2019 Student Case.pdf - 2019 STUDENT CASE COMPETITION The...

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2019 STUDENT CASE COMPETITION The Student Case Competition is sponsored annually by IMA to provide an opportunity for students to interpret, analyze, evaluate, synthesize, and communicate a solution to a management accounting problem.
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August 2018 / STRATEGIC FINANCE / 83 ANGIE’S EMPANADAS: PRICING DECISIONS FOR A START-UP A small business owner is considering expanding her business and needs help to evaluate the first six months of operations and determine how to reach her profit goals. By A. CRAIG KELLER, CMA, AND MICHAEL R. HAMMOND, CPA
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84 / STRATEGIC FINANCE / August 2018 S oon after Angie Keller graduated college, she began talking with her family and best friends to help figure out her career options. She had just delighted a large group of people with her delicious Peruvian cuisine at her graduation party, so her first thought was to open a Peru- vian restaurant. As a nontraditional graduate of her univer- sity’s hotel and restaurant administration program, she was aware of the challenges of running a restaurant, including the long hours and high failure rate. After abandoning the idea of a restaurant, she began considering other food- service operations such as catering or supplying specialty items, for example, appetizers or desserts. One idea she considered was selling empanadas. An empanada is a pastry made with modified pie dough filled with various ingredients. The dough is rolled out and cut into three- to four-inch circles. A heaping tablespoon of pre-cooked ingredients is placed in the center, and the dough is folded over the ingredients and pinched closed. Then the empanadas are baked at 350 degrees for about one hour. When there are 15 minutes of baking time left, the pastry is brushed with egg. Ingredients vary but often include meat mixed with vegetables and spices, or even fruit, as well as vegetarian varieties. Different regions of Latin America favor diverse types of empanadas. For instance, pumpkin empanadas are popular in Mexico. Angie had long been told that her empanadas were the best in town, and they travel well. They can be frozen and retain their good quality and taste even after being defrosted and reheated. So she decided to create Angie’s Empanadas, a wholesale food-service company, to sell her empanadas to local restaurants. The company sells three kinds of empanadas: Peruvian (chicken), Argentinean (beef), and vegetarian. The empanadas are assembled in a rented kitchen, with fully cooked fillings. Then they are baked and placed on trays in batches of eight small empanadas. Currently Angie sells trays of the three types for the same price. Restaurant clients unwrap the tray, brush the empanada tops with egg wash, and heat them for 10 minutes before serving them as appetizers.
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  • Winter '19
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