1. Is Bene Petit a manufacturing company, a merchandising company, a service company, or some combination of the three? Explain. 2. Why does Taylor need to understand both financial accounting and managerial accounting? 3. Describe how Taylor would incorporate sustainability and corporate social responsibility into Bene Petits business strategy. Who are the stakeholders? How does it relate to the triple bottom line? 4. Give examples of the following costs for Bene Petit: a. Direct costs b. Indirect costs c. Manufacturing costs d. Nonmanufacturing costs e. Product costs f. Period costs g. Relevant costs h. Irrelevant costs i. Out-of-pocket costs j. Opportunity costs 5. Why does Taylor need to understand cost behavior? What decisions will it help her make? 6. Name three possible activity drivers Taylor could use to estimate cost behavior. 7. Give a potential cost driver for each of the following activities: a. Creating and testing recipes for new menu items. b. Preparing vegetables (washing, slicing, dicing, etc.). c. Cooking a large batch of chili for donated meals. d. Packing refrigerated boxes with the meal kits. e. Delivering donated meals to a community organization. f. Cleaning up after a production batch. g. Hiring and training new employees. h. Delivering meal boxes to customers doorsteps. i. Performing maintenance on kitchen equipment. j. Promoting the business with a Groupon. 8. How many months of data would Taylor need to apply the high-low method? How many months of data would Taylor need to perform regression analysis? What are the pros and cons of each. 9. Why would Taylor need to prepare a contribution margin income statement? How is it different than an income statement provided to banker or investor? 10. Does Taylor need to worry about whether income will be different under full absorption versus variable costing? Why or why not?

11. As a start-up business, why would Taylor want to know the break-even point? How would she use this information to launch her business? 12. Taylor has pledged to donate one meal for every meal purchased. However, donated meals are produced in family size only (four servings), while purchased meals come in three sizes: single serving, dual serving (two servings), or family size (four servings). If Taylor wants to determine how many purchased meals she needs to sell to break even, including covering the cost of the donated meals, what information does she need? Name several pieces of information that Taylor needs to know to do the break-even analysis. 13. If Taylor expects to earn a small profit during her first year of full operations (after covering the cost of the donated meals), how would she compute the margin of safety? What would the information tell her? 14. If the mission of Taylors business is to serve a social purpose by donating meals to homeless families, why would she want to do a target profit analysis? 15. Explain to Taylor how investing in equipment, facilities, and other fixed costs will affect the operating leverage for her business. Is operating leverage a good or bad thing for Taylors business?

Case Overview This case describes an entrepreneurial venture that has both a business and social mission. The case setting is a hypothetical meal delivery service that utilizes a "one-for-one" business model in which the owner pledges to donate one meal for every meal sold. The case storyline is modeled after Bombas, which was featured on Shark Tank and is one of the show's biggest success stories. The case covers the early stages of the business's life cycle, including concept/beta-testing, start-up/introduction, and expansion/growth. It is divided into five parts that can be assigned separately or as one culminating project: Part 1: Understanding the Business Part 2: Product and Service Costing Part 3: Managerial Decision Making Part 4: Planning and Control Part 5: Performance Evaluation and Analysis Each part includes discussion questions, assignments, and Excel or Tableau based projects. The background information for each part is provided below. The specific require- ments and data for completing the assignments are provided in Connect. Case Background This is the story of Taylor, a 35-year-old entrepreneur. Taylor graduated from Western State University (WSU) with a degree in journalism and culinary arts. Taylor had always dreamed of opening a restaurant but soon realized just how challenging the restaurant industry can be. After moving to the city and working for a small advertising agency, Taylor fell in love with a young lawyer named Alex. They got married, adopted a dog, and eventually started a family. When their second child arrived, Taylor decided to stay home and focus on raising the kids while Alex started a new law practice. Taylor took on the role of stay-at-home parent with dedication and gusto but also volunteered at a local food bank and wrote the monthly newsletter for a nonprofit organi- zation. Dinner time was particularly important to Taylor and Alex, as it was the one time the family could sit down, put away electronic devices, and spend quality time together. At least three nights a week, Taylor planned a meal that the entire family prepared and cooked together. Taylor had always been an excellent cook and had a knack for making healthy meals that don't taste healthy. One day when Taylor was telling the other stay-at-home parents what was on the weekly menu, Jackie lamented that she had tried "family meal night" but struggled to find recipes the entire family liked. Ben said he recently tried Blue Apron, a meal-delivery service, but found the recipes a bit too "gourmet for his family's tastes. And Maria said one of their kids has a severe peanut allergy, so they prepare everything from scratch to avoid cross-contamination. Suddenly Taylor saw an opportunity to combine her love of food, dream of being an entrepreneur, and desire to go back to work now that the kids were more independent. To test out the idea, Taylor convinced five neighbors to let her plan their meals for a month. Each week, Taylor would develop three recipes that were nutritious, delicious, and family-friendly. On Monday, she delivered a box that included all the ingredients needed for three meals, along with detailed instructions for each meal. Taylor also agreed to be available every night from 5:00 to 7:00 to answer questions about how to prepare the meals. At the start, Taylor only charged for the actual cost of the ingredients used to make the meals. She was careful to