Giberson’s Glass Studio Harvard Case Solution & Analysis

Giberson's Glass Studio Case Study Help

Background of the Case

Giberson’s Glass Studio is a well-known organization, founded by Edward Giberson. He is known for his special skills in the manufacturing of glass bowlers. Giberson is a proprietor and currently, he moved its studio from North Caroline to Virginia. The products made in this studio are fully made by Giberson’s hands which helps the product to make it superior in quality.

There is a deep observation conducted by Giberson over the process of blustering honey at the end of the straw that helps him to make his process to manufacture and shape each bowl. At the current time, Giberson’s faces various issues that impact the business practices and put the business at risk. These rising issues and challenges put the organization moving toward bankruptcy. There is a need to implement new actions and strategies to get the business on track again.

Problem Statement

The case revolves around Giberson’s Glass Studio it presents that Mr. Giberson faced various issues and challenges in the glass manufacturing business after his divorce. The first and key challenge faced by Giberson is that he do not have any knowledge and understanding of bookkeeping mechanism because his wife is responsible to manage all records.

The second challenge is a lack of knowledge about product pricing and costing, which ultimately create an issue to identify the best or highest-selling products. These challenges ultimately put the organization in losses which lead to bankruptcy now there is a need to implement a strategy and improve understanding about products to reduce the rising challenges.

Financial Analysis

After analyzing the current issues there is a need to perform various financial analyses and calculations to get an understanding of the business performance. First have to analyze the total production of Giberson’s Glass Studio per year which ultimately help to get the calculation for expected or forecasted annual revenue under its variable, operating, and fixed costs.

Total Production in a Year

To calculate the total production or number of pieces manufactured by Giberson Glass Studio in one year use the given data from the case (Table 3), which presents the average weekly production for four different products. There is a total of 2 weekly outputs for the production multiply the sum of weekly productions by (4) to get monthly production and use these values to calculate annual production by multiplying by (10).

Annual production is about a total of 10 months because its total fixed cost is used only in 10 months which means that the working on products is set for 10 months. The total annual production of all 4 products is about (2760) pieces. For further calculations see (Exhibit 1).

Expected Annual Revenue

Moving towards further calculation it’s time to calculate the expected total revenue by using the given data from the case (Table 4), which presents the unit price for each item. Using the annual production for each item and then multiplying it by the unit price of each product to get the expected annual revenue. The total revenue for Giberson’s Glass Studio is about ($31,080). This revenue is considered to be low because the other cost and expenses make the net income negative. For further calculations see (Exhibit 2).

Operating Cost of Giberson’s Glass Studio

Calculation of operating cost uses the data from the case in (Exhibit 1), which presents an average monthly operating cost for the organization. There are a few other operating costs that are also incurred over the manufacturing process in which truck payments for each month are ($205). Furnace gas for glass blown is about ($1000) per month under operating cost.

There is also a depreciation cost incurred under the operating cost for the furnace (2 years), equipment (8 years), truck (5 years), and gas tanks (8 years) on page 4 of the case. There are different numbers of months for each operating cost. Use the average monthly cost for each particular and multiply it by its annual working months to get the total operating cost for a year. After analyzing and calculating the values the total operating cost for a month is ($4,588) and for a year is ($52,506). For further calculations see (Exhibit 3)................

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