Analysis of Engelhardt Art Glass
This is an excerpt from the paper...
Miss Johnson needs to begin her analysis of Engelhardt Art Glass with an analysis of the company(s cost structure and cash flow. Currently, the company incurs $800 per month in expenses, plus $600 per month in fuel for the furnace. In addition, Giberson spends $92 per month on materials for the glass ($21.33 per week, with 4.33 weeks per month). He has also recently taken on $98.33 per month payments on a truck. This brings his total monthly costs to $1590 (800+600+92+98). His revenue per week can be based on his production since he currently has back orders and is able to sell his weekly production.Based on Johnson(s observations, Giberson produces 7 patterned glasses which sell for $6, 5.5 paperweights which sell for between $9 and $17.50, 39 wrapped tumblers which sell for $5 and 3 vases which sell for between $12.50 and $30. These include both the firsts and seconds, which sell for the same price. For those items (paperweights and vases) which have multiple selling prices, an average of the high and low will be used to determine revenue. This yields an average price of $13.25 for the paperweights, and $21.25 for the vases. Thus Giberson(s weekly revenue is $373, or $1617 per month ($373 * 4.33). Since Giberson has estimated that he needs approximately $12,000 per year for living expenses, and since he is currently netting less than $30 per month, it can be understood why his savings is being depleted. There is also the issue of the downtime that Giberson has
. . .
nce Giberson will produce the 200 pounds regardless of the actual products that result from the batch. The fuel for the furnace ($600) is also taken into account here. The following chart establishes the contribution margin (CM) for each product (per month):
Pat Glass
Paperwghts
Tumblers
Vases
Total
Sales
181.86
315.5495
844.35
276.04
1617.80
Sales mix
11%
20%
52%
17%
100%
Less: VC
88.88
69.83
495.19
38.09
692
CM
92.98
245.72
349.16
237.95
926
CM ratio
51%
78%
41%
86%
57%
Fixed
898
Net Inc.
28
This chart illustrates that the vases are the most profitable part of Giberson(s business.
Since Giberson has a CM ratio of 57%, his break-even point is 898*0.57, or $511.86. Using the sales mix for the different products, we arrive at the following break-even points for each product:
Pat Glass
Paperwghts
Tumblers
Vases
CM ratio
11%
20%
52%
17%
BE Point
56
102
266
87
In a
. . .
Some common words found in the essay are:
Vases CM, Based Johnsons, Art Glass, Total Sales, Giberson Johnson, Giberson CM, Net Inc, Miss Johnson, cm ratio, gibersons current, fuel furnace, Glass Paperwghts, Paperwghts Tumblers, pat glass paperwghts, minutes total produce, 200 pounds, sales mix, 12 weeks, weeks giberson, paperwghts tumblers vases, $9 $1750, 11% 20% 52%, tumblers vases, glass paperwghts tumblers, sell $6,
Approximate Word count = 1222
Approximate Pages = 5 (250 words per page)
|
Customer Service
to Over
32,000 Professionally Written Papers!!!
