#3821. Creating Value - from potato to hash browns and beyond...

other, level: Senior
Posted Tue Sep 19 08:10:54 PDT 2006 by chris demaline (accounting_instructor@hotmail.com).
UoP Online, Phoenix, AZ
Materials Required: Visuals - any combination of the following -- handouts, .PPT files w/projector
Activity Time: 1-3 hours/1-3 class days
Concepts Taught: finance, accounting, economics, business admin.

Creating Value -- from potato to hash browns and beyond. . .

Classroom Arrangement:

This is a terrific group activity.
Traditional class room environment -- sit in groups of 3-5
Online courses -- use group chat/group newsgroups. . .

Lesson Plan Duration:

Traditional class room - This activity should cover one-two course periods [approx. 1 -- 3 hours] including instructor presentation, group discussion and formal group p: Post assignment and presentation. Then give 2 -- 3 days to complete assignments.

Special Directions:

This activity is designed to be used as an ice-breaking exercise in a introductory course covering, Business Management, Accounting, Economics or Finance.
Anticipatory Set:
This lesson is an initial activity meant to be performed at the beginning of the course. This should pique student's interest and prepare them to learn more about the concepts that they discover in this activity.

Objective and Purpose:

Study of:
• Value creation in a free-enterprise system (finance)
• Definition and theory of fair market value (finance)
• Supply/Demand (economics)
• Product Costing/Pricing (accounting)
• Product R & D (management)

Instructor Presentation

Instructor ponders an anomaly as follows:
Last week, I purchased a 10 pound bag of potatoes for $3.79 and a 10 oz box of French-fried potatoes for $1.99. How does that make any sense. . .? Also, why did I have to pay $1.89 extra this morning to get a side of hash browns (about 8 ounces of potatoes) at the local cafe? Sure, the restaurant had to go through all that effort of cutting and cooking the potatoes but does that mean the sliced potato is now worth 20 times as much as the whole potato! I was smart enough to join the local warehouse club not long ago. There's nothing like paying a company for the opportunity to buy products from them. That makes me feel really special.:-) I'm so special that they interrogate me as I walk into my club and frisk me on the way out ---- now that's customer service.
Anyway, back to the potato. The other day -- while at my club - I was piling my cart high. It was full of reasonably price over-portioned items that I didn't really need. While grazing, I came across a new item. It was a shrink-wrapped collection of ready-to-cook hash browns. The product included 6 individual, 4 oz servings of dried hash browns at a low-low price of $6.79. What a bargain. That's only $4.50/lb (or $45/10 pounds). I new there was a reason that I paid for the privilege of shopping at the club.
Even so, what about the steak house that wanted to charge me $2.99 to add a potato to my entrée. Yes, the spud came with butter and sour crème but they only had to slice it once in the middle. That one slice makes that 4 ounce potato worth 100 times the price of those potatoes in that 10# bag from the grocery store? Don't even get me started on the $.75 bag of potato chips from the vending machine.
Now wait just a minute; I just saw on the news that potato farmers were happy to be selling their harvest for $12 per cwt (one-hundred lbs). So, the grocery store is making 300% profit?!?!?! This is madness! Or is it. . .?

Deliverables:

Student's work can take many different forms including:
• Open spontaneous discussion
• Formal written or oral reports -- either individual or in groups.
• Formal or informal debate

Closure:

• Instructor will briefly review with students the material covered for the day,
• discuss the major questions raised and
• layout a plan for further exploring these topics throughout the remainder of the course.