Giberson's Glass Studio

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Giberson’s Glass Studio
Comparison of the Past and Recommendations for the Future

Giberson’s Glass Studio
Income Statement
For the Year Ending August 31, 2007

Revenues:
Sales $ 31,080
Total Revenue $31,080
Expenses:
Materials $ 857
Gas 9,200
Operating Expenses 10,210
Depreciation 4,625
Interest 460
Total Expenses 25,352
Net Income 5,728

Executive Summary

This report is to provide an evaluation of the current financial position and prospective profitability of Giberson’s Glass Studio. The calculations used and information are presented in the documents following and outlining each recommendation.

We find the company to be in positive financial standing, but with large areas of weakness that will require further investigation and action by management.

We will present the following recommendations:
* Reset Pricing Structure
* Use of Part Time Labor
* Time Management Plan
* Demonstration Shows
* Product Line Expansion

Recommendation # 1-Reset Pricing Structure

Assumptions:
* No other changes (i.e. batch size, production size, labor, etc.) * Increase in Net Income is preferred.

Price per Item Calculations:
Batch Price-$21.43
Salary per Working Week-$625.00
Total Costs per Week-$646.43
Produced Pounds-39.3 lbs.
Costs per item:
Patterned Glass-$8.22 each
Paperweights-$14.80 each
Wrapped Tumblers-$8.22 each
Vases-$9.87 each
We suggest a 50% mark-up from the total cost of each item.

Giberson’s Glass Studio
Projected Income Statement-Recommendation #1
For the Year Ending August 31, 20XX

Revenues:
Sales $ 40,520
Total Revenue $ 40,520
Expenses:
Materials $ 857
Gas9,200
Operating Expenses 10,210
Depreciation4,625
Interest 460
Total Expenses 25,352
Net Income $ 15,168

Recommendation # 2-Use Part Time Labor

Assumptions:
* Interested in increasing efficiency.
* Productions tasks are completed by Mr. Giberson only.
* $5/hour meets or exceeds Minimum Wage requirements.

Part-Time workers will be completing “cold time” production activities, such as grinding, sanding, and polishing. They will also be packing and shipping, cleaning, clerical duties, and serving customers in store front.

Using part-time labor will allow for increased efficiency and allow products to be created and finished simultaneously, which allows for more production during each day.

We suggest adding two part-time employees at $5/hour.
Employee no.1- Grinding, sanding and polishing 30 hours per week x ($5.00 per hour) = $150 per week Employee no.2- Clerical work, customer service, cleaning 30 hours per week x ($5.00 per hour) = $150 per week

Giberson’s Glass Studio
Projected Income Statement-Recommendation #1 & 2
For the Year Ending August 31, 20XX

Revenues:
Sales $ 40,520
Total Revenue $ 40,520
Expenses:
Materials $ 857
Additional Labor 12,000
Gas 9,200
Operating Expenses 10,210
Depreciation 4,625
Interest 460
Total Expenses 37,352
Net Income $ 3,168

Giberson’s Glass Studio
Projected Income Statement-Recommendation #2
For the Year Ending August 31, 20XX

Revenues:
Sales$ 31,080
Total Revenue $ 31,080
Expenses:
Materials$ 857
Additional Labor 12,000
Gas 9,200
Operating Expenses 10,210
Depreciation 4,625
Interest 460
Total Expenses 37,352
Net Loss ($6,272)

Recommendation # 3-Time Management Plan

Assumptions:
* Interested in increasing profitability and efficiency. * Increase in Net Income is preferred.
* Recommendation #2 is accepted.

Based on the...
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