Giberson Glass Studio Case Study

Representing costs as a percentage of sales is not the best way to judge efficiency since it can ignore variables such as bottle deposits and discounted rates, which would show problems in production when in fact there are not any. Therefore, JJ’s statement on production remains truthful when he said that CBI has been operating as efficiently, if not more, in the past. Here’s an example:

Risk of increasing labor costs faster than expected which could directly impact the pricing of the products

The primary issues in the Giberson’s Glass Studio case revolve around simple costing structure problems. Giberson does not have the correct knowledge about what each of his products is costing him, thus his ability to derive how profitable each of his product lines is severely hindered. Having no basic cost structure brings many problems to all lines of business and causes inefficient allocations of funds and removes the ability to bring about the maximum level of profits that each business desires. Under periods of financial distress Giberson without these product costs is unable to restructure his business model around his biggest “money makers” and can’t remove the products that are no longer profitable and are holding the business back.

Owens & Minor is a distributor of surgical and medical supplies to hospitals and other health care facilities. Due to changing demand from customers, the company is facing increased operating costs, which has resulted in lower profit margins and even losses. In 1993, O&M recorded an $18 million profit, which was reduced to a loss of $11 million in 1995. The entire industry is experiencing similar difficulties. In an effort to resume profitability, O&M is evaluating alternatives to “cost-plus pricing”. Cost-plus pricing does not reflect the true cost of the services provided by O&M. Customers are demanding more of O&M while

And the customer are sensitive to the price since those products are using only few times and need to be change all the time.

1. For financial accounting purposes, what is the total amount of product costs incurred to make 10,000 units?

Interestingly, clubs, collectors, and museums alike fawn over even the most common of pieces. What makes Depression Glass so special? In a time of hunger and unemployment, its bright colors and exciting patterns made the mundane, or even the miserable, feel more special.

The value of fixed assets typically decreases over time. The amount of the decrease each year is accounted for and is called depreciation. Depreciation for the year is expensed on the income statement and added to the accumulated depreciation account on the balance sheet. So the value of the fixed assets on the balance sheet is reduced by the accumulated depreciation.

5. Determine the necessary sales in unit and dollars to break-even or attain desired profit using the break-even formula.

Some of the disadvantages are: limiting the vendors may limit the variety of products, relinquishing inventory control over to vendors and distributors may negatively impact their customer satisfaction, and the customers may decide to deal with supplier directly which could put Best Buy at risk of loosing their business.

Then, you will have to organize you time better and rearrange the idle periods to locate additional 10.5 hour ((64 minus 43)x1/2 hour) per month for blowing and finishing additional Vases.

know what it is exactly, in order to assess the extent to which the accounting profit reflects

b. The inventory write down recorded, as an expense by the company is $4.4 million. It is measured at lower of cost and net realizable value. Cost is measured by weighted average using standard cost method or

* Requires short-term capital expenditure to launch product, and provides less economies of scale to launching into the whole market.

Businesses – from manufacturing, merchandising and service industries alike – take careful considerations for their costing systems. Setting-up competitive prices in the market can be a result of proper costing methods. Misallocation of costs may lead to incorrect price estimates, continuous production of unprofitable products, and ineffective processing schedules. In this case study, we will discuss the costing methods Zauner Ornaments are currently using and upon conclusion, it will enable us to distinguish the advantages and disadvantages of each costing method.