Case Notes/Answers
Spike's Indoor Beach Volleyball and Rock Climbing Inc.
by Elizabeth
Discussion Questions:
1. Perform a business size-up.
2. Analyse the expansion qualitatively.
3. List all the cash flows associated with the expansion, and classify them as relevant (cash, future
and different), recurring or one-time costs.
4. Perform a differential analysis, with sensitivity analysis where necessary. What is the return on
investment? What is the payback period?
5. As Earl Misener, would you go ahead with the expansion?
, 809B05
Teaching Note
SPIKE'S INDOOR BEACH VOLLEYBALL AND ROCK CLIMBING INC.
CASE SYNOPSIS
Earl Misener, owner of Spike’s Indoor Beach Volleyball and Rock Climbing (Spike’s), is considering
expanding his London, Ontario, facility by adding a rooftop patio and outdoor beach volleyball court.
Misener has estimated the incremental revenues and costs of the expansion and wants to know whether the
investment makes sense qualitatively and quantitatively.
CASE OBJECTIVES
This case is intended to introduce the topic of future-oriented decision-making using the differential cash
flow model. It is appropriate for an introductory management accounting course at the undergraduate
university level.
SUGGESTED ASSIGNMENT QUESTIONS
1. Perform a business size-up.
2. Analyse the expansion qualitatively.
3. List all the cash flows associated with the expansion, and classify them as relevant (cash, future and
different), recurring or one-time costs.
4. Perform a differential analysis, with sensitivity analysis where necessary. What is the return on
investment? What is the payback period?
5. As Earl Misener, would you go ahead with the expansion?
Spike's Indoor Beach Volleyball and Rock Climbing Inc.
by Elizabeth
Discussion Questions:
1. Perform a business size-up.
2. Analyse the expansion qualitatively.
3. List all the cash flows associated with the expansion, and classify them as relevant (cash, future
and different), recurring or one-time costs.
4. Perform a differential analysis, with sensitivity analysis where necessary. What is the return on
investment? What is the payback period?
5. As Earl Misener, would you go ahead with the expansion?
, 809B05
Teaching Note
SPIKE'S INDOOR BEACH VOLLEYBALL AND ROCK CLIMBING INC.
CASE SYNOPSIS
Earl Misener, owner of Spike’s Indoor Beach Volleyball and Rock Climbing (Spike’s), is considering
expanding his London, Ontario, facility by adding a rooftop patio and outdoor beach volleyball court.
Misener has estimated the incremental revenues and costs of the expansion and wants to know whether the
investment makes sense qualitatively and quantitatively.
CASE OBJECTIVES
This case is intended to introduce the topic of future-oriented decision-making using the differential cash
flow model. It is appropriate for an introductory management accounting course at the undergraduate
university level.
SUGGESTED ASSIGNMENT QUESTIONS
1. Perform a business size-up.
2. Analyse the expansion qualitatively.
3. List all the cash flows associated with the expansion, and classify them as relevant (cash, future and
different), recurring or one-time costs.
4. Perform a differential analysis, with sensitivity analysis where necessary. What is the return on
investment? What is the payback period?
5. As Earl Misener, would you go ahead with the expansion?
