Memorandum
Literature Review: Before a recommendation can be made, it is important to understand the different factors that play a role in your situation. One of the first aspects we analyzed was cost behavior, which is how a specific cost reacts to change in activity levels. We also accounted for relevant costs. These costs eliminate any unnecessary data that has the potential to complicate the decision-making process for management.
Data Analysis: Craddock Cup generates total revenue of $49,840 for 32 teams from registration fees, T-shirts, concessions, soccer clinic, and contributions. It is currently incurring a total expense of $53,538. However, the total irrelevant cost of $3,400 decreases the total expense, which includes the city field rental for $1,200 Rivaldo’s salary of $6,300, and rent expense of $2,700, these costs will be incurred whether CYSL drops or keeps the Craddock cup. As a result, Craddock Cup generates an incremental profit of $6,502. Craddock Cup will generate an additional $10,132 by adding 32 more teams to the tournament. Most sources of revenues will double except for contributions for a total of $85,680. Relevant expenses such as registration with state YSL, hotels, face book, marketing and advertising, and salary remain unchanged. These costs remain unchanged due to recruiters’ interest in only High School teams, and no further plans for marketing and advertising, and no salary increase. However, relevant variable expenses double as the number of teams double for a total expense of $69,046 resulting in a total profit of $16,634.00 In efforts to increase the visibility and prestige of the tournament the total registration will increase by $55.00 per team to break-even. The additional total cost of $3,520 includes $1,000 for advertising expense, $2,400 for hotels, and $120 for the face books. Dividing the total