keep detailed receipts for all ingredients and supplies used each week and would divide by five to figure out what each family owed. Taylor included an invoice in each meal box, along with a note to drop off a check or pay using Venmo or Cash App. She also included a feedback form asking about ease of preparation, appeal to adults and children, and suggestions for other menu ideas. Soon Taylor realized it was not practical to keep track of the cost of every item she used to prepare the meals. For example, it was much more cost-effective to buy staples such as spices, olive oil, rice, and flour in bulk; and she didn't want to keep track of the exact amount used for these miscellaneous ingredients. She also bought some refrigerated boxes and ice packs so the items could be left on the porch for a few hours and then reused. Taylor also had to dedicate some space in an extra bedroom/office for all the supplies and buy an extra refrigerator to store fresh ingredients. How should Taylor charge for these "indirect costs in a simple and fair way? Despite her best efforts to minimize waste, Taylor usually ended up with leftover ingredients after filling the weekly meal boxes. Depending on how the items were sold or packaged, it wasn't always possible to buy the exact amount needed. It was also easier to buy a little extra to avoid running back to the store at the last minute. Taylor usually used any extra ingredients to make a meal or snack for her own family or added a little extra for families with hungry teenagers. Then one Sunday, Taylor heard about a local family trying to get back on their feet after some difficult times and a period of homelessness. Taylor emailed the neighbors and asked if they would mind paying a little extra to provide a meal box to this family in need. They enthusiastically said yes! Over the next few months, Taylor gradually increased the amount she was charging her neighbors for the meal delivery service and began working with a non-profit organization to provide more meals to families in need. Taylor ran the pilot project for four months. Although one neighbor had to drop out after the first month due to a family emergency, three other families heard about it and wanted in on the system The goal of the pilot had been to test the viability of the business idea and work out any problems in the recipes. Of course, once Taylor starts to invest even more time and money in the business, including hiring employees and expanding to a nearby facility, the business will need to do more than just cover the cost of the meals. Taylor wants to turn it into a profitable business venture that also serves a greater purpose. Providing meals to local families was personally rewarding to Taylor, and it also made her customers feel that they were doing something good. Taylor has read about other socially responsible companies that manage to "do good while doing well." Taylor would like to focus on families with young children as she knows how critical a stable and nutritious food supply is during their formative years. Taylor's goal is to donate one meal for every meal sold to a paying customer. Taylor has decided to name her business Bene Petit. It sounds like bon apptit (enjoy your meal), but bene means "good" and petit means "small." The mission of Bene Petit is to provide delicious meals to families with young children and to contribute to society through small acts of kindness. Part 1: Understanding the Business (Chapter 1) In Part 1, students will consult with Taylor on the start-up of her business, including identify- ing the business strategy, determining the business model, understanding the role of account- ing information and other data for making management decisions, classifying the different costs that the business will incur, and identifying target markets. Because it has a dual mission, Bene Petit serves two important stakeholder groups: customers/clients and community partners/homeless families. Target customers or clients are busy, socially conscious professionals and families with high disposable income who live in areas with a high rate of homelessness, Partners are local nonprofit organizations that will distribute meals to families in need. Taylor would like to focus on families living in transitional or temporary housing, as this is an important bridge between homelessness and permanent housing Taylor's first task in launching her business is to gain a better understanding of each of these stakeholder groups. The analytics assignment will require students to analyze household income and other demographic data from the U.S. Census Bureau and combine it with homelessness statistics provided by the U.S. Department of Housing and Urban Development (HUD). Students will then create data visualizations to communicate the business problem to potential investors. Part 2: Product and Service Costing (Chapters 2-5) In Part 2, students will help Taylor design a cost system by deciding what type(s) of cost system(s) to use and how to assign direct and indirect costs to various products, customers, and services. To do so, they must understand how Bene Petit operates and the different types of products and customers it serves. Bene Petit uses a "one-for-one" business model. This approach was first popularized by Blake Mycoskie, founder of TOMS, who started out by donating one pair of shoes for every pair sold, and more recently pledged to donate a week's worth of clean water for every bag of coffee sold. This social entrepreneurship model has been adopted by other businesses, including Warby Parker (eyeglasses) and Bombas (first socks, then t-shirts and underwear). At the time this case was written, none of the major meal delivery services were using a "one-for-one model. However, industry leaders such as Hello Fresh and Freshly often donate meals on special occasions, such as National Philanthropy Day, or in response to crises, such as natural disasters or the COVID pandemic. Bene Petit's pledge to donate one meal for every meal sold" is a core part of its value proposition that differentiates it from competitors. While it is marketed as a "one for one" business, the meals are not equivalent from a production and delivery perspective. The same is true at Bombas, as the socks the company donates to the homeless are intentionally designed to be more generic (plain black sock) and durable than the colorful socks that are marketed to consumers. Similarly, the production and delivery process at Bene Petit is different