Professor Elam

A Practical Application of Managerial Accounting The Boarding House as Destination

Labor Day Weekend

August 31, 2014

 

I want to use this as an example of one of the uses of managerial accounting. Accountants are in demand as advisors. This business model described below solves many of the problems of a traditional restaurant. Here in San Antonio the San Francisco Steakhouse has gone to a meeting only format. That like Miss Bobo's solves many of the traditional restaurant problems. We will discuss this in class this week.

Lunch at Miss Mary Bobo’s

Lynchburg, TN and Fredericksburg, TX are destination cities.  They are the envy of every small town Chamber of Commerce in America. With less than ten thousand population, many tens of thousands of tourists flock to each city each year. Indeed the small towns of Central Texas are one of the top five tourist destinations in the State. Lynchburg is the home of iconic Jack Daniels Distillery.

Our front burner example is Miss Mary Bobo’s Boarding House in Lynchburg, TN.  One can google the name to view a plethora of positive comments and images.

There really was a Miss Mary Bobo. The former Salmon Hotel became her Boarding House in 1908. She died in 1983 but remained involved in the Boarding House until her death just shy of   age 102 in  1983. The House itself is classic southern style, two storied with a front porch and central hallway.

The History of the Mary Bobo Boarding House.

Zomato reviews here

Today the house is divided into ‘dining rooms’ with a round table and chairs featuring a large Lazy Susan in the center of the table. Each table seats nine to ten with the House accommodating 65 maximum for each meal.

Dining is by reservation only. Each meal has a hostess whose job is to describe the history of the Boarding House and, yes, turn the lazy Susan so each diner can partake of the various offerings. Each hostess answers questions, maintains decorum, and without anyone noticing, moves things along so that the room is cleared in time for the next group.

As a college accounting professor I started adding up the advantages of this venue as the ideal restaurant set-up. Here goes.

 

1. All seating’s are by reservation. Since you know how many are coming you can plan on exactly how much food to prepare. No wasted food or leftovers cuts the costs.
2. The number of dining experiences can be expanded or contracted depending on demand. If three tour buses want to stop, one can have three lunches at 11, 12 and 1 PM. Or one can cut back to a single setting if need be.
3. Jack Daniels owns the Boarding House now and promotes the culinary arts program at the Community College, named for Jack’s nephew, Len Motlow,  who took over from  Jack. Those students are on scholarship and work as bus boys and such. So there is the opportunity to interface with a local college.
4. The Boarding House only operates at lunch. So no need to be there early for breakfast or late in the evening. There are no alcoholic beverages eliminating another potential cost control headache.
5. Miss Mary’s operates six days a week from Monday through Saturday. This coupled with the lunch only business plan makes it much easier to staff the Hostess and kitchen component.
6. The cost of food is low, and preparation is straightforward. We won’t need Wolfgang Puck in the kitchen. So the food cost is low and preparation within the ability of anyone capable of donning a white apron and chef’s hat.
7.  The day I was there the entrees were fried chicken and meat loaf. The Hostess explained that every meal had the southern staples of fried okra ( a novelty to Yankees no doubt), baked apples, chow chow (tomatoes and onions), and a bowl  of beans. Chess pie (again, keep it simple) was the desert and ea or water rounds out the beverage selection. And the best for last part is, the price is $20. Per person for what is essentially a low cost meal. No doubt there is some haggling with group prices for tours but then that assures a steady stream of customers. Accounting wise this means the contribution margin ratio is high, which is a good thing.

My point is that this business plan conquers many of the problems that plague the typical start-up restaurant. The menu is simple and once the right ambiance is established, things, well, get cookin’.

Now I grant that last step is vital. But find the right older home, construct a story about town pioneers gathering in similar establishments in the 1920s, recruit a few friendly Hostesses, and you should be on your way.

Destination locations are built by visionary entrepreneurs. Here is the vision, any applicants?

