Professor Elam

Tuesday Sept 4 2012

The line wa just too long at MCD, and needing gas anyway I headed out to  the Valero down the road. Sure enough the convenience store there featured a Subway, with no one in line, and open for breakfast, gee who knew Subway  was in the Egg McMuffin War?

I am teachcing  two classes focused on managerial accounting. My goal is to get students to thinking about cost concepts. My trip to the Subway was a great example of just that. Now that Subway has many more locations than MCDs, it is becoming more aggressive to offer the franchisee more options to compete. 

I scanned the menu and asked for a simple breakfast look a like Egg McMuffin. Now recall that in managerial accounting we want a basic chasis design, be it a hamburger like Five guys or a Toyota Camry
chasis that becomes a cute Lexus, so here were my choices.

1. Flatbread (at right), muffin, or sandwich bread

2. Black Forrest ham (now is that phrase great marketing or what, imagine raising hogs in the German Black Forrest) or Bacon

3. White or yellow egg 

4. three choices of cheese

5. condiment, mustard or may or ketchup

6. anything else, salt or pepper?

Later in the class we will study establishing standards and gauging variances. Subway had the standards set all right. For each choioce the server had a separate plastic compartment where the components of my breakfast were stored. When I replied yellow egg, she withdrew a sort of large flat cooked scrambled egg, which she cut in to four pieces using two of them, one for each side of my muffin. 

Now class how many permutations could we have from this one exercise, let's count staring with the choice of three bread, I am going down the choices

3 x 2 x 2 x 3 x 3 x 2 = 216 possible combintations for this one basic idea. 

I realize that most of the students are quite frankly not really interested in accounting. But I suspect they are interested in business success. What I am trying to accomplish in class and on this blog is to spark your interest in the topic. Again here is an example of 

a basic chasis, the breakfast sandwich

standards

mass production

customization at the same time

next time you are in a restaurant, fast food or otherwise, how many examples can you spot of building multiple products off one basic idea. 

Consider an Italian restaurant, hmm, we might have a minimum of these choices

spaghetti, fettucini, linguini, rotini, farfalle

meatballs, chicken, shrimp, veal

marinara or vodka or white sauce

that's 5 x 4 x 3 = 60 varieties off the same basic idea, you can easily of course add in artichokes, capers, and a multitude of other choices to take this number much higher

 

See you in class…