for the meals that are sold to customers/clients (referred to as customer meals) and the meals that are donated to partner organizations (referred to as donated meals). CUSTOMER MEALS Meals that are sold to customers are individualized based on choices customers make on a week-to-week basis, as follows: Each week, customers select from a menu of 20-30 different meals. Some of the most popular recipes are kept on the menu for several months, while others are changed out each month. The ingredients are prepared (eg., sliced, chopped, seasoned, etc.) and packaged separately to maintain freshness, but are not assembled or cooked. The cost of ingredients varies between menu options, as does the amount of labor time required. For example, meat and seafood recipes tend to have higher ingredient costs, while vegetarian recipes require more prep time and packaging. Each customer order is delivered in a refrigerated box that contains several meal "kits." A kit includes everything needed to prepare one meal, along with a detailed recipe card. Meal kits are available in three sizes: single-serving (one adult serving), dual-serving (two adult servings), or family-sized (four adult servings). The minimum weekly order size is four single-serving meals (four adult servings). three dual-serving meals (six adult servings), or two family-sized meals (eight adult servings). The most common order size is four family-sized meals, which is 16 adult servings per week. DONATED MEALS Taylor partners with local community organizations to distribute meals to families in need. The donated meals are more standardized than those that are marketed directly to consumers. These meals were developed to meet the needs of families living in transitional or temporary housing. Some key features of the donated meals are described below Donated meals are produced in large batches and delivered in bulk to community partners. The donated meals come in one size (four adult servings) and will feed a larger family with children. To allow more time between production, delivery to community partner), distribution (to families), and consumption, donated meals are pre-cooked and frozen. The meals can be reheated in a microwave or oven or on a stovetop. All recipes meet the nutritional guidelines recommended by the FDA. The recipes are designed to appeal to a broad cross-section of children and adults. . Based on these criteria. Taylor developed the following three recipes for the donated meals: Creamy chicken with vegetables Spaghetti with meatballs Vegetarian chili with cornbread The total cost of ingredients used in the three recipes is roughly the same, and each batch takes about the same amount of time to prepare and package. Taylor is unsure of how to compute the cost of the different types and sizes of meals she sells (and donates) but knows she needs this information to make decisions. For Part 2 of the case, students will apply concepts from job order costing process costing, and activity-based costing to determine the most appropriate cost system(s) for Bene Petit. They will also analyze a large data set using simple and multiple regression and recommend the most appropriate driver(s) for assigning indirect or overhead costs to products and customer orders. Part 3: Managerial Decision Making (Chapter 6 and 7) In part 3 of the case, students will consult Taylor on various managerial decisions she may encounter as Bene Petit continues to grow and expand, including the following: SCENARIO 1: COST-VOLUME-PROFIT ANALYSIS How many purchased meals must be sold to cover the cost of the donated meals and break even? If Taylor expects to earn a small profit during her first year of full operations (after covering the cost of the donated meals), what is her margin of safety? How will investing in equipment, facilities, and other fixed costs affect Bene Petit's degree of operating leverage? SCENARIO 2: SPECIAL ORDER ANALYSIS The athletic director of a local high school approached Bene Petit about a special offer. The director would like to promote meal kits to athletes and their families to encourage healthy eating and as a fund-raising opportunity. The meals would be delivered directly to the school, where families would pick them up and pay the school directly. The athletic director has requested a 40% discount off the normal price for this bulk order. The school would pass a 20% discount on to the athletes families and use the other 20% to support an athlete's award banquet. SCENARIO 3: MAKE-OR-BUY ANALYSIS Bene Petit is currently paying employees to deliver the refrigerated meal boxes to customers' doorsteps using the company's small fleet of delivery trucks. As the business expands, Taylor is trying to decide whether she should outsource delivery to a private delivery company such as FedEx or UPS. SCENARIO 4: DROPPING PRODUCTS OR SERVICES Bene Petit currently offers single-serving, dual-serving, and family-sized options for purchased meal kits. Single-serving meals make up about 10% of all orders and are only slightly less costly to produce than dual-serving meals. Taylor is trying to decide whether to eliminate single-serving meal kits. Part 4: Planning and Control (Chapters 8 and 9) In part 4 of the case, students will help Taylor create an operating budget for Bene Petits second year of operations, including the following. Sales budget broken down by meal size. Direct materials (ingredients) purchases budget Direct labor and manufacturing overhead budgets Selling and administrative expense budget Pro-forma income statement Students will then perform a comprehensive variance analysis to reconcile the difference in actual and budgeted results, including flexible budget volume variances and cost/spending variances. Part 5: Performance Evaluation and Analysis (Chapters 10-13) In part 5 of the case, students will help Taylor design a performance measurement system and analyze Bene Petit's performance for the first three year of operations, including the following: Creating a simple balanced Scorecard for Bene Petit. Benchmarking the performance of a competitor (Hello Fresh) in terms of return on investment (ROI), investment turnover, and profit margin Evaluating the sustainability report for a competitor (Hello Fresh) and describing how sustainability metrics could be incorporated into a balanced scorecard. Analyzing capital projects based on net present value (NPV) and the profitability index. Computing financial ratios for Bene Petit's first three years of operations