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Table 1. Materials for batch Batch Mix Cost/Unit Cost/Batch 100 lb. sand $35/ton $1.75 38 lb. soda $110/700 lb. 5.97 9 lb. potassium $105/200 lb.

Table 1. Materials for batch

Batch Mix Cost/Unit Cost/Batch

100 lb. sand $35/ton $1.75

38 lb. soda $110/700 lb. 5.97

9 lb. potassium $105/200 lb. 4.73

4 lb. borax $.50/lb. 1.50

14 lb. lime $5.50/50 lb. 1.54

2 lb. fluorspar $.47/lb. .94

3 lb. zinc oxide $1.40/lb. 4.20

169 lb. $20.63

Additional Ingredients

20 g antimony $5.20/lb. .23

40 g arsenic $6.50/lb. .57

$.80

Total $21.43

Cullet: 31 lb.

Table 2. Glass Content

Item Weight/Piece

Patterned Glasses .5 lb.

Paperweights .9 lb.

Wrapped tumblers .5 lb.

Vases .6 lb.

Table 3. Production time weekly output

Production Time Average Weekly Production

Item Hot Time Cold Time Firsts Seconds

Patterned Glasses 15 min 3 min 18 1

Paperweights 15 min 15 min 10 0

Wrapped tumblers 15 min 3 mi 30 2

Vases 25 min 5 min 7 1

Gilbertson worked a rigorous schedule from September through early June. During the summer, he spent about ten weeks traveling to trade shows where he exhibited his work, and he spent the remaining two weeks of the year vacationing in the mountains.

Table 4. Per Unit Price List

Item Price

Patterned glasses $9.00

Paperweights 15.00

Wrapped tumblers 8.00

Vases 25.00

Exhibit 1: Gibsons Glass Studio Average Monthly Operating costs

Office Supplies $25

Hand tools and manufacturing supplies 150.00

Part-time labor (at $5.00/hour) 100.00

Professional services 50.00

Advertising and promotion 20.00

Contributions 15.00

Dues and subscriptions 35.00

Travel and entertainment 75.00

Insurance 90.00

Taxes and licenses 45.00

Repairs and maintenance 25.00

Rent 175.00

Utilities and telephone 60.00

Miscellaneous 50.00

$915.00.

Exhibit 2: Gibsons Glass Studio Balance Sheet September 1, 2006

Assets

Cash $100

Inventory:

Supplies 75

Raw Materials 50

Prepaid insurance 200

Prepaid rent 175

Furnace and ovens 5,000

Equipment 3,000

Gas tanks 400

Truck 8,500

Total $17,500

Liabilities and Equity

Accounts payable $125

Truck Loan 6000

Total Liabilities $6,125

Owners equity 11,375

Total $17,500

Case: Gilbertsons Glass Studio

How well is Mr. Giberson doing?

How many pieces can he make in a year?

Determine the expected annual revenue.

Determine the operating costs.

Which of Mr. Gilbertsons operating costs are variable in nature and what activity they vary with?

Which of Mr. Gilbertsons operating costs are fixed in nature and why so?

Determine the annual income or loss.

How efficient was Mr. Gilbertson in using his time? How efficient was glass utilization?

What was the variable cost per unit and contribution margin of vases?

What is the total cost per unit of vases?

Can Mr. Gilbertson change any aspect of the business in order to lower costs? What recommendations would you have for Mr. Gilbertson to price his products?

Note: Please refer to your analysis of questions 1-4, in order to answer number 5.

Assessment

You will be assessed by:

  • the quality of your analysis (which includes how you determined your answer)
  • the correct answer that you provided

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