CASES AND PROJEC LO2, 5, 6 C18-34. Designing an ABC System for a Country Club The Reserve Club is a traditional private golf and country club that has three different categories of membershups: golf, tennis & swimming, and social. Golf members have access to all amenities and programs in the club, Tennis & Swimming members have access to all amenities and programs except use of the golf course, and Social members have access to only the social activities of the club, excluding golf, tennis, and swimming. All members have clubhouse privileges, including use of the bar and restaurant, which is operated by an outside contractor. During the past year, the average membership in each category, along with the number of club visits during the year, was: Visits Gelt Tennis & Swimming Social Members 500 110 250 15,000 2.200 5,000 Some members of the club have been complaining that heavy users of the club are not bearing their share of the costs through their membership fees. Dess Rosmond. General Manager of the Reserve Club: agrees that monthly fees paid by the various member groups should be based on the annual average amount of cost-related activities provided by the club for the three groups, and he intends to set fees on that basis for the coming year. The annual direct costs of operating the golf course, tennis courts, and swimming pool have been calculated by the club's controller as follows: Golf course. Swimming pool Tennis courts $1,250,000 75,000 45,000 The operation of the bar and restaurant and all related costs, including depreciation on the bar and restaurant facilities, are excluded from this analysis. In addition to the above costs, the club incurs general overhead costs in the following amounts for the most recent and typical) year: Amounts General Ledger Overhead Accounts Indirect labor for the club management staff (the general manager assistant general manager, membership manager, and club controller) Ubilities (other than those directly related to golf, swimming, and tennis). Website maintenance Postago Computers and information systems maintenance Clubhouse maintenance & depreciation Liability insurance Security contract $375,000 34,000 8,000 2,500 10,000 32,000 6.000 15,000 $482,500 . . Dess believes that the best way to assign most of the overhead costs to the three membership cat- egories is with an activity-based system that recognizes four key activities that occur regularly in the club: Recruiting and providing orientation for new members Maintaining the membership roster and communicating with members Planning, schoduling, and managing club events Maintaining the financial records and reporting for the club REQUIRED Identify and explain which overhead costs can reasonably be assigned to one or more of the four key activities, and suggest a basis for making the assignment ). Identify a cont driver for each activity cost pool that would seem to be suitable for assigning the activity cost pool to the three membership categories Suggest a method for assigning any overhead cons to the three membership categories that cannot reasonably be assigned to activity pools Comment on the suitability of ABC to this cost assignment situation