are primarily driven by usage hours, while technology costs relate to system activation and support. Administrative, marketing, and shared service costs correspond to management, promotion, and logistics activities.

Technology Impact and Resource Consumption

The installation of an automated video analysis system two years ago (cost: $180,000) eliminated two part-time video coordinator roles but requires $45,000 annually in licensing and support.

Automated ball return systems reduced practice setup time from 45 minutes to 15 minutes and cut one full-time coordinator role. However, they cost $28,000 annually in maintenance.

Revenue and Attendance Patterns

Men’s games attract around 2,000 spectators, while women’s games average 1,000 spectators.

Spending patterns:

• Food and drinks: $12 per person (men’s), $8 per person (women’s)

• Merchandise: $6 per person (men’s), $4 per person (women’s)

Women’s games focus on family-friendly and youth engagement promotions, while men’s events generate stronger merchandise and concession sales.

Activity-Based Costing (ABC) Potential

Analysis suggests MMBC could benefit from implementing an Activity-Based Costing system.

Proposed cost drivers for overhead categories:

• Facility Operations & Maintenance → Court usage hours

• Technology Systems & Support → Number of systems activated per game

• Administrative & Management → Administrative hours per game

• Marketing & Community Programs → Number of promotional campaigns

• Shared Services & Equipment → Number of equipment items used

Usage patterns differ by program:

• Court hours: 5.5 per men’s game, 2.5 per women’s game

• Technology systems: 12 for men’s, 4 for women’s

• Administrative hours: 30 for men’s, 10 for women’s

• Equipment items: 40 for men’s, 15 for women’s

• Marketing campaigns: 15 annually for men’s, 5 for women’s

Estimated ABC implementation costs:

• Software and setup: $85,000

• Staff training: $25,000

• Consulting: $40,000

• Maintenance: $15,000 annually

• Additional 0.5 FTE admin ($35,000 annually)

Total first-year cost: $200,000
Ongoing annual cost: $50,000

Strategic Context and Competitive Environment

MMBC’s mission is to sustain competitive men’s and women’s teams, grow community engagement, and ensure financial stability. Expansion plans include youth leagues, coaching programs, and shared facilities.

The university’s gender equity and sporting excellence goals align with MMBC’s initiatives but require accountability and efficiency. Competitor clubs use various pricing models — from dynamic pricing (based on demand and timing) to simple cost-plus models — with the most successful adopting data-driven cost management systems.

Board Concerns

The board has raised several critical issues:

1. Pricing Equity: Women’s game tickets are overpriced relative to their costs.

2. Resource Allocation: Possible inefficiencies between programs.

3. Technology ROI: Lack of clarity on cost-benefit outcomes.

4. Competitive Positioning: Limited visibility into true cost structures.

5. Future Planning: Expansion decisions need better cost projections.

Cynthia recommends implementing Activity-Based Costing for improved accuracy, strategic planning, and sustainable financial management.

Case Study Team Assignment

You are tasked with preparing a consulting report addressing the following five requirements for MMBC’s Board of Directors:

1. Critical Analysis of Current Costing and Pricing System – Evaluate the current overhead allocation method and calculate existing ticket prices for both teams.

2. Literature Review – ABC and ABM in Sports Organizations – Review academic and practical applications of ABC/ABM in university sports contexts.

3. ABC System Design and Revised Pricing Analysis – Design an ABC model for MMBC and recalculate costs and ticket prices.

4. Implementation Strategy and Change Management – Create a transition plan for introducing ABC, including stakeholder engagement and training.

5. Management Recommendations – Offer actionable operational and strategic recommendations for MMBC based on ABC findings.

Report Format and Submission Guidelines

• Word Limit: 3,500 words (excluding calculations, references, and appendices).

• Font: Times New Roman, size 12.

• Sections: Cover Page, Executive Summary, Table of Contents, Introduction, Discussion, Recommendations, Conclusion, References, and Appendices.

• Include tutorial time and group number on the title page.

• Submission: Online via Moodle by Friday, 10 October, 11:55 PM.

• Late Penalty: 5% per day; after seven days = grade of zero.