Will Sports Cartels Survive the Next Recession?

Labor Day Weekend

Charles Hugh Smith poses an interesting question. As fewer people can afford to attend pro games, does it make sense to advertise on tv to those that have little disposable income, ie who are not at the game.

This is a question San Antonio should be asking as teh City flirts with the Oakland Raiders.

The Proficient Accounting Student From Also Ran to Good to Great Part II

Sunday August 31 2014

Mack Brown the former UT football coach peaked several seasons ago. He had even taken to blaming the team for its failures which brought on several subsequent routs, the oppostition reads the paper apparently.

Here is Granted they played perenial under dog North Texas State but the socre was 38 - 7  Click to read the story. The only reason UNT scored seven was that that UT dropped the ball, literally, in its own end zone. UNT nonly gained 90 yards in 60 plays.

Meanwhile UTSA gave University of Houston nothing to cheer about in UH's new stadium. The Roadrunners won 27-7.

UT's Coach Charlie Strong  earns $5 Million. UTSA's Coach Larry Coker earns $450,000. And the victory over UH was a lot harder in my opinion that beating forver hapless UNT.

Strong kicked ten players off the UT Team since he took over this spring. Infractions include failing to go to class, failing class, or violence against women, two were suspended after being arrested. The rest of the team took notice.

Well here we have the same story. Winning coaches enforce discipline. The formula for success is totally known.

All three of my degrees are from UT Austin. Believe me it is a different culture. Thousands of students come from all over the world. Competitive pressure among the winners is high. But UT understands what it takes to win.

Meanwhile, with tens of thousands of students, UNT and UH wonder why it  can't be that way for them. They slipped into Division 1A Conferences. But alas, they just don't have the winning formula. But then the did not have the formula in Division I B either.

Tx State won the Division II National Championship in 1984. They moved to Division 1 B and were never heard of again for twenty years.

My point is that it is necessary to understand the formula for success. Simply having money or a new stadium, won't get one to the winner's circle.

Notice that UTSA has apparently realized what it takes to have a successful program from the start. But then UTSA is part of the UT system.

Much is written about sports. The reason is that on paper the teams in whatever endeavor are well matched. But whether it be basketball, think University of Kentucky, football, think Alabama, or whatever, some teams are always contenders while others struggle.

San Antonio may be courting the Oakland Raiders to move here. Here is a report on arest records for NFL teams.  NOw contrast that with our own SA Spurs, a model of deportment and

often in the winner's circle. They know the formula for success.

 

 

The Proficient Accounting Student From Also Ran to Good to Great

Sunday August 31, 2014

The formula for success is totally known

Training School run by Ross Perot for duPont Glore Forgan, 1972, I was there

I spent six months in the most expensive, extensive training school ever attempted in the brokerage industry. Ross Perot had taken control of an also ran national wire house, duPont Glore Forgan. He intended to show Wall Street how it should be done. One of the recurring comments was the quote above.

And indeed it is true. We will focus on that in our discussions this week. Let me briefly recount my own experiences and then move to some current examples of good to great. Yesterday I mentioned a competitive swimmer and a concert pianist, two different fields but each requires the same dedication for success.

I never played team or competitive sports. But in high school I had drifted into compettitive debate. Back then various high schools staged large speech tournaments with contests in debate, persuasive, extemperanous speaking. My first school, Kermit Tx, was too cheap to fund a program that would put us up over night at a motel. So we only made two trounaments a year, and had to shuttle back and forth at night an the next morning to one of them. That of course was totally inaedequate to attain any real porficiency.  As a result I never did any better than 50% win two lose two in the prelims.

Then our family moved to Andrews, Tx. It was perhaps the best financed school district in the tstate. It paid the highest teacher salaries. The new high school had carpet in the classroom and an indoor swim pool. The debate team the year before had won the state championship in AAA.

