Analysis of Engelhardt Art Glass

Analysis of Engelhardt Art Glass

Miss Johnson needs to begin her analysis of Engelhardt Art Glass with an analysis of the company(s cost structure and cash flow. Currently, the company incurs $800 per month in expenses, plus $600 per month in fuel for the furnace. In addition, Giberson spends $92 per month on materials for the glass ($21.33 per week, with 4.33 weeks per month). He has also recently taken on $98.33 per month payments on a truck. This brings his total monthly costs to $1590 (800+600+92+98). His revenue per week can be based on his production since he currently has back orders and is able to sell his weekly production.

Based on Johnson(s observations, Giberson produces 7 patterned glasses which sell for $6, 5.5 paperweights which sell for between $9 and $17.50, 39 wrapped tumblers which sell for $5 and 3 vases which sell for between $12.50 and $30. These include both the firsts and seconds, which sell for the same price. For those items (paperweights and vases) which have multiple selling prices, an average of the high and low will be used to determine revenue. This yields an average price of $13.25 for the paperweights, and $21.25 for the vases. Thus Giberson(s weekly revenue is $373, or $1617 per month ($373 * 4.33).

Since Giberson has estimated that he needs approximately $12,000 per year for living expenses, and since he is currently netting less than $30 per month, it can be understood why his savings is being depleted.

There is also the issue of the downtime that Giberson has due to the hot summer months and the trade shows where he exhibits his work. These account for 12 weeks of unproductive time. However, his expenses are decreased, not eliminated during these times. Although he does not have to pay for the fuel for the furnace, or for materials, his monthly expenses otherwise do not decrease, leaving him with $700 in expenses (including the truck payment and excluding hand tools and supplies related directly to glass blowin…

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