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OC user
OC user
in Economics·
1 Feb 2019

On the Edge: A Traditional Business section on page 23 of the Velasquez textbook

In over 28 countries, mostly north African nations, female circumcision—or female genital mutilation, as its critics call it—is generally accepted.58 Female circumcision is normally per- formed when a girl is between 7 and 12 years old. It involves cutting the girl’s external genitalia. In most countries, the pro- cedure is done by a female “practitioner” who uses a small knife or razor blade but no anesthesia. A young girl will often resist, so several women must hold her down while the practi- tioner works. The women who perform circumcisions charge for their services and see their work as a business. It is esti- mated that in countries where the practice is widely accepted, the annual fees collected by all the businesses that provide circumcision services total tens of millions of dollars.
Mothers in these countries feel they must have their daugh- ters circumcised because otherwise no “good” man will marry them. Many believe that circumcision controls a woman’s sex- ual desires and cleanses her spiritually so that others can eat what she cooks. Although the practice is not mentioned in the Koran, many North African Muslims believe that female circum- cision is required by certain sayings they attribute to Muham- mad, the founder of Islam. However, Muslim scholars dispute both the authenticity and the interpretation of these sayings.
Many Americans and Europeans feel strongly that female genital mutilation is an immoral assault on a helpless and unwilling girl, an assault that provides her no medical benefit, risks serious infection, and permanently deprives her of the ability to feel sexual pleasure. They have pressured foreign governments to outlaw the practice and to crack down on the women who make a business of it because they are violating the human rights of thousands of girls.
Practitioners claim that Westerners who w want to prohibit female circumcision are trying to impose their own morality on others. A Somali practitioner said: “This is a great offence and a great interference with our lives and our lifestyle. For too long Europeans have come into our countries and told us how to live our lives and how to behave and we believe that is totally unac- ceptable. We will not allow foreigners to tell us how to behave or put our businesses at risk any longer. In order for our daugh- ters to be free they must have this procedure. It is their right as women and our obligation as adults to make them into the best young women we can. Circumcision is a fundamental part of becoming a young woman and we will not deny them that because of some misplaced sense of morality from foreigners.”
Phillip Waites, a doctor and medical analyst for a news service noted, “The core issue here is whether or not Europe- ans have the right to step into another country and demand that they change their traditions and culture.” Remarking on the many practitioners for whom female circumcision is a busi- ness, he said: “There aren’t a whole lot of jobs in Somalia. There really isn’t a whole lot of anything in Somalia frankly, and these women have a specialty that not only garners them a good living but also gives them a certain status in the country that they might not otherwise have.”

Is the business of providing female circumcision services morally wrong? Why?

If a practitioner asks for a small business loan from a Western "micro-finance lender" like www.kiva.org (Links to an external site.) would it be wrong for the lender to refuse?

Would it be wrong for the lender to agree? Explain.

Is it wrong for Westerners to pressure North African governments to prevent practitioners from doing female circumcisions?

Does the case support ethical relativism or does it suggest that there are certain things that are wrong no matter what, or neither of these positions?

OC user
OC user
in Finance·
2 Feb 2019

Aside from cost-based system pricing , what better method is appropriate for this case, state reason why.

I. SYNTHESIS

Refreshing beverages such as fruit shake and smoothies have become the quickest way to beat the heat, especially during dry season. Over the last two years, Pearly Shake has become known as a quench thirst for people living near Galas Market. Acclaimed to be the only flavored shake business located in the area with its affordable beverages ranging from ₱25.00 for the regular size shake and ₱30.00 pesos for large size shake with a topping of your choice. According to Ms. Analyn Lim, owner of Pearly Shake, her business makes ₱ 15,000 to ₱17,000 average sales per day. Pearly Shake offers variety of flavors (in powdered form) such as bubblegum, double-dutch, strawberry, vanilla, chocolate and ube.

As what the owner have said “a micro-scale business do not require much investment, an entrepreneur can start his own business with a small capital. Nowadays, customers have high tend to consumption product of milk and sugar but they have few choices to choose from so I set-up Pearly Shake try to create the demand for my customers”.

In addition, Analyn Cheng employs three personnel for her business. She pays them ₱ 250.00 per day inclusive of free breakfast, lunch, and dinner. The establishment is open from 10:00 am to 7:00 pm, Monday to Sunday. Ms. Cheng usually travels from Galas Quezon City to Divisoria, once a month to buy powdered shake flavors, straws, plastic cups, sugar, cream, whole milk.

II. OBJECTIVES

• To create a strong product awareness.

• To achieve an increasing number of loyal consumers.

• To maintain a positive, strong growth of the micro-enterprise each year.

III. POINT OF VIEW

This final paper will take the point of view of Pearly Shake’s owner, Analyn Cheng.

IV. STATEMENT OF THE PROBLEM

This paper’s approach emphasizes the importance of CVP analysis and how it ties directly into planning and control processes management must take in order to manage a successful business.

This paper seek to answer the question: How can Ms. Cheng fully improve the its pricing system?

