Private Fitness, Inc.’S Management Controls

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Assignment 1-3
Read and analyze the Private Fitness, Inc. case in Management Control Systems.
Write a 2- to 3-page paper that addressing the following. Follow APA guidelines for citations and format for your paper. a. Summarizes the case and provide background information. b. Describes a solution to Rosemary Worth's control problem that emphasizes: 1. Results controls 2. Action controls 3. Personnel/cultural controls c. Makes a recommendation. d. Explains why your recommendation is the best solution.

Rosemary Worth opened a small health club which offered personal fitness training and a variety of fitness classes. Rosemary had previously worked as an aerobics instructor and won many fitness competitions. The purpose of opening Private Fitness, Inc. was to increase Rosemary’s standard of living and enable her to have more free time for personal family obligations. Private Fitness, Inc. earned revenue by charging an hour rate for personal training services that varied during peak and nonpeak hours. A fee was also charged for fitness classes. Customers were offered discounts if services were prepaid.
Rosemary hired five instructors to run the fitness classes and provide personal training services to clients. The instructors were paid on a commission basis. Rosemary hired Kate, a long time personal friend, as not only an instructor but also a manager of business operations. The business operations Kate was responsible for included: marketing, facility up-keep, scheduling of appointments, and record keeping. Kate was paid a base salary and a commission based on revenues. It was discovered that Kate was not recording all client revenues in a timely fashion. Kate was also rendering services to clients utilizing Private Fitness, Inc.’s equipment and keeping client payments. Rosemary has realized that operational problems exist and also that a decision must be made regarding Kate’s role with the company.
In order

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