Word Limit Penalties:

• 1–150 words over: -5%

• 151–300: -10%

• 301–500: -15%

• 501–1000: -20%

• Over 1000: minimum -25% (at marker’s discretion)

Assessment Overview

The assessment focuses on the Monash Monsters Basketball Club (MMBC), a university-based sports organization located in Clayton, Melbourne. It aims to critically analyze the club’s current costing and pricing system, identify inefficiencies, and design a more effective and accurate Activity-Based Costing (ABC) model. Students are expected to apply management accounting concepts to evaluate operational challenges, propose solutions, and align financial management with MMBC’s strategic goals.

Key Assessment Requirements

The consulting report for MMBC’s Board of Directors involves five core components:

1. Critical Analysis of the Current Costing and Pricing System:

   • Evaluate MMBC’s existing overhead allocation method.

   • Identify cost distortions and pricing inequities between men’s and women’s programs.

   • Calculate the existing ticket prices using the current cost-plus approach.

2. Literature Review – ABC and ABM in Sports Organizations:

   • Conduct a scholarly review of Activity-Based Costing (ABC) and Activity-Based Management (ABM) frameworks.

   • Highlight their relevance, benefits, and applications in sports management and university athletic organizations.

3. ABC System Design and Revised Pricing Analysis:

   • Develop a comprehensive ABC model for MMBC using identified cost drivers.

   • Recalculate the costs and propose revised ticket pricing based on the ABC data.

4. Implementation Strategy and Change Management:

   • Create a structured transition plan for introducing ABC.

   • Include details on stakeholder engagement, training, and system integration.

   • Address challenges such as resistance to change, staff readiness, and communication.

5. Management Recommendations:

   • Provide strategic and operational recommendations to enhance cost efficiency, pricing fairness, and long-term sustainability.

   • Suggest methods for evaluating the return on investment (ROI) from technology and infrastructure upgrades.

Formatting and Submission Guidelines:

• Word limit: 3,500 words (excluding references and appendices)

• Structure: Cover Page, Executive Summary, Table of Contents, Introduction, Discussion, Recommendations, Conclusion, References, Appendices

• Submission via Moodle by the specified deadline

Step-by-Step Mentorship and Approach to the Assessment

To ensure a structured and logical approach, the academic mentor guided the student through a five-phase process, corresponding with each assessment requirement. The mentor emphasized analytical reasoning, critical application of accounting theory, and professional presentation.

Phase 1: Understanding the Case and Identifying Key Issues

Mentor’s Guidance:
The mentor began by helping the student thoroughly understand the case context—MMBC’s operational structure, financial challenges, and competitive environment. The mentor highlighted that the core issue lay in the misallocation of overhead costs using direct coaching hours as the sole driver, which led to pricing inequity between men’s and women’s games.

Student’s Focus:

• Summarized key facts about MMBC’s operations, cost structure, and revenue streams.

• Identified the main problems: inaccurate cost allocation, overpricing of women’s games, and underestimation of facility and technology costs.

• Established the report’s purpose — to evaluate and redesign the costing system using ABC principles.

Outcome:
A clear understanding of MMBC’s financial and operational framework, forming the basis for subsequent analysis.

Phase 2: Critical Analysis of Current Costing and Pricing System

Mentor’s Guidance:
The mentor encouraged a quantitative approach using provided data to analyze the current cost structure. The student was guided to:

• Calculate the overhead allocation based on direct coaching hours.

• Determine the total costs per game for both men’s and women’s programs.

• Apply the cost-plus pricing method with a 25% markup.

Student’s Work:

• Computed that the overhead allocation (using 4,000 total coaching hours) distorted actual costs since the men’s program used 60% of hours but incurred proportionally more technological and facility-related costs.

• Derived per-game ticket pricing that showed women’s games were overpriced despite lower actual costs.

Outcome:
The student demonstrated that MMBC’s current costing system fails to reflect actual resource consumption, reinforcing the need for ABC.

Phase 3: Literature Review – ABC and ABM in Sports Organizations

Mentor’s Guidance:
The mentor provided research directions, recommending academic sources on Activity-Based Costing and Activity-Based Management in sports and higher education institutions. Guidance was given on integrating theory with practical relevance.

