Executive Summary
Bobble in Style company produces bobbleheads, which they sell from their home-based office and work area. The material used to make bobbleheads is less rigid, unique, and true to life than our competitors. Mr. and Mrs. Lee are the sole investors and founders of the company. The founders are the only employees, and at the end of each month, they fail to pay themselves. The cost of shipping materials is $3 per unit out of 600 units. Bobble in Style company advertises its products through social media platforms, costing $3000 every month. This month alone, the company produced and sold 420 units of bobbleheads. One group of bobbleheads retails at $85, and this month’s total sales are equal to $51000. The company uses the internet to connect with customers on Facebook, Twitter, and WhatsApp, which costs them 150 dollars. (Question 1)
Money made from selling our products is deposited on a daily basis, and on withdrawal, a cost of 200 dollars is incurred. Each month, the company spends $100 on utilities. Lee’s uses a total of 1200 dollars to travel, thus establishing a market for bobbleheads. The contribution margin per unit of company sales is 82 dollars, which gives a total contribution margin of $49200 (Member#1 & Member#2 work). The company founders plan to acquire a new machine costing a total of 42000 dollars to aid in the production of bobbleheads. New equipment purchased speeds up the production process, giving cash flow of $17000, $29000 and $40000, respectively, for the next three years. The company pay cash during the purchase of raw materials and has retained earnings of $4500. The company looks forward to hiring a part-time employee to handle packing and shipping at a rate of 10 dollars per hour for 40 hours in a month, costing a total of 400 dollars. (Question 3)
Conclusion
Lee’s company, bobble in Style, despite being new in the market, is already making good progress. The company distinguishes itself from others through the use of unique and durable materials to make bobbleheads. Customers are always attracted to products that are individual and long-lasting, thus making companies like Bobble in Style estimate high sales proceeds. Many people own smartphones, and Lee advertises their products on Twitter, Facebook, and Instagram, and information reaches many people (Question 3). Lees’ knows how to take care of company finances by minimizing expenses that the company pays every month, for example, failing to pay themselves. When company management makes a sound decision, there is a success which could lead to its expansion. The retail price of the bobble style is a bit high, and every person willing to buy the product might not be able to afford it. If Lees consider putting measures in place to reduce the cost of bobblehead production, the monthly sales will increase. Lee is considering hiring a professional in the production field to help in company management.
The company should also establish an office in the town where many people can access. For the company to make a good profit, they have to increase its sales and cut some of the fixed costs that are high for conference fees (Question 3). The company has to improve its marketing strategies to convince people about the importance of the product. For customers to adopt a product, they first have to try it out and see if it satisfies their needs. The company should listen to customers’ complaints, which will help them to make changes in less satisfying factors. The company should offer a discount to promote customers, thus boosting sales. Lees should treat their customers well and recommend friends and family to bobbleheads; the company’s sales will increase with time.
Explanation of Questions 1, 3 & 4
Cash flow and income statements are important in any organization, as they indicate whether a company is operating at a profit or loss. Lee’s company keeps records like the cost of goods, expenses, sales, incomes and taxation rate, which is helpful in drafting an income statement (question 1). It is possible to draft the balance sheet in question one by using the assets and liabilities records present. Lees Company records in Question 3 make it possible to calculate the contribution margin of bobbleheads per unit. In the data records in question 3, there is a new equipment purchase (asset) aid in the drafting of the income statement.
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