Tiffany Nadeau is your client!

Write a report that is appropriate for her (based on what you learn about her)

Make it a great week!

Your assignment

You agreed to analyze her business operations and to advise her how to reach her goal of earning $120,000 per year, after taxes. After some calculation and some thought, you conclude that Tiffany has to increase her revenues, perhaps by achieving greater volume, or perhaps by raising her selling price. (You are given only two recommendations to consider: either increase volume OR Raise the selling price (Both to increase revenue!). NO MORE!!!)

Evaluate what kind of business

Tiffany Nadeau established and ran a small workshop that manufactured unique, high quality jewelry. She marketed these creations to up scale gift shops across the United States in batches of 20 assorted items, for which she charged $2,880 per batch. In turn, the gift shops sold the jewelry at prices averaging eight times what they paid for the jewelry.

A bit about your client

Business was brisk, and Tiffany could sell all that she produced. But she found herself earning very little money, and after paying her 45% U S and California income tax, she found herself with almost no money to live on. That led Tiffany to you, as her consultant. She complained to you that she worked very hard, 50 weeks a year, but ended up broke and frustrated. Tiffany said that house prices were very expensive in Santa Rosa, CA and that she hoped to purchase a home and have enough left for a nice vacation and moderate lifestyle. She noted that she would be satisfied to make $120,000 a year, after taxes.

Tiffany employed 11 people. 10 earned $30 per hour and worked producing jewelry. Joseph was paid $20 per hour for his unskilled labor. Jewelry production varied between a low of 14 and a high of 26 batches per week, and averaged 1,000 batches per year. Each batch cost $130 (excluding wages) to pack and ship, with Joseph doing all the packing and shipping. It takes Joseph 1 hour to pack and ship one batch. Joseph also does other chores, such as sweeping, vacuuming and cleaning, and he averages 30 hours per week of employment with Tiffany's workshop, for the 50 weeks per year that he works for Tiffany. (Who does all of the making or creating ?

I appreciate your willingness to think of creative solutions, but be sensitive to your client.)

Tiffanys marketing trips

Tiffany spends 10 weeks a year touring the U.S. and attending trade shows in order to sell her jewelry. Her travel, hotel, show fees, and food costs were $4,200 each week. Workshop rent and utilities cost her an average of $7,500 per month. Tiffany works 40 weeks a year at making jewelry, While at the shop, she works 50 hours per week designing, setting up and manufacturing as needed to get orders out on time. She takes 2 weeks of vacation each year. (Are marketing and purchasing important functions? Are they important to Tiffany and to her sales?

Rent and utilities of $7,500 per month (included in the rent, utilities, and raw materials numbers given later in the case).

KIS and read the entire case more than once carefully! Keep in mind your clients needs. )

Fixed and variable manufacturing cost

The cost of raw materials varied depending on the price of gold and silver. Tiffany spends about $1,900 per batch on raw materials. Production workers spend 20 hours form each batch. Tiffanys time is in addition. They earn $30 per hour. And work 40 hours per week. Advertising runs $38,000 per year. Insurance costs $1,500 per month. Rent and Utilities are $7,500.

Please Note:

Use contribution income statement, breakeven analysis, etc.

Thank you.