ACCT 227 Cost Accounting
Professor Karen V. Wiebke, CPA
March 22, 2009
Seeing a Starbucks sign reminds a person of the tantalizing flavors that are brewed from the store that sells millions of people their first cup of coffee every morning. Upon walking into the store, it is inviting and welcoming. The staff is friendly and helpful and the crowd is eager to enjoy that bittersweet java on the taste buds. When an order is made, the staff prepares each individual cup of coffee fresh, and exactly to the customer’s preference. Starbucks Corporation is the leading retailer, roaster and brand of specialty coffee in the world. Starbucks Chairman Howard Schultz has built a booming empire, with 13,500 stores worldwide. (Helm, 2007) On that road to success, he has applied several concepts of how a business should be run; and he has proven his theory-just look around and you will see a Starbucks store.
Base on the publically information the cost drivers relevant to Starbucks are raw materials (coffee beans, tea, etc…), employees benefits and wages and cost associated with repairs and maintenance. Cost drivers are the activity the causes the cost to be incurred. Starbucks activity is to provide fresh cups of coffee or other specialty drinks to their customers. Indirect costs for the company are utilities, taxes, administration, insurance, etc. Schultz, among others, have started to question the vast expansion and if the growth has caused them to lose their core values. (Sway, 2007) But keeping a perspective of where the roots of the company lie and making sure eyes are focused on heading in the right direction, will keep the business on track. Those roots lie in the decision making of the company, the motivation of the employees, the organizational culture and the communication within the company. Every company has decisions to make. Some are difficult, some are not so difficult. Some will have an immense...