V. GUIDE QUESTIONS

1. Using the below information, determine the number of shakes that will need to sell to break even.

DIRECT MATERIAL INGREDIENTS

Small (8 oz. size)

Large (12.oz size)

Condensed Milk (₱ 41. 50 for 300 mL)

20mL or 0.676 fluid ounce

30 mL or 1.017 fluid oz

Sugar (₱500.00 for 15 lb bag = 30 cups)

1/2 cup of sugar

3/4 cup of sugar

Flavorings

.25 per shake

.40 per shake

Specialty Straws

.75 straw

.75 straw

Cups (100 8 oz. cups at a cost of ₱150.00)

Cups (100 12oz. cups at a cost of ₱185.00)

Fixed cost:

Rent : ₱5,000 a month

Cleaning and other miscellaneous supplies

₱2,000 a month

Equipment: Industrial Milk Shake Maker:

₱2,500 per machine X 3 machine = ₱ 7,500

Equipment: Refrigerator : ₱4,500

Licenses and permits: ₱1,050 a year

Owner's salary: ₱180,000 a year

Employees

Three full-time employees: each receiving a daily salary of ₱250.00

Sales Mix: Large 60% , 40% small sized shake

Computation of Variable Cost per Unit :

Small

Large

Condensed Milk

2.77

4.15

Sugar

8.33

12.50

Flavorings

0.25

0.40

Speciality Straws

0.75

0.75

Cup

1.50

1.85

Direct Material Cost per Shake

13.60

19.65

Contribution Margin per Unit :

Selling Price per Shake

25

30

Variable cost per Shake

13.60

19.65

Contribution Margin per unit

11.40

10.35

Total Fixed Cost per year :

Employee Salary ( 250 x 3 x 365 )

273,750

Owners Salary

180,000

Licenses and Permits

1,050

Rent

60,000

Cleaning and other supplies

24,000

Depreciation ( 7,500 + 4,500)

12,000

Total Fixed Cost per Year

550,800

At break-even point, Total Contribution Margin = Total Fixed Cost

Let the break-even quantity be Q.

Since the sales mix is 60 % large and 40 % small, the equation can be expressed as,

11.40 x 0.4 Q + 10.35 x 0.6 Q = 550,800

or 4.56 Q + 6.21 Q = 550,800

or 10.77 Q = 550,800 or

Q = 51,142 shakes.

Small shakes: 51,142 x 40% = 20,456.8

Large shakes: 51,142 x 60% = 30,685.2

In value terms, break-even point :

Small shakes : 20,456.8 x 25 = 511,420

Large shakes : 30,685.2 x 30 = 920,556

Total break-even sales = ₱ 1,431,976

VI. CONCEPTUAL FRAMEWORK AND AREAS OF CONSIDERATION:

The researcher will be using SWOT analysis in assessing the business’s status.

SWOT

PEARLY SHAKE

STRENGTHS

Strong existing distribution channel

Brand strengths and uniqueness

WEAKNESSES

Unavailability of some flavorings.

Lack of segregation of duties with regards to the different functions of the business.

OPPORTUNITIES

Brand is attractive to consumers

The location of the business is in a crowdy place.

THREATS

Downward Price Pressure

Brand susceptibility

In this study, one known factor which influenced the earning of profit is the level of production (i.e., volume of output). Cost-volume-profit (CVP) analysis examines the relationship of costs and profit to the volume of business to maximize profits. There may be a change in the level of production due to many reasons, such as competition, introduction of a new product, trade depression or boom, increased demand for the product, scarce resources, change in selling prices of products, etc. In such cases management must study the effect on profit on account of the changing levels of production. A number of techniques can be used as an aid to management in this respect.

One such technique is the cost-volume-profit analysis. The term cost volume profit analysis is interpreted in the narrower as well as broader sense. Used in its narrower sense, it is concerned with finding out the “crisis point”, (i.e., break-even point) i.e., level of activity when the total cost equals total sales value. In other words, it helps in locating the level of output which evenly breaks the costs and revenues. Used in its broader sense, it means that system of analysis which determines profit, cost and sales value at different levels of output. The cost-volume-profit analysis establishes the relationship of cost, volume and profits.

VII. ALTERNATIVE COURSES OF ACTION

To properly cite the correct costing strategies of the business, Analyn will be addressing a lot of problem of that she is facing. To help her address these issues, the researcher has come with the following alternative courses of actions:

Alternative Courses of Action 1: Analyn can fully improve the cost of Pearly Shake by introducing cost-based pricing where the price includes the cost of ingredients and cost of operating the business.

Cost based pricing is the easiest way to calculate what a product should be priced at. The owner can do it by:

• include a profit percentage with product cost

• add a percentage to an unknown product cost

• blend of total profit and product cost

Alternative Courses of Action 2: Retain the pricing system of Pearly Shake.

Making a profit means structuring the business so that it stands out from the competition and offers customers something they can’t get anywhere else. It also means paying attention to costs as well as income, avoiding unnecessary expenses and getting creative in seeking new revenue streams, by retaining the same pricing system of Pearly Shake.

Alternative Courses of Action 3:


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