Dreamboat Annie: An Accounting Story

Cash Register Close UP

Author’s Note:

Explaining accounting and finance and can be pretty dull. That’s a problem, if your need to learn accounting and finance.

So, on a plane from St. Louis to Seattle this spring, I tried to find a solution to that problem. What if I could write about some accounting concepts inside of a quirky (maybe even funny) short story? My goal here is to present some accounting information, then add another quirk to the story. By the end, you’re learned something about accounting- but it’s presented in a light-hearted way that keeps your attention.

Anyway, that’s the goal here- enjoy!

The leaves always looked brighter after a good rain, Roger thought, as he drove to office on a bright October morning.

Roger owned Dreamboat Annie Catering Company- named after the old song from the band Heart. Dreamboat had grown into a pretty big business. Roger’s company supplied desserts to 6 busy restaurants in St. Louis.

Preview video for Live Webinar: Top 10 Personal Financial Mistakes (And the Tools To Avoid Them)

As he put down the visor to combat the morning sun, he thought about the pricing discussion he had with his accountant. Dreamboat had a fair amount of overhead that needed to be included in the price of the products they sold. Roger needed a more precise way to assign that overhead. He mulled it over as he pulled into the parking lot.

Click Here For Free Report: 10 Great Resources For Personal Finance

The rearview mirrors needed adjusting. His 15-year old daughter, Rosie had insisted on a last-minute trip to Target the night before. Park of her reason for going was to get more experience driving at night.

He pulled his backpack out of the car and smiled. The Target trip has started as a quick trip to get a pair of tights for a play. It turned into a 30-minute ordeal. Rosie spend every available dime she had- including a plastic monkey skull paperweight that she just had to have….priorities, he thought.

The overhead issue boiled down to two costs. First, he needed to allocate the salary and benefit costs for Gloria, his assistant. Gloria took orders from clients, sent instructions to the production department and invoiced clients.

Dreamboat Annie’s also needed to allocate the salary and benefit costs for Burt, the delivery driver. Burt’s job was to load the truck and make deliveries to each of the restaurants.

4-Question Survey to improve this blog (takes 2 minutes). Please help me give you more of what you need!

Wow- that coffee is scalding, Roger thought. How does Starbucks keep everything in their coffee cups at a boiling point?

Now, there was more to it than just the two salaries. Burt, for example, incurred a pretty significant amount of mileage on the truck. The truck’s repair and maintenance was also an issue.

The salary and benefits for Gloria and Burt totaled $75,000, however. The cost was the lion’s share of the overhead that needed to be applied, Roger thought. Might as well start there.

“Roger, look what I found in that back room was just cleaned out!” Burt smiled as he proudly presented a stack of Playboy magazines.

“Wow- 1978 and ’79, stacked in order by month…impressive!”, laughed Roger. He has just read that Playboy was ending the practice of completely nude women in the magazine. ‘Guess people will just have to read the articles, he thought.

Burt commented that the mags were too moldy to open- he’d throw them out.

Dreamboat’s 6 customers placed in average of 3,000 orders a year. The average of 500 per restaurant- multiple orders a day were common. Most restaurants would order more desserts based on reservations that accumulated during the day. Dreamboat had a 2pm cutoff for taking orders.

Roger took out a legal pad. $75,000 divided by 3,000 orders was $25 per order. Yea- that’s what they were charging as overhead per order. He glanced at the invoicing form on the screen. There was a line item of “$25 overhead” printed on every invoice.

Gloria and Burt had tracked the percentage of their time they spend on each client for 3 months, and the results were surprising. A single restaurant could eat up a lot of time, particularly if they changed their order.

Changes required Gloria to immediately call production. After all, if they changed an order from 50 cheesecakes and 100 muffins to 100 cheesecakes and 50 muffins, someone had to know in the kitchen. In extreme cases, the changes resulted in food that wasn’t sold- Roger donated this food to a soup kitchen nearby.

Order changes also impacted Burt. He would often have to unpack and repack the truck. Burt also needed to get a corrected invoice from Gloria. Gloria emailed invoices, and also made sure that a copy was sent with each order.

“I don’t know what do to….we can’t resign ANY of the infielders…and we need to blow up the pitching staff!” The Cardinals had just lost to the Cubs (did it have to be the Cubs?) in the playoffs. As usual, St Louis baseball fans were panicking. Didn’t we just win 100 games?, Roger thought? He turned down the sports talks station.

As it turned out, Compared To What took up 30% of the total time spent by Burt and Gloria. The restaurant (named after the Henny Youngman joke) did a huge business using a menu that changed constantly. Charlie, the restaurant owner, had become a good friend of Roger’s.