The program featured separate classes for debate and the other speech categories, ie there wer two classes a day, I enrolled in both. It was clear in short order what it took to be a winner-dedication. OUt side the two classes I observed that everyone was spending a couple of hours a day reading up on the topic, that year a national right to work law. Excellence and nothing less was expected in our scrimmages in class against one another. I caught on fast, I will say that. And paired with a freshman, yes a ninth grader but a great one, he and I were the only team to win all four rounds at the first tourney of the season. I had moved from good to great. As seniors I don't think any team ever failed to mover from the four prelim rounds to the elimination rounds which sometimes ran to another four rounds. Either Andrews or Midland Lee won every debate tournament that season.

Okay so you are no doubt bored with my high school reminisces.  Such is the curse of growing older. All one generation can do is provide examples to the next.

My point is that in six short weeks the Andrews coaach completely re made me as a contestant. Now I understood what it took to win.YOu can have the same experience. In my next post I examine the experience of UT Austin and UTSA football this weekend. I realize most females are turned off by athletic examples but this is a perfect example of what I am talking about.

Get in the Water

Weekend Aug 30, 2014

What can we learn about the studyof accounting from Olympians?  Quite a bit actually. 

Michael Phelps is the most decorated Olympian of all time with 22 total medals to his credit. In  the 2012 games he won four gold and two silver, making hims the most successful athlete for the third Olympics in a row.

In this highly competitive sport there are only about three swimmers in any one race who are genuinely in the game, The key to success was revealed in a Sixty Minutes interview with his coach. 

The fellow from 60 Minutes asked about his time off, the coach replied he did not take time off. Well surely he did not swim say on his birthday.

Yes he did. 

Well what about Christmas Day?

Yes he did.

Well what about New Year's and watching football with his buddies?

He swam that day too. 

The coach sighed and said look if you want to do this

Get in the Water.

 

IN other words practice practice practice.

The concert pianist Vladimir Horowitz remarked 

If I do not practice for a day I can tell the difference. 

If two days go by the critics can tell the differnece.

After three days, the audience can tell. 

Folks, if individuals at the literal top of their game have to rpactice every day, just how much do you think you need to practice accounting

Every Day?

Are you reviewing the power points and end of chapter questions and answers?

Get in the Water, metaphorically speaking.

 

Number of CPA Candidates Flat Lines

Friday August 29, 2014

An alert TAMUSA accounting student sent me this article on the disconnect between the growing demand for CPAs and the flat line of the number taking the exam. 

Ths is a perfect example of what I talked about the first week in clas. Are you reading about accounting every day?  Accounting Today is linked in the side bar of Professor Elam Blog. 

How many articles hve you sent your professors lately?

Getting Underway, the Semester Begins

Friday August 29, 2014

We usually confine this space to links about accounting and business. But for the start of the semester let's use the end of the first week for a bit of reflection. 

Yes we had the usual fits and starts of getting on line at various sites. We inundated you with resources in the syllabus and among various posts under Course Content on Black Board. Use this four day weekend to explore all of them, now, You should be picking an choosing your arsenal of resources to Conquer the course. I can only suggest and guide, you must take action. 

 I have been reading books on how we learn and what is the future of education. I mentioned  Kahn Academy in one class this week. Even though many of you are parents near no one had ever heard of it. Click on the link to learn more, now. 

Kahn Academy was kick started with a million dollar grant from Bill Gates who was impressed wtih Salman Kahn's on line prowess of delivering education. The site has been particularly successful in teaching math, a topic that still eludes most public schools. So many public schools are now using Kahn Academy. 

Success drove Salman Khan to write The One World School House; Education Reimagined. All this began with Salman coaching his neice on math by long distance. He was successful using a computer tablet to demonstrate problem solving techniques. That finally morphed into Khan Academy. That book is available in the Alamo Public LIbraries.

One of his good points in the book is that decades ago the idea of Content Mastery took hold in public schools. The idea is that one should never be moved to the next or higher level of comprehension until one masters the first level. Sadly this idea has lost ground. 

