AIN3701
ASSIGNMENT 3 2025
UNIQUE NO. 651535
DUE DATE: 8 AUGUST 2025
,Question 1 (a): Fishbone Diagram (Ishikawa)
Main Problem: Decline in Membership at FitNation Gym
Root Cause Categories and Contributing Factors:
[Membership Decline]
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| | | |
[Marketing] [Facilities] [Operations] [Customer
Experience]
| | | |
- Poor social - Locker & showers - Unreliable class - Unfilled
childcare
media reach maintenance schedules vacancy
- Stale messaging - Limited appeal - Instructors miss - Parents
cancelling
amenities sessions due to
lack of support
Use SmartArt > Relationship > Fishbone Diagram in Word to visually create this.
📄 Question 2: IFRS 15 and Journal Entries
(a) Distinct Performance Obligations under the 24-month contract:
Access to gym facilities over 24 months
Participation in GymStarter Program
Distribution of branded incentives (Towel, T-shirt, Bag), conditional on attendance
(b) Journal Entry at Inception (1 Jan 2025):
Dr Contract Asset (R24,000)
Cr Deferred Revenue (R24,000)
(c) Month-end Entry (31 Jan 2025 – No milestones met):
Dr Bank (R1,000)
Cr Contract Asset (R1,000)
Dr Deferred Revenue (R1,000)
, Cr Revenue (R1,000)
(d) When customer qualifies for T-shirt (Revenue and Inventory):
Dr Deferred Revenue (R200)
Cr Revenue (R200)
Dr Cost of Sales (R90)
Cr Inventory (R90)
(e) After 8 weeks – customer did NOT qualify for gym bag:
Dr Deferred Revenue (R550)
Cr Revenue (R550)
(Unmet incentive revenue is recognised once qualification period expires.)
📄 Question 3 (c): Discrepancies in Inventory
Audit results show discrepancies, especially for gym bags (only 55 in stock, vs expected). Key
issues:
Missing inventory suggests theft or unrecorded issue-outs.
Likely poor inventory tracking and reconciliation practices.
Johannesburg branch showed highest losses.
📄 Question 3 (d): Internal Control Suggestions
1. Manual Inventory Logs: Maintain a sign-out register for each incentive item issued to
members.
2. Monthly Physical Counts: Conduct regular physical inventory audits per branch and
match against system records.
📄 Question 4 (a): Regression Interpretation
Model Fit:
R² = 0.85 → The model explains 85% of the variability in renewal likelihood.
Adjusted R² = 0.80 → Indicates strong model reliability with adjusted variables.
ASSIGNMENT 3 2025
UNIQUE NO. 651535
DUE DATE: 8 AUGUST 2025
,Question 1 (a): Fishbone Diagram (Ishikawa)
Main Problem: Decline in Membership at FitNation Gym
Root Cause Categories and Contributing Factors:
[Membership Decline]
|
----------------------------------------------------------------
| | | |
[Marketing] [Facilities] [Operations] [Customer
Experience]
| | | |
- Poor social - Locker & showers - Unreliable class - Unfilled
childcare
media reach maintenance schedules vacancy
- Stale messaging - Limited appeal - Instructors miss - Parents
cancelling
amenities sessions due to
lack of support
Use SmartArt > Relationship > Fishbone Diagram in Word to visually create this.
📄 Question 2: IFRS 15 and Journal Entries
(a) Distinct Performance Obligations under the 24-month contract:
Access to gym facilities over 24 months
Participation in GymStarter Program
Distribution of branded incentives (Towel, T-shirt, Bag), conditional on attendance
(b) Journal Entry at Inception (1 Jan 2025):
Dr Contract Asset (R24,000)
Cr Deferred Revenue (R24,000)
(c) Month-end Entry (31 Jan 2025 – No milestones met):
Dr Bank (R1,000)
Cr Contract Asset (R1,000)
Dr Deferred Revenue (R1,000)
, Cr Revenue (R1,000)
(d) When customer qualifies for T-shirt (Revenue and Inventory):
Dr Deferred Revenue (R200)
Cr Revenue (R200)
Dr Cost of Sales (R90)
Cr Inventory (R90)
(e) After 8 weeks – customer did NOT qualify for gym bag:
Dr Deferred Revenue (R550)
Cr Revenue (R550)
(Unmet incentive revenue is recognised once qualification period expires.)
📄 Question 3 (c): Discrepancies in Inventory
Audit results show discrepancies, especially for gym bags (only 55 in stock, vs expected). Key
issues:
Missing inventory suggests theft or unrecorded issue-outs.
Likely poor inventory tracking and reconciliation practices.
Johannesburg branch showed highest losses.
📄 Question 3 (d): Internal Control Suggestions
1. Manual Inventory Logs: Maintain a sign-out register for each incentive item issued to
members.
2. Monthly Physical Counts: Conduct regular physical inventory audits per branch and
match against system records.
📄 Question 4 (a): Regression Interpretation
Model Fit:
R² = 0.85 → The model explains 85% of the variability in renewal likelihood.
Adjusted R² = 0.80 → Indicates strong model reliability with adjusted variables.
