Class Notes Lemonade Tycoon Info PDF

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Download Class Notes Lemonade Tycoon Info PDF

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The University of Texas at Austin McCombs School of Business, Business Foundations Program

ACC 310F: Foundations of Accounting

Lemonade Tycoon Information and Tips Overview During the semester you'll help run a virtual business that will allow you to apply the concepts of the class; the virtual business is a lemonade stand in Lemonade Tycoon. You’ll help run your team’s company (i.e. class section) by managing various aspects of a lemonade stand such as setting a price, choosing a location and managing costs. Your objective is to maximize your company’s profits and end the game in the best financial position possible relative to your competition. We’ll play the game in “challenge mode” for about 14-18 days during which your section will make decisions as a class and then I’ll input those decisions into my copy of the simulation and then run a day of operations. Although not required, if you’d like to practice with the simulation, Lemonade Tycoon is available as a free App on iTunes or for purchase in a PC format at websites such as Shockwave.com. Lemonade Tycoon Information and Tips Weather and Temperature Keep a close eye on weather and temperature. This will help you estimate how many potential customers you should meet and decide on an appropriate recipe and price. Keep in mind that what you see every morning is a forecast and as such it may (and will) differ from the weather and temperature you’ll experience during the day. Choosing your Recipe Try different combinations of ingredients and see what works best. Remember to keep a good balance between lemon and sugar; you don’t want your lemonade to be too sweet or too sour. It’s good to add ice cubes when the temperature is higher; it keeps the lemonade cool, plus it allows you to serve more cups per pitcher. Beware that when you are adding ice you need to keep the balance with the other ingredients. The default recipe includes 4 lemons and 2 cups of sugar per pitcher as well as 2 ice cubes per cup; this recipe produces 12 cups per pitcher. Buying Supplies Buy everything you need to last for a day, at least. You don’t want to run out of stock in the middle of a promising day. Depending on the stand you are using there is a limit on the amount of goods you can stock. Also, note that all goods besides cups are perishable; ice is good for one day only, lemons for a few days, and a couple of weeks for sugar. Try not to keep too much in stock or you’ll lose money. For reference, lemons spoil in 2-3 days, sugar goes bad after a few weeks or so and ice melts in a day; however, plastic cups last forever. Supplies can be purchased in the following quantities:

Until you upgrade your stand, you can purchase up to the following maximum amount of supplies: 96 lemons, 100 cups of sugar, 200 ice cubes and 150 cups. Setting Your Price Take all parameters into account and set an appropriate price for the day. People are less likely to buy on cold and rainy days and more when it’s hot and sunny. Adjust your price accordingly. Watch out for customer types: kids don’t have a lot of money to spend, but businessmen, on the other hand won’t be too wary about the price when they’re thirsty. The default price is $1.00 per cup and can be changed in increments of $0.10 from $0 to $5.

