case study
BA 4221 – MIDTERM CASE INSTRUCTIONS: BAKE ME A CAKE
Students are required to purchase this case from Ivey Publishing. See “Ordering Instructions for Students” under the Course Syllabus section of D2L.
Due date: 4:30 p.m., October 21st.
Ivey Case: 9B13B001
Synopsis
On January 14, 2012, Amy Bourgon, sole proprietor of Bake Me A Cake (BMAC), set out to make some decisions regarding the company’s future strategy. BMAC had grown and Bourgon was considering a move because she was unsure of how much more growth the current space could accommodate and wondered whether it was time to take the business to the next level. Bourgon needed to decide whether to renovate her family’s home or to lease a commercial location for the business. Also, because Bourgon wanted to improve BMAC’s profitability, she was considering increasing cupcake prices; and she also wondered how BMAC should best advertise for fiscal 2012. Bourgon decided she would first analyze the company’s three-year financial performance and then project financial performance for fiscal 2012, depending on her decisions. She hoped to implement all changes before April 2012, when the next busy wedding season would begin.
Assignment
You are a undergraduate accounting student who has offered to help Amy perform the necessary analysis.
Use the following as a guide to assist in completing the assignment.
1. What are BMAC’s strengths and weaknesses?
2. Identify threats and opportunities in the industry.
3. Analyze the company’s statement of cash flows for the year ended December 31, 2011.
4. Analyze the relevant financial ratios for BMAC.
5. Outline the pros and cons of renovating the family home versus leasing a location. Complete a differential analysis for these two alternatives.
6. What are the advantages and disadvantages to increasing cupcake prices? Calculate the direct cost per cupcake. What would the contribution from cupcake sales be for the suggested price points?
7. Create an
Students are required to purchase this case from Ivey Publishing. See “Ordering Instructions for Students” under the Course Syllabus section of D2L.
Due date: 4:30 p.m., October 21st.
Ivey Case: 9B13B001
Synopsis
On January 14, 2012, Amy Bourgon, sole proprietor of Bake Me A Cake (BMAC), set out to make some decisions regarding the company’s future strategy. BMAC had grown and Bourgon was considering a move because she was unsure of how much more growth the current space could accommodate and wondered whether it was time to take the business to the next level. Bourgon needed to decide whether to renovate her family’s home or to lease a commercial location for the business. Also, because Bourgon wanted to improve BMAC’s profitability, she was considering increasing cupcake prices; and she also wondered how BMAC should best advertise for fiscal 2012. Bourgon decided she would first analyze the company’s three-year financial performance and then project financial performance for fiscal 2012, depending on her decisions. She hoped to implement all changes before April 2012, when the next busy wedding season would begin.
Assignment
You are a undergraduate accounting student who has offered to help Amy perform the necessary analysis.
Use the following as a guide to assist in completing the assignment.
1. What are BMAC’s strengths and weaknesses?
2. Identify threats and opportunities in the industry.
3. Analyze the company’s statement of cash flows for the year ended December 31, 2011.
4. Analyze the relevant financial ratios for BMAC.
5. Outline the pros and cons of renovating the family home versus leasing a location. Complete a differential analysis for these two alternatives.
6. What are the advantages and disadvantages to increasing cupcake prices? Calculate the direct cost per cupcake. What would the contribution from cupcake sales be for the suggested price points?
7. Create an