Where am I going with this?  Well, as always I began the financial accounting class, 3310 3311 3312 with basic spreadsheet problems. As always I learned a lot about the group by watching your faces as we explored the problem. What I learned was that this is that adjusting entries and a ten column worksheet are new material to most of you. This makes me wonder what you studied in your first two accounting classes. But this is nothing new or unique to this semester. 

This past spring I gave the SAME adjusting entry quiz to the graduate class that I gave to the intro 3310 class. The average score in the graduate class was three out of thirteen. That is correct, 24% correct, which means they really knew nothing about book keeping. This is why they are still struggling, they never learned book keeping in the first place. 

This is why in football terms we are starting with blocking and tackling, the basics. We provided the answers to the entries on the pastina problem for you. But it is up to you to start all over on the blank spreadsheet and determine if you can make the entries yourself. 

I just recalled teaching the intro to college course at Tx State. They required a six week orientation class on how to go to college. One lad told me that he had studied more for  his first college exam than he had studied in all four years of high school. Sadly he was no doubt telling the truth. 

And the truth was he knew nothing about how to study or prepare for an exam. He had been handed the answers all through high school on the Holy Grail of no one left behind, graduate all who enter. Studying means 

reading the chapter

Writing copious notes and lists of things to remember

the spiceland text contains solved problems as does the Schaums series I recommend. Yet most students fail to atempt to solve those problems on a blank piece of paper. Until you can do that you are not learning accounting.

come to class with questions about what you do not understand. then attempt to workthe problems again

Yet most students

do not read the book

do not work either the solved problems which should lead to mastery of the brief exercises

they copy answers off the board not having read the problem which means they learn nothing as they are not familiar with the question

Failure to adopt a proper study plan is the result of schools over coaching students by simply providing the test beforehand, if that is the case after a while students decide there is no point in reading the text as they have the test in hand. I don't doubt that but that will not be the way forward from now on.

Okay that is 750 words the length of the average newspaper column. So I will conclude. We will be discussing the difference between book keeping, our ten column spreadsheet and the much larger world of accounting and finance.  

I will be posting my weekly newspaper column, yes it appears in two newspapers and has for years, on Sunday. This is a demonstration of the practicality of managerial accounting. We will also discuss Miss Mary Bobo's Boarding House in class, it really is a great application of managerial accounting in the restaurant business.

Keep logging on here, I will be posting throughout the weekend. 

San Antonio CPA Society Career Night

Friday August 29, 2014

Welcome back, Accounting Students!
Plan now to attend the SAPCAS Fall Accounting Careers Workshop on Friday, September 26, from 5:30-8 p.m. Great opportunities to talk to CPAs in a variety of careers, distribute your resume and get a leg up on the competition for those coveted internships and entry-level jobs. RSVP now!

Billy Crystal's Tribute to Robin Williams

Tuesday August 26, 2014

Billy Crystal did a short tribute to Robin Williams on the Emmys Monday night, They were good friend performing together and visiting with one another's family.

 

Here is the link

 

http://blogs.wsj.com/speakeasy/2014/08/25/billy-crystal-robin-williams-emmy-tribut/?mod=WSJ_hpp_MIDDLENexttoWhatsNewsTop

It's Who You Are Not Where you Go

Tuesday August 26, 2014

This Columbia Harvard Professor says avoid the Ivy League.

HIs criticism focuses on the diffidulty of getting in to those schools. 

My take is that the Ivy League is really not so much a group of schools but a fraternity. Get in, you are pretty much guaranteed to graduate. And you will likely be hired by another Ivy League graduate. 

Here in Texas that sort of thing exists on a different scale. An Aggie will likely hire another Aggie over a Tea sip. And a UT grad will likely hire another UT grad. 

My recommendation is that as an accounting major, you should focus on an accounting certification and plan now to accomplish that goal. Passing a certified exam is the best ticket to job security.