The McGee Cake Company In early 2010, Doc and Lyn McGee formed the McGee Cake Company. The company produced a full line of cakes, and its specialties included chess cake,* lemon pound cake, and double-iced, double-chocolate cake. The couple formed the company as an outside interest, and both continued to work at their current jobs. Doc did all the baking, and Lyn handled the marketing and distribution. With good product quality and a sound marketing plan, the company grew rapidly. In early 2014, the company was featured in a widely distributed entrepreneurial magazine. Later that year, the company was featured in Gourmet Desserts, a leading specialty food magazine. After the article appeared in Gourmet Desserts, sales exploded, and the company began receiving orders from all over the world. Because of the increased sales, Doc left his other job, followed shortly by Lyn. The company hired additional workers to meet demand. Unfortunately, the fast growth experienced by the company led to cash flow and capacity problems. The company is currently producing as many cakes as possible with the assets it owns, but demand for its cakes is still growing. Further, the company has been approached by a national supermarket chain with a proposal to put four of its cakes in all of the chain’s stores, and a national restaurant chain has contacted the company about selling McGee cakes in its restaurants. The restaurant would sell the cakes without a brand name. Doc and Lyn have operated the company as a sole proprietorship. They have approached you to help manage and direct the company’s growth. Specifically, they have asked you to answer the following questions: 1. What are the advantages and disadvantages of changing the company organization from a sole proprietorship to an LLC?

In 2013, Jen Liu and Larry Mestas founded Jan and Larry’s Frozen Yogurt Company, which was based on the idea of applying the microbrew or microbatch strategy to the production and sale of frozen yogurt. Jen and Larry began producing small quantities of unique flavors and blends in limited editions. Revenues were $ 600,000 in 2013 and were estimated to be $ 1.2 million in 2014. Each small cup of yogurt sold for $ 3, and the cost of producing the frozen yogurt averaged $ 1.5 per cup. Administrative expenses, including Jen and Larry’s salary and expenses for an accountant and two other administrative staff, were estimated at $ 180,000 in 2014. Marketing expenses, largely in the form of behind-the-counter workers, in-store posters, and advertising in local newspapers, were projected to be $ 200,000 in 2014. An investment in bricks and mortar was necessary to make and sell the yogurt. Initial specialty equipment and the renovation of an old warehouse building in lower downtown occurred at…

n 2010, Jennifer (Jen) Liu and Larry Mestas founded Jen and Larry’s Frozen Yogurt Company, which was based on the idea of applying the microbrew or micro-batch strategy to the production and sale of frozen yoghurt. (The reader may recall that we introducedthis yoghurt venture in the problems section at the end of Chapter 2.) Jen and Larry began producing small quantities of unique flavours and blends in limited editions. Revenues were $600,000 in 2010 and were estimated to be $1.2 million in 2011.Because Jen and Larry were selling premium frozen yoghurt containing premium ingredients, each small cup of yoghurt sold for$3, and the cost of producing the frozen yoghurt averaged $1.50 per cup. Administrative expenses, including Jen and Larry’s salaryand expenses for an accountant and two other administrative staff, were estimated at $180,000 in 2011. Marketing expenses,largely in the form of behind-the-counter workers, in-store posters, and advertising in local newspapers, were projected…

Goodwill Bobby’s Donuts Donuts & Coffee opened its doors in 2018 on the corner of Geary and Masonic St. in San Francisco, CA. Originally, the owners Lindsey Kline and Carly Repko had planned on catering to the small businesses in the neighborhood and keeping the business a fun side business to their main day jobs. However, soon they found themselves competing with the major local players including the downtown Donuts Shop and other local bakeries in the area. As part of their success, on December 31, 2018 they decided to purchase an existing local donut shop “Bobby’s Donuts” to further positon themselves in the local market. After the acquisition, Bobby’s Donuts continued to operate as a separate company and met the conditions of being a separate reporting unit. The consideration paid on December 31, 2018 directly to the shareholders of Bobby’s Donuts in exchange for all shares was $50,000. The following accounting facts existed at the time of acquisition: Bobby's Donuts -…

