A Change of Taste By: Garcia, Michael L; Squires, Karen D

A Change of Taste
By: Garcia, Michael L; Squires, Karen D.
Journal of Business Cases and Applications (2009)

Read the article and discuss the implications of managerial accounting for this company.  Following are specific questions related to the case that should be addressed:

1. Summarize the case in approximately one page.  What are the underlying issues, problems or opportunities? How risky (potentially) is this business?

2. Look at the company’s potential profitability
a. Tasty Flan’s unit variable costs for 2007 using the Joe’s estimate of sales volume.
b. The number of units that Joe Jimenez would need to sell in order to achieve his objectives.
c. What are the dollar sales required to achieve this objective.
d. Prepare a contribution margin income statement for 2009.

3. Based upon the findings in question #2, should Joe purchase the business from Ronald? Support your position with a well-reasoned argument.  What other factors might Joe consider as part of the decision-making process?

4. What are the ethical issues that are found in this case? Using the IMA’s Statement of Ethical Professional Practice identify and discuss the standards that may be applicable to this case.  Explain what should be done and the consequences of the recommended actions.