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Selecting a Location You’ll start in the suburbs, a free location. Learn the ins and outs of the business and then switch to a more crowded area. When renting more expensive locations, make sure you have the proper equipment or you might not be able to keep up with the increasing number of customers and you might lose money. Note that popularity and satisfaction ratings are different for every location. Customer type concentrations will also vary in the different parts of town. So the recipe for success might differ from one place to another. The Suburbs (free) Is there a better place to start your Lemonade empire than your very own neighborhood? Don’t expect a lot of customers here, but the free rent and popularity bonus will help you test the ups and downs of the business without too much risk. The Park ($10 per day) With a decent customer base and a fairly cheap daily rent, the park is a nice place to start expanding your business. Kids just can’t resist a cool glass of Lemonade, so long as you can keep the price in their range. The Train Station ($30 per day) Commuters and tourists meet every day at the Train Station. Most people are in a hurry to catch the next train, so make sure you don’t make them wait. Downtown ($30 per day) Lots of customers with money to spend means you can make big bucks in the downtown area; just make sure you have the proper equipment because businesspeople with their busy schedules simply hate waiting in line. The Beach ($40 per day) Sea, sand and a bright sun really make anybody thirsty for a cool glass of lemonade. The beach attracts lots of potential customers and is truly an incredible spot on hot and sunny days. The Mall ($50 per day) If you can afford the pricey rent, you could make a fortune at the mall. Since it’s an interior location, you can expect lots of customers on cold and rainy days and less when it’s hot and sunny. The Marina ($50 per day) Big boats, glamour and tons of onlookers. On a sunny afternoon, everybody wants to be seen hanging-out among the rich and famous. The Old Square ($100 per day) Put your stand between portrait artists and sellers of discount t-shirts. The Old Square is where vacationers are ready to pay a high price for any product. Visibility is essential if you want to attract them to your stand. The Magic Gardens ($100 per day) The dream of every lemonade stand owner! There are lots of potential customers, but the crowds are unpredictable and there are more than a few competitors. The good things is, people are used to waiting in line around here so no need to worry too much about an overcrowded stand. Accessible only with a top class stand. The Hexa-Stad ($150 per day) Huge crowds invade the EA Stadium a couple of time a week, but if your hometown teams starts a losing streak, you might remain the only one cheering for them. A word about Popularity and Satisfaction Popularity can be defined as the percentage of people in the map that is aware of your existence. Satisfaction is the percentage of people who have tried your lemonade and liked it. Popularity will always increase with time. Satisfaction is determined by your ability to tweak your recipe. The number of people coming to your stand is strongly influenced by those two parameters. Advertising Your Product Whenever you need a visibility boost, invest a few dollars in advertising. Advertising can really be helpful when starting a new location or when your popularity is low. The default amount for advertising is $0 and can be changed in increments of $1 from $0 to $20.

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Upgrading Your Stand When you start making some good money, check out the various upgrades you can buy for your stand. They’ll help you keep your process efficient as you serve more and more customers. High Output Citrus Juicer ($49.99) Time to opt for industrial strength in order to get the juice out of your lemons! This high output juicer is particularly suited for constant production: it can press approximately 200 lemons per hour. Miracle 9000 Power Juicer ($149.99) The Power Juicer’s revolutionary design and powerful engine, spinning at an incredible 10,000 RPM, will refill your pitchers in no time and leave you thinking: It’s a miracle! ShadeMaker 3000 Canopy ($129.99) Keep your customers cool and happy while they wait. Not only does the canopy cover your stand with refreshing shade during hot days, but it also increases the visibility of your stand. EZserve Cash Register ($249.99) Significantly speed up your serving process with this fast and reliable cash register. Mr. Fridge ($249.99) Mr. Fridge’s powerful refrigeration system holds the storage cabinet at a constant cool temperature, helping your lemons stay fresh and tasty for days. Ice-O-Matic Ice Dispenser ($399.99) Tired of wasting money on ice cubes every day? Start serving ice-cold drinks to thirsty customers and stop worrying about running out of stock with this convenient and portable ice dispenser. Classic Stand ($449.99) The Classic Stand will give you that visibility boost you’ve been craving. Its convenient design allows you to store more goods and serve more customers every day. Hiring Staff Hire the right person at the right time to send your sales through the roof. Martine the Cashier ($60 per day) When there are just too many people to serve at the same time, its time to call for help! Polite, talkative and efficient, Martine is the ideal helper and she’s only charging you $60 a day. Simon the Lemon ($80 per day) Sometimes, there is no way you will be able to serve all those clients in a timely manner. But you can help entertain them so they won’t even realize they’ve been waiting. Simon is talented. For only $80 a day, he can make jokes, juggle lemons, swallow fire and perform acrobatic stunts. Interpreting the Results Before and after each day of business, you should collect data to help interpret your results and improve your future decisions. The template on the following page, which contains blank financial statements and other operating data, should help you do so. For reference, the simulation uses a few terms in a manner which is slightly different from how we will use them; for example, when the simulation refers to “supplies” or “stock” (i.e. lemons and sugar) we will use the more common term “inventory” (i.e. merchandise acquired for resale to customers). When that inventory is sold, the simulation refers to that cost as “stock used” or “stock lost” where we will the more common term “cost of goods sold”; furthermore, where the simulation uses the term “profit/loss” on the balance sheet we will use the more common term “retained earning”.

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Your Decisions and Results

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