Dolphin Bakers - Costing Carnival - a Profitability Analysis of the Bakery

Sukkur Institute of Business Administration University [pic 1]

Airport Road, Sukkur Sindh, Pakistan

 DOLPHIN BAKERS – COSTING CARNIVAL

A Profitability Analysis of the Bakery

This case is written by Vikesh Kumar Chawla and Jameel Ahmed Soomro MBA Sukkur IBA, under the supervision of Sajjad Ahmed, ACMA Faculty member Sukkur IBA solely to provide for class discussions. The author does not intend to illustrate either effective or ineffective handling of a managerial situation. The author may have disguised certain names and other identifying information to protect confidentiality.

This Publication may not be transmitted, photocopied, and digitalized, or otherwise reproduced in any form by means without the permission of copyright holder. This Case Study covers practical implications of Business theories, models, and structures. This is written for Managerial Accounting to get copy of case, contact at vikashkchawla@outlook.com.

Sukkur Institute of Business Administration ©

As the financial statements of Dolphin Bakers compiled for the year 2013-2014, Mr. Ajeet Kumar who was the owner of the business was not happy with the performance of the bakery. He knew that the bakery has shown an excellent profitability for a long time according to the gross margin of his accounting system. Despite the excellent margin, he worried about the trustworthiness of the figures. The gross margin did not include any of the indirect costs related to the baking process. Mr. Ajeet suspected that the indirect cost might make up a bigger part of the total product cost in the bakery. Another cost that was not included in the margin, is the cost of goods not sold. This cost includes costs of products that is thrown away, stolen or not registered in a correct way. Mr.Ajeet thought that he has put too much faith in the margins produced in his management system and he wants to know what his margin would look like if he was to include all of the costs related to the products of the bakery but he don’t know how to start with this new method.

Dolphin Baker’s Background:

Mr. Ajeet belongs to a family, who is more focused towards Real estate business arena. His family always prefer and support their children to focusing on opening up a small business which were not a part of their family businesses cycle. His elder brother Mr. Mukesh Kumar is an Entrepreneur and he is doing the business export and import business mostly of date palms to India and UAE. His father and grandfather spent their whole life in operating a real estate business in the sukkur region, but Mr. Ajeet breaks the chain and he expressed his choice to study more about Business fundamentals. Initially, He has to face some challenges from the family and his surroundings but he managed to continue his studies and got the degree of MBA Finance from Karachi University back in 2002, which helped him to get a job of Operations Manager in MCB bank Sukkur. This job was not more than enough to support his family but that was his passion to be a Banker serve the community with his full faith and honesty. But as time passes after 1 year of his services his father could not be able to manage all the things alone so he asked him to join the real estate business along with his younger brother Mr. Sateesh who was just 21 years old and as this business was their family business and that need to be overtaken by someone inside from the family. As real estate business requires a lot of efforts to pursue customers and Mr Ajeet got the good communication skills so it helps the business to excel more and more. But Mr. Ajeet doesn’t seems happy and internally satisfied with the real estate business because he has identified a Market gape in Sukkur region which is of the unavailability of the state of the art Bakery which should have the one stop shop for everyone so he asked his father to hand over the real estate business to his younger brother Mr. Sateesh as now he has been well trained under the supervision of Mr. Ajeet. Earlier his father was reluctant as this business of bakery is not as per the standards of their family but later on when Mr. Ajeet provides him a feasibility plan his father agreed and permit him with handsome amount to open up a Dolphin Bakers in Sukkur region.  The bakery started its operations in the year 2006.