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Business and Finance

Bobble In Style Company Case Study

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 in comparison with 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 there products through social media platform costing $3000 every month. On this month alone the company produced and sold 420 units of bobbleheads. One group of bobblehead retails at $85, and in this month a 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 establish 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 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 a retained earnings of $4500. The company looks forward to hiring a part-time employee to handle packing and shipping at a rate 10dollars 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, their business is already making good progress. The company distinguishes itself from others through the use of unique and durable material 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, lee’s advertising their products on the Twitter handle, Facebook, and Instagram, information reaches out to many people (Question 3). Lees’ know how to take care of company finance through minimizing expenses that the company 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 bobble style is a bit high, and every person willing to buy the product might not afford. If lees consider putting measures in place to reduce the cost of bobblehead production, the monthly sales will increase. Lee’s consider 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 their sales and cut some of the fixed costs that are high for conference fee (Question 3). The company has to improve the strategies of marketing to convince people about the importance of the product. For customers to adopt a product, they have first to try it out and sees if it satisfies they need or not. The company should listen to customers complain which will help them to make changes in less satisfying factors. The company should offer a discount to promote customers thus boosting their sales. Lees should treat their customers well to recommend friends and family to bobbleheads; the company 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 helpful to draft an income statement (question 1). It is possible to draft balance sheet in question one, by using assets and liabilities records present. Lees Company records in Question 3, makes it possible to calculate contribution margin of bobbleheads per unit. Data records in question 3, there is new equipment purchase (asset) aid in the drafting of the income statement, aid in income statement drafting.

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