Giberson Case

In: Business and Management

Submitted By jnc0817
Words 1126
Pages 5
Caitriona Leone & Jordan Crystal
15 October 2012
Giberson’s Glass Studio
1. Come up with an analysis that might help save the business.
Edward Giberson is facing a problem with his rapidly deteriorating glass studio. He is not making profit, which is from a combination of not pricing his products correctly and spending too much on costs. I first figured out his total revenue for the year. Giberson’s year is actually made up of 40 weeks or ten months. The following table is what makes up his revenues: Category | Unit Price | # of units | Sales | Patterned glasses | $9.00 | 19*40=760 | $6840 | Paperweights | $15.00 | 10*40=400 | $6000 | Wrapped tumblers | $8.00 | 32*40=1280 | $10,240 | Vases | $25.00 | 8*40=320 | $8000 | Total Annual Revenue: | =31,080 |

I then calculated the operating costs for the year, which included his estimated wages of $25,000 for the year and depreciation of the equipment, furnace, truck, and gas tanks. I combined the remaining operating costs together which include advertising, rent, utilities, etc.: Category | Cost per month | Months (40/52)*12 | Operating Costs | Office Supplies | $25 | 9.23 | $231 | Hand Tools/MFG supplies | $150 | 9.23 | $1,385 | Part-time labor | $100 | 9.23 | $923 | Other operating costs | $640 | 9.23 | $7,680 | Truck | $205 | 9.23 | $2,460 | Furnace | $1,000 | 9.23 | $9,230 | Furnace Depreciation | $208* | 12 | $2,500 | Equipment Depreciation | $31.25** | 12 | $375 | Truck Depreciation | $141.67*** | 12 | $1,700 | Gas tanks depreciation | $4.17**** | 12 | $50 | Salary | $2083 | 12 | $25,000 | Total Operating Costs: | $51,533 |
*5000/(2 years*12 months)=208
**3000/(8 years *12 months)=31.25
***8500/(5 years * 12 months)=141.67
****400/(8 years * 12 months) =4.17

I figured out how much he was actually using in terms of direct materials: Patterned glasses: 0.5…...

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