Giberson's Glass Studio Free Essay Example from StudyTiger

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 recommendations made during the time management plan, we would like to increase the number of pieces produced, ultimately increasing profitability and reducing waste. Higher production would allow your backlog to catch up and allow for made-to-order products to be considered and produced. Time Management will help you be more aware of your productivity, keep you on task, and help you become the most productive that you can be. Time is money, as it relates to production. Giberson’s Plan of Weekly Production

Giberson’s Glass Studio Projected Income Statement-Recommendation #2 & 3 For the Year Ending August 31, 20XX Revenues: Sales$ 43,920 Total Revenue $ 43,920 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$ 6,568 Recommendation # 4- Demonstration Shows Assumptions: * Recommendation #2 and 3 are accepted. * Pricing remains the same structure, even though it costs less to produce each item. Room for 10 people maximum, with average of 7 people attending at each time slot. Based on the recommendations made under the time management plan, we would like to increase the number of pieces produced, while allowing time with customers on a small group basis to meet desires of customers and owner. Demonstration shows could charge $2 per person per showing, allowing for an additional stream of income, beyond glass products. Each show would be 30 minutes long, allowing for show of making product, discussion, and question and answer time. Giberson’s Plan of Weekly Production

Giberson’s Glass Studio Projected Income Statement-Recommendation #1, 2, 3 & 4 For the Year Ending August 31, 20XX Revenues: Sales$ 43,920 Show Revenue 4,480 Total Revenue $ 62,400 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$25,048 Giberson’s Glass Studio Projected Income Statement-Recommendation #2 & 3 For the Year Ending August 31, 20XX

Revenues: Sales$ 43,920 Show Revenue 4,408 Total Revenue $ 48,400 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 $ 11,048 Recommendation # 5- Product Line Expansion Assumptions: * Interested in adding new and different products. * Increase in Net Income is preferred. * Interested in using massive parts of weekly batch that is usually wasted .

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