He got up to stretch. His accountant has explained a concept called Activity-Based Costing, or ABC. ABC costing allowed an owner to assign overhead costs based on activities. In this case, the activity used to assign costs was the time spent by Gloria and Burt.

Roger headed out to his car. Compared To What’s frequent order changes meant that they needed to be assigned more overhead costs. If not, he was underpricing the goods sold to that restaurant. Other customers, as a result, would be overcharged for overhead.

He started the car and headed over to see Charlie. He wanted to explain the pricing change in person. Actually, Roger thought, the price increase may motivate Charlie to reduce the number of order changes. If he understands the changes increase Dreamboat’s costs, he’ll be motivated to change the practice.

He’d checked the menu online. Compared To What’s lunch feature was steamed clams and apple sauce…wonder if that will sell?

Ken Boyd

Author: Cost Accounting for Dummies, Accounting All-In-One for Dummies, The CPA Exam for Dummies and 1,001 Accounting Questions for Dummies

Co-Founder: accountinged.com

(email) ken@stltest.net

(website and blog) http://www.accountingaccidentally.com/

(you tube channel) kenboydstl


Cash register close up

David Tarwin, Cash register close up

(CC BY-SA 2.0)





(Visited 189 times, 1 visits today)
Like this content? Sign up for free updates

185 thoughts on “Dreamboat Annie: An Accounting Story”

  1. I’m usually to blogging and site-building
    and i really adore your articles. The article has really
    speaks my interest. I’m going to save your web site and keep checking for new information.

  2. Hmm it looks like your website ate my first
    comment (it was really long) so I guess I’ll just sum it up what
    I wrote and say, I’m truly enjoy your blog.
    I as well am an aspiring blog blogger but I’m still new to the entire thing.
    Have you got any tips and hints for rookie blog writers?
    I’d definitely appreciate it.

  3. Excellent posts from you, man. I’ve understand your stuff and you
    are way too wonderful. I actually like what you have here,
    especially like what you’re saying and the way in which you say it.

    You make it entertaining. I can’t wait to read more of your posts.
    This is really an awesome website.

  4. It was fantastic discovering your website yesterday.
    I arrived here nowadays hunting new things. I wasn’t
    discouraged. Your suggestions after new approaches on this thing have
    been beneficial plus a great help to me personally. We appreciate you having time to write down these
    items and then for sharing your thoughts.

  5. This is my very first time to visit here. I found a multitude of interesting stuff within your blog, specifically its
    discussion. From the plenty of comments on the posts, I guess I am not the
    only one having most of the enjoyment! Keep up the
    excellent job.

  6. You’re so interesting! I don’t think I’ve truly read anything like that before.
    So good to find another person with a few unique thoughts on this topic.
    Really.. thanks for starting this up. This web site
    is one thing that’s needed on the web, someone with
    a little originality!

  7. Hey! Somebody in my Myspace group shared this website with us
    so I came to take a look. I’m certainly loving the information. I’m bookmarking and
    will be tweeting this to my followers! Excellent blog and wonderful
    design and style.

  8. Wow! This can be one of the most beneficial blogs i’ve
    ever arrive across on this subject. In fact this is great.
    I’m also an expert in this topic therefore I can understand your hard work.

  9. Wonderful blog! I found it while surfing around on Yahoo News.
    Do you have any suggestions on how to get listed in Yahoo News?
    I’ve been trying for a while but I never seem to get
    there! Cheers

  10. Hey there! This is my first comment here so I just wanted to give a quick shout out and say I genuinely enjoy reading through your blog posts.
    Can you recommend any other blogs/websites/forums that cover the same topics?
    Thanks a ton!

  11. Hey There. I found your blog making use of msn. This is a very well written post.

    I will be sure to bookmark it and also return to read more of your helpful information. Many thanks for
    the post. I will most certainly return.

  12. Admiring the commitment you put into your blog and in depth information you present.

    It’s great to come across a blog every once in a while that
    isn’t the same unwanted rehashed information. Fantastic
    read! I’ve saved your site and I’m including your RSS feeds to my Google account.

  13. Hello! I’ve been following your web site for a while now and finally got the bravery to go
    ahead and give you a shout out from New Caney Tx!

    Just wanted to say keep up the fantastic job!

  14. Write more, thats all I have to say. Literally,
    it seems as though you relied on the video to
    make your point. You obviously know what youre talking about,
    why throw away your intelligence on just posting videos to your
    site when you could be giving us something informative to read?