Student’s Work:

• Conducted a structured review covering key authors and frameworks (e.g., Kaplan & Cooper’s ABC model).

• Discussed how ABC provides better cost transparency and decision-making in service organizations.

• Highlighted examples from university sports clubs adopting ABC for fair pricing and resource management.

Outcome:
The literature review linked theory to MMBC’s practical context, establishing a strong academic foundation for the proposed costing model.

Phase 4: Designing the ABC System and Revised Pricing Model

Mentor’s Guidance:
This phase focused on developing an Activity-Based Costing system tailored to MMBC. The mentor guided the student to:

1. Identify cost pools — Facility Operations, Technology Systems, Administrative Management, Marketing, and Shared Services.

2. Determine cost drivers for each pool based on the case data (court hours, systems activated, admin hours, marketing campaigns, equipment items).

3. Allocate costs according to the consumption patterns of the men’s and women’s programs.

4. Recalculate per-game costs and propose new, equitable ticket prices.

Student’s Work:

• Created an ABC model distributing the $1.6 million overhead across identified activities.

• Found that the men’s program consumed more technological and facility resources, while women’s games used fewer systems and marketing campaigns.

• Proposed revised ticket pricing reflecting actual costs and fair markups.

Outcome:
The ABC-based analysis corrected pricing distortions, resulting in cost transparency, equity between programs, and improved decision-making capability.

Phase 5: Implementation Strategy and Change Management Plan

Mentor’s Guidance:
The mentor emphasized that implementing ABC is not merely a technical change but a strategic and cultural shift. Students were encouraged to adopt change management models (e.g., Lewin’s Change Theory, Kotter’s 8-Step Model) to ensure smooth adoption.

Student’s Work:

• Developed a phased implementation plan covering software setup, staff training, pilot testing, and continuous monitoring.

• Recommended engaging stakeholders — coaches, administrative staff, IT personnel, and the finance team — early in the process.

• Addressed potential barriers such as resistance to new systems, training needs, and data integration issues.

Outcome:
A realistic and structured implementation strategy was developed to ensure successful ABC adoption with minimal operational disruption.

Phase 6: Strategic Recommendations and Final Report Compilation

Mentor’s Guidance:
The mentor guided the student on compiling the final report with professional presentation, clear argumentation, and actionable recommendations.

Student’s Work:

• Proposed key recommendations such as adopting ABC for fair pricing, investing in training, and conducting annual cost-benefit reviews.

• Suggested monitoring key metrics like ticket sales, cost recovery rates, and audience engagement post-implementation.

• Ensured compliance with report structure, formatting, and word limit.

Outcome:
A comprehensive, logically structured consulting report was prepared, addressing MMBC’s financial and strategic challenges with data-driven insights.

Final Outcome and Learning Achievements

Through the step-by-step mentorship, the student successfully produced a well-researched, analytically sound consulting report that met all assessment requirements. The final deliverable demonstrated the following key achievements:

1. Academic and Technical Outcomes

• Mastery of management accounting concepts, particularly cost allocation and Activity-Based Costing.

• Ability to apply theoretical knowledge to real-world sports management contexts.

• Enhanced proficiency in data interpretation, pricing strategy, and cost analysis.

2. Professional and Analytical Skills

• Improved critical thinking and problem-solving abilities.

• Experience in developing a strategic implementation plan for organizational change.

• Strengthened report writing and presentation skills, aligning with professional accounting standards.

3. Learning Objectives Covered

• Understanding of cost classification, allocation, and activity-based methods.

• Application of ABC and ABM principles in service and sports organizations.

• Integration of management accounting tools into strategic decision-making.

• Evaluation of ethical, operational, and financial implications of pricing systems.

• Development of a consultative approach in addressing real-life management issues.

Conclusion

Under the academic mentor’s structured guidance, the student navigated each phase of the MMBC case study systematically — from understanding the problem to designing a practical solution. The final report not only fulfilled the academic requirements but also reflected the real-world relevance of management accounting in improving financial transparency, strategic planning, and equitable pricing decisions within sports organizations.

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