Littleton Community Center

ISBN 0-324-00964-X

Case Teaching Package
A case teaching package is available for this case. It includes strategies for case presentation, key concepts, solutions to the assignment questions in the case, and suggestions for the most effective ways to work this case into your course.

Length
This case is 8 pages in length and its case teaching package is 14 pages.

Abstract

Since Littleton Community Center (LCC) was created as a recreation center several years ago, it has been operating with a large subsidy in excell of $200,000 from its parent organization, South Suburban Recreation District (SSRD). With SSRD planning to allocate such funds elsewhere in the future, LCC needs to become financially independent within the next five years. The student's task is to develop such a plan for LCC by analyzing earned revenues, unearned revenues, and expenditures. As a graduation requirement, all MBA students must do a community service project. A team of five students, with a professor as an advisor, had two weeks to do this actual project. The two Master of Accountancy students and the professor from that team are the authors of this case.

Fit Within a Course

This case has already been used three different times in a required Master of Accountancy course in managerial-accounting topics. It may also be used in an introductory managerial accounting course (both undergraduate and graduate), a cost-accounting course, and a nonprofit accounting course which includes planning and cost allocation topics.

This case has been taught using two different strategies:
1. A general discussion of planning alternatives for financial independence, i.e., a "number crunching" approach, or
2. A specific development of a spreadsheet-planning model with five years of budget and ABC analyses, i.e., a "number crunching" approach. Either approach has worked well in analyzing how LCC can replace its $200,000 subsidy over the next five years to become financially independent.

The graduate students have preferred the "non-number crunching" approach. For graduate students, who already have budgeting and ABC analysis skills, this approach has worked well in achieving the three major learning objectives. For undergraduate students, who may need to develop more budgeting and ABC analysis skills, the "number crunching" approach may be more appropriate.

Linkages to Textbooks or Journal Articles

Study Questions

1. Develop a plan for LCC to become self-sufficient by the end of the next five years, or by 1998. Prepare projected Statements of Revenues over Expenditures for each of the next five years. Use an activity-based costing model to increase course fees for facility-rental charges.
2. How would your solution change if it would not be politically feasible to raise course fees for facility-rental charges (which are currently not included in such fees)?
3. How would your solution change if SSRD decided that it would charge-back $36,000 to LCC for various accounting and administrative functions once LCC decided to charge SSRD $36,000 in facility-rental fees?