The recommendation for Giberson's Glass Studio is based on the findings of the cost accounting exercise. The first recommendation is that this glass studio should improve its prices. Three products of this glass studio are generating some losses. They include paperweights, pattern glass and wrapped tumblers. The first strategy in this recommendation is increasing the paperweights’ price from $ nine to $ 22. This will result in $ 0.39, in profit as opposed to the current $ 6.61 loss. Secondly, the pattern glass should have its price increased from $ nine to $ 19 whereby a profit of $ 0.59 will be generated per unit. In addition, the wrapped tumblers’ price could be increased from $ eight to $ 19. Such an effort would reverse the loss of $ 10.41 into a profit of $ 0.59 for each unit.
The other recommendation is that this glass studio should increase its current production units. In this case, an increase in the overall production units will increase the total profits. The main product that should be targeted is production of vases. At this glass studio, there is idle, unused capacity which amounts to 11.4 hours. Utilizing this idle capacity will translate to improved efficiency for this glass studio. An increase in capacity use and the product price will result in a revenue increase which will also result in an increase, in profits.
Another recommendation is that this glass studio must reduce its variable costs. Owing to the high fixed costs, incurring low variable costs may impact heavily on the profitability of this glass company. He uses around 35% of the 204 pound batch in each week. If he decreases this batch, there is a possibility of reducing wastage and also cut costs. 50% of the costs could be reduced by reducing the batch to 100 pounds.
Free Case Study On Giberson's Glass Studio
Type of paper: Case Study
Topic: Business, Design, Commerce, Unemployment, Products, Glass, Studio, Increase
Pages: 1
Words: 300
Published: 2020/02/28
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