Harry’s Huff N Puff Glass Blowing
To effectively run a business a manager must evaluate all aspects of the production process ensuring it’s efficient and profitable over the long run. In the following, paper we will explore and evaluate the business practices of Harry Huff N Puff Glass Blowing. We will begin the analysis by methodically working through accounting calculations preparing Harry’s 2006 traditional income statement. Once complete with traditional income statement we will move on and prepare a contribution income statement proving the conjecture that regardless method utilized net income is the same. Furthermore, we will perform a breakeven analysis of the business and determine a required production rate which yields $25,000.00 in net income after taxes. Finally, we will conclude the paper with a discussion on management recommendations to increase efficiency and yield Harry higher returns on produced goods.
The Background on Harry Huff N Puff Glassblowing
The following is an excerpt of background information provided from TUI for this assignment. Harry Huff N Puff is a skilled artist with a specialty in glassblowing. He has worked for a variety of companies as a glassblower for 25 years during which time he has honed his skills to the point where he is able to create glass-blown are pieces which are extremely high quality and valuable. On January 1, 2006, Harry took the majority of his life savings and opened his own shop where he produces three products: vases, paperweights, and tumblers. His shop consists of the ovens and blowing room, the finishing room and packing room, a storeroom, and a business office. He has one employee, Sam a semi-skilled worker who works approximately 20 hours per week at $15.00 per hour. Sam’s hours each week vary as needed and is available up to 40 hours per week
Harry is able to produce and ship an average of five bundles per week. Because of the delicate nature of the products, packaging and shipping...