  15. This will be a terrific blog, would you be interested in doing an interview with regards to
    exactly how you developed it? If so e-mail me!I’d always wish to be kept up to date
    on new blogs on this website, saved as a favorite!You
    have very interesting points. What an excellent site you might have here.

  16. I’ve been surfing online greater than 3 hours today, yet I never found any
    fascinating article like yours. It is lovely worth sufficient for me.
    Personally, if all website owners and bloggers
    made good content material as you did, the net will likely be a lot more helpful than ever before.

  17. Can I just say what a comfort to uncover somebody who truly understands what they’re discussing on the web.
    You actually understand how to bring an issue to light
    and make it important. A lot more people should look at this
    and understand this side of the story. I was surprised
    that you’re not more popular because you certainly have the gift.

  18. You actually make it seem so easy together with your presentation however I find this matter to be actually something that I think I might by no means understand.

    It sort of feels too complex and very large for me.
    I’m looking forward for your next put up, I’ll try to get
    the hold of it!

  19. Howdy! Someone in my Myspace group shared this website with us so I came to give
    it a look. I’m definitely loving the information. I’m bookmarking
    and will be tweeting this to my followers! Outstanding blog and
    wonderful design.

  20. Great goods from you, man. I’ve understand your stuff previous to and
    you’re just extremely great. I really like what you’ve acquired here, certainly like what you are stating and the way in which you say it.
    You make it enjoyable and you still take care of to keep it sensible.
    I cant wait to read far more from you. This is
    really a tremendous site.

  21. I’m really impressed with your writing skills and also with the
    structure to your blog. Is that this a paid topic or did you customize it your self?
    Either way keep up the excellent quality writing, it’s rare to see a great weblog
    like this one today..

  22. you are iin point of fact a excellent webmaster. The website loading speed is amazing.

    It sort of feels thaqt you’re doing any unique trick.

    In addition, The contents are masterpiece.
    you’ve performked a excellent process on this matter!

  23. Hello! I’ve been following your web site for some time now
    and finally got the bravery to go ahead and give you a shout out from Huffman Texas!
    Just wanted to say keep up the great work!

  24. I’ve been exploring for a bit for any high-quality articles or blogs in this kind of niche.
    Thankfully I ultimately came across this website.

    Reading this info, i am glad I discovered what I needed.

    Many thanks for posting.

  25. Have you ever thought about including a little bit more than just your articles?

    I mean, what you say is fundamental and all.
    But think about if you added some great
    photos or video clips to give your posts more, “pop”! Your content is excellent but with pics
    and videos, this blog could certainly be one of the
    very best in its field. Terrific blog!

  26. Its like you read my mind! You seem to know so much about this,
    like you wrote the book in it or something. I
    think that you can do with some pics to drive
    the message home a little bit, but other than that,
    this is fantastic blog. A fantastic read. I’ll certainly be

  27. If you could provide your individuals an excellent experience, and also provide them the details they seek,
    you should have no difficulty attaining exposure via search– maintain that
    in mind as you fine-tune your strategies for the coming year as
    well as beyond.

  28. Thank you for any other excellent post. Where else
    could anyone get that kind of information in such a perfect method of
    writing? I’ve a presentation subsequent week, and I am on the search for such

  29. Do you mind if I quote a few of your articles as long as
    I provide credit and sources back to your site? My blog is in the very same area of interest as yours and my visitors would genuinely
    benefit from some of the information you provide
    here. Please let me know if this alright with you. Thanks a lot!

  30. Appreciating the hard work you put into your website and in depth information you present.

    It’s awesome to come across a blog every once in a while that isn’t the same unwanted rehashed material.

    Fantastic read! I’ve bookmarked your site and I’m including your RSS feeds to my Google account.

  31. Simply desire to say your article is as amazing. The clarity for
    your put up is just great and i can think you’re knowledgeable on this subject.
    Well with your permission let me to take hold of your RSS feed to keep up to date
    with forthcoming post. Thanks 1,000,000 and please keep up the
    rewarding work.

  32. Hey There. I found your blog using msn. This is a really
    well written article. I’ll make sure to bookmark it and come back to read more of
    your useful information. Thanks for the post.
    I will definitely return.

  33. I’m impressed, I must say. Rarely do I encounter a blog that’s equally educative and amusing, and let me tell you, you have hit the nail on the head.
    The problem is an issue that too few folks are speaking intelligently about.

    Now i’m very happy I stumbled across this in my search for something regarding this.

  34. When I originally commented I appear to have clicjed the -Notify mme when new comments are added-
    checkbox and noww each time a comment is added I get four email with the same comment.
    Thete haas to be a wway you are able to removge me from that service?

Leave a Reply

Your email address will not be published. Required fields are marked *