Goodwill Bobby’s Donuts Donuts & Coffee opened its doors in 2018 on the corner of Geary and Masonic St. in San Francisco, CA. Originally, the owners Lindsey Kline and Carly Repko had planned on catering to the small businesses in the neighborhood and keeping the business a fun side business to their main day jobs. However, soon they found themselves competing with the major local players including the downtown Donuts Shop and other local bakeries in the area. As part of their success, on December 31, 2018 they decided to purchase an existing local donut shop “Bobby’s Donuts” to further positon themselves in the local market. After the acquisition, Bobby’s Donuts continued to operate as a separate company and met the conditions of being a separate reporting unit. The consideration paid on December 31, 2018 directly to the shareholders of Bobby’s Donuts in exchange for all shares was $50,000. The following accounting facts existed at the time of acquisition: During 2019, a…

Goodwill Bobby’s Donuts Donuts & Coffee opened its doors in 2018 on the corner of Geary and Masonic St. in San Francisco, CA. Originally, the owners Lindsey Kline and Carly Repko had planned on catering to the small businesses in the neighborhood and keeping the business a fun side business to their main day jobs. However, soon they found themselves competing with the major local players including the downtown Donuts Shop and other local bakeries in the area. As part of their success, on December 31, 2018 they decided to purchase an existing local donut shop “Bobby’s Donuts” to further positon themselves in the local market. After the acquisition, Bobby’s Donuts continued to operate as a separate company and met the conditions of being a separate reporting unit. The consideration paid on December 31, 2018 directly to the shareholders of Bobby’s Donuts in exchange for all shares was $50,000. The following accounting facts existed at the time of acquisition: Bobby's Donuts -…

After working for years as a regional manager for a retail organization, Scott Parry opened his own business with Susan Gonzalez, one of his district managers, as his partner. They formed S&S to sell appliances and consumer electronics. Scott and Susan pursued a “clicks and bricks” strategy by renting a building in a busy part of town and adding an electronic storefront. Scott and Susan invested enough money to see them through the first six months. They will hire 15 employees within the next two weeks – three to stock the shelves, four sales representatives, six checkout clerks, and two to develop and maintain the electronic storefront. Scott and Susan will host S&S’s grand opening in five weeks. To meet that deadline, they have to address the following important issues: 16. What business processes are needed, and how should they be carried out? 17. What functionality should be provided on the website?

Eat-n-Run Inc. owns and operates 10 food trucks (mobile kitchens) throughout metropolitan Los Angeles. Each food truck has a different food theme, such as Irish-Mexican fusion, traditional Mexican street food, Ethiopian cuisine, and Lebanese-Italian fusion. The company was founded three years ago by Juanita OBrien when she opened a single food truck with a unique menu. As her business has grown, she has become concerned about her ability to manage and control the business. OBrien describes how the company was built, its key success factors, and its recent growth: I built the company from the ground up. In the beginning, it was just me. I drove the truck, set the menu, bought the ingredients, prepared the meals, served the meals, cleaned the kitchen, and maintained the equipment. I made unique meals from quality ingredients and didnt serve anything that wasnt perfect. I changed my location daily and notified customers of my location via Twitter. As my customer base grew, I hired employees to help me in the truck. Then one day I realized that I had a formula that could be expanded to multiple trucks. Before I knew it, I had 10 trucks and was hiring people to do everything that I used to do by myself. Now, I work with my team to build the menu, set daily locations for the trucks, and manage the operations of the business. My business model is based on providing the highest-quality street food and charging more for it than other trucks. You wont get the cheapest meal at one of my trucks, but you will get the best. The superior quality allows me to price my meals a little bit higher than the other trucks. My employees are critical to my success. I pay them a better wage than they could make on other food trucks, and I expect more from them. I rely on them to maintain the quality that I established when I opened my first truck. Things are going great, but Im feeling overwhelmed. So far, the growth in sales has led to a growth in profitabilitybut Im getting nervous. If quality starts to fall off, my brand value erodes, and that could affect the prices that I charge for my meals and the success of my business. Create balanced scorecard metrics for Eat-n-Run Inc. Identify whether these measures best fit the learning and growth, internal processes, customer, or financial performance perspective of the balanced scorecard.

Solution Summary: The author explains the advantages and disadvantages of forming a Limited Liability Company (LLC), based on the case of Person D and Person L.

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