Truffle in paradise: Job costing for a small business

Textbooks and case studies that simply provide direct materials and direct labor costs for job costing problems do not give the reader a true picture of the difficulty in developing these costs, especially for small business owners. “Truffle in Paradise” presents a case based on a very real situation where the entrepreneur, Thor Rasmussen, has started a premium truffle business in his spare time; the business is growing but Thor has no idea if it is profitable because he has not costed his truffles and does not know if his prices are appropriate. The case walks you through the process of determining the costs of his truffles, applying a costing model to analyze his prices, performing sensitivity analyses on labor and material costs, and producing a pro-forma income statement. Student feedback reported that the case opened their eyes to the complexity of costing and planning in small businesses.