Felicia Coates
University of Virginia
Darden Graduate Business School
September 15, 2008
Edward Giberson
Giberson’s Glass Studio
Owner
Dear Mr. Giberson:
I appreciate an opportunity you provided for me to observe and analyze a production process at your studio. I would like to share with you my observations and recommendations.
There are four products you produce at the studio: Patterned glasses, Paperweights, Wrapped tumblers and Vases. Based on amount of a batch mix and average number of units produced, I calculated Direct Materials per Unit as following:
Item Direct Materials Cost
per Unit, $
Patterned glasses 0.29
Paperweights 0.52
Wrapped tumblers 0.29
Vases 0.35
I also measured an amount of time you spend on blowing and finishing of the goods. In order to calculate Direct Labor cost per unit, I used hourly rate of $25.00
Direct labor costs are represented below:
Item Production Time, Hr. Total Direct Labor per Unit Time, Hr. Total Direct Labor per Unit Cost, $.
Hot Time, Hr. Cold Time, Hr.
Patterned glasses 0.25 0.05 0.30 7.50
Paperweights 0.25 0.25 0.50 12.50
Wrapped tumblers 0.25 0.05 0.30 7.50 ...