Assumptions

Number of Tournaments per city 60 90 120 lst_tournaments

Revenue

Revenue per tournament $500 inp_rev_tourn

Costs
Labour cost per hour $50 inp_cost_lab
Number of hours per tournament 6 inp_hrs_tourn
Annual fee $20,000 inp_ann_fee
Dividend $100,000 inp_dividend

All Scenarios

Number of Tournaments per city

#NAME? 60 90 120
Number of staff 6 #NAME? #NAME?
7 #NAME? #NAME? #NAME?
Question 1.
If Lisa manages to have 60 school competitions in each of the 7 cities and
all competitions are taken care of by hired staff, will the business make
enough profit to allow Lisa to quit her current job and pay the
$20,000 annual fee?
Question 2.
If Lisa manages to have 90 school competiti
all competitions are taken care of by hired s
enough profit to allow Lisa to quit her curre
$20,000 annual fee?

Number of tournament days 60 Number of tournament days

Number of cities 7 Number of cities
Number of staff 7 Number of staff

Revenue #NAME?
Cost #NAME?
Gross Profit #NAME?
Annual Fee #NAME?
Profit / Loss #NAME?
Dividend #NAME?
Net Cash #NAME?

Question 3. Question 4.
If Lisa manages to have 60 school competitions in each of What is the minimum number of comp
the 7 cities and she takes care of the Sydney competitions place in each of the 7 cities so that Lisa
and hires staff to manage competitions in the other 6 cities, will fee and earn at least $100,000 without
the business make enough profit to allow Lisa to quit her current Sydney competitions?
job and pay the $20,000 annual fee?

Number of tournament days 60 Number of tournament days

Number of cities 7 Number of cities
Number of staff 6 Number of staff

Revenue #NAME?
Cost #NAME?
Gross Profit #NAME?
Annual Fee #NAME?
Profit / Loss #NAME?
Dividend #NAME?
Net Cash #NAME?
 ges to have 90 school competitions in each of the 7 cities and
tions are taken care of by hired staff, will the business make
fit to allow Lisa to quit her current job and pay the
nual fee?

mber of tournament days 90

Number of cities 7
Number of staff 7

Revenue #NAME?
Cost #NAME?
Gross Profit #NAME?
Annual Fee #NAME?
Profit / Loss #NAME?
Dividend #NAME?
Net Cash #NAME?

.
e minimum number of competitions that should take
ach of the 7 cities so that Lisa is able to pay the annual
arn at least $100,000 without having to manage the
mpetitions?

mber of tournament days 86

Number of cities 7
Number of staff 7

Revenue #NAME?
Cost #NAME?
Gross Profit #NAME?
Annual Fee #NAME?
Profit / Loss #NAME?
Dividend #NAME?
Net Cash #NAME?
Student No: 14,250,423 Name: Seb McCabe G

Question 1 - Expansion to other cities 2.5 marks

After discussions with you, Lisa realised she needed to include the Frisbee purchase costs which amount to $28 per tournament. She also learned that
Super Frisbee Australia will have to make superannuation contributions for employees (an additional 10.5% on top of the hourly labour cost).

What is the impact on profitability of these additions? Please shade in green those scenarios in which Lisa can still earn $100,000 per year
Note: Scenarios are given by the number of competitions (80, 100,120) and the number of employees (6 or 7)

Assumptions Calculations
Number of tournament days per city 80
Revenue per tournament $500 Number of cities 7
Number of staff 6
Labour cost per hour $50
Superannuation costs $5.25 Revenue $280,000
Number of hours per tournament 6 Labour cost $1,025,640
Supply cost per tournament $28 Supply cost $15,680
Annual fee $20,000 Gross Profit -$761,320
Dividend $100,000 Annual Fee $20,000
Profit / Loss -$781,320
Dividend $100,000
Net Cash -$881,320

Scenarios
Number of tournament days per city
80 100 120
Number of Staff 6
7

Question 2 - Sharks Football Club Proposal 2.5 marks

Recall that the Sharks Football Club was interested in organising Super Frisbee fan competitions? The owner of the club, Martin Spicer, has sent a
proposal to organise these competitions in partnership with Super Frisbee Australia (SFA). Fans participating in the competitions will pay a $75 entry fee.
The proposal has two options:
the Sharks finance the entire fan tournament and give 15% of revenues to SFA
SFA invests $30,000 and receives 25% of the revenue of the fan tournament.

How many people have to enter for Lisa to be indifferent between the two options?

Number of participants 1,000

Option 1 Option 2
Entry fees $75 Total Revenue to be shared
SFA Share of Revenue Option 1 15% SFA share of Revenue $0
SFA share of revenue Option 2 25% SFA Investment
SFA Investment Option 2 $30,000 SFA Profit
Difference

If Lisa believes 5,000 people will enter the competition, should she select Option 1 ($0 investment and 15% revenue share) or Option 2 ($30,000
investment and 25% revenue share)?

Number of participants 3,000

Option 1 Option 2
Entry fees $75 Total Revenue to be shared
Revenue share Option 1 15% SFA share of Revenue
Revenue share Option 2 25% SFA Investment
Investment $30,000 SFA Profit
Difference
Therefore is preferred