Private Fitness, Inc.

BBUS 425 go Management Accounting Case 1 Private Fitness, Inc. Analysis of brisk charge and mental process issues Yunlong TangYen Hao ChaoInstructor Tony BellSep 16, 2012 MEMORANDUM DATE Sep 16, 2012 TO Rosemary Worth, the proprietor of Private Fitness, Inc. FROM Yen Hao Chao and Yunlong Tang - RE Analysis of existing management and operation issues Its a pleasure that we waste a panorama to review your comp boths existing management and operation remains.We desire that there are approximately serious management and operation problems which take up to be changed or improved immediately. In this memorandum, we eachow for identify those issues in management and operation system, and result recommended solutions for solving problems. Issues in management and operation system 1. The biggest issue is that the comp both has less go over on track all records, such(prenominal) as the number of clients, the length of any close fitness class, and the money transactions betwee n customers and the company.With bulge out this information, the company may non collect cash properly and prevent crimes from happening in the operation, such as money stealing 2. Some of the jobs from management level have not been well performed in the normal business operation, since all mightiness and jobs have been centralized onto one person. 3. Employees might provide some privy fitness classes to the client without distinguishing to the company. This is a very serious problem, since role honesty is a large benefit to the health of your business.Solution We go out provide you the suggestions establish on two types of apply which are action control and personal control. In action control, we recommend you to install a control system for tracking classroom usage and hire another monetary tutor to take over any financial jobs, operation salute and profit recording from Kate. In personnel control, we recommend you to regulate some smart policies such as no personal discount and any class troth essential be communicateed to the refreshing pay manager.Classroom usage control system Classroom usage control system is a system to help you to track the length of using the classroom in order to verify how overmuch money is collected establish on the snip of classroom usage. Under this system, every client or employee must apply a card to use the classroom. They need to rook on the machine in order to get in or out of the exercise room. After they swipe the machine, the computer go away automatically record this data and save it to the database.Through this control system, you will have the masterful information about how many clients you have, how long they stay in the classroom, and how much money you are supposed to earn each month based on the time of classroom usage. If the collected money does not border the amount of cash received based on the length of classroom usage, the financial manager needs to be responsible and find out th e reason for the missing money as well as report the incident to you immediately. Although this control system will solve the problems and generate huge profits in the long run, that it still has some disadvantages such as cost and maintenance.Additionally, you have to provide significant training for employees and customers to crawl in how to use this system. Management system Your management system has failed to meet the polish of its function which is supposed to include monitoring and arrogant the finance of your company. First, we last that your manager, Kate Hoffman, has been in charge of almost all jobs at the management level. lay too much power in the hands of one manager may name risks to the management system.Second, since Kate has both jobs as an instructor and a manager in the company, she may not have enough time to keep track of every single transaction and all expenses accurately. As a result, we believe that hiring a professional person with finance statemen t and management experience as a financial manager is essential. The forward-lookingly manager will be in charge of record monitoring, appointment scheduling and financing, and Kate will exit the marketing manager including the indebtedness of note up-keep and keep her position as one of the instructor in the company.Kate and the new manager will now each receive 50% of the wages which Kate used to receive, but Kate can still have the bonus as usual. All business transaction, such as money collecting and equipment purchasing, will be reported to the new manager. Although most clients have direct contact with some of your companys employees, any appointment of taking classes must also be reported to the new manager with details on the date of the appointment and the length of the class.As well, the new manager has to directly report all information to you periodically, like once a month. Hiring a new manager will lead to a flatter business body structure so that every manager has more specific functions on controlling the system and more accuracy on performance. Furthermore, viewing the report of all periodic expenses and profit from the finance manager will provide a forecast on the companys future financial touch and become more helpful to improve the efficiency of the operation and the stopping point making from the management level.However, this new move may create unthought-of expenses on paying salary to the new manager, and also, the new manager will need time to become familiar with his/her new co-workers and the new operative environments. Policies Since many of the students have straight contact with the instructors, they may deal with the instructors on a lower floor the table, such as asking for the personal discount privately. Some of the instructors may also provide private classes to students with using companys quick-wittedness in the normal business schedule without reporting.To prevent those risks, you must create related policies as follow * No personal discount provided to customers from any of our employees unless the discount is permitted by the company * No private fitness classes are provided to the customers at any of the time unless the classes have been reported * Any impact of the two policies will receive penalty or warning depending on the situation.We believe the new policies will restrict the authority of using the rapidity and limit the contact with customers from the employees. The employees will behave more professionally and become more honest to the company. The chance of creating unreported transaction will be minimized, and the record of using any facility in the company will be more accurate. However, the employees may feel uncomfortable with the new policies, but they will get used to the new policies. RecommendationWe recommend that the company should set up a system for tracking the usage of classrooms, hire a new financial manager to take over partial duty of management from Kate and regulate some new policies. New system and new manager will provide significant control on tracking the process of collecting money and organizing business operation. On the other hand, in order to enhance the honesty of employees, implementing new policies inside the company is necessary and beneficial to provide a healthier working environment.