Case Study of the Week: The Role of Small Business on the Economy

May 23, 2022

Business Finance

You are to assume the role of a small business development officer with City Majestic Financial, a non-profit organization that helps business owners with growth and development and offers support and information to potential business owners. A client has asked you for information regarding economics and entrepreneurship.

The client owns a business and has requested the following information topics:

  • Types of economic systems and explanation of each
  • The role of small business on the economy

The client has provided financials concerning the business. The client would like you to include the financials in your presentation when explaining business profit. The client would like you to calculate and explain the economics of one unit, create an income statement to show profit, and calculate the break-even point to generate a profit. You must also explain the effects of competition.

Financials:

  • Selling Price per Unit: $18.00
  • COGS: $10.31  
  • Number of Units Sold: 3,000 (one month)  
  • Variable Expenses: $30,930  
  • Fixed Operating Expenses: $3,460.05
  • Taxes @ 15%: $2,941.49

Questions?

Randi Bibiano
Competitive Events Specialist
randi@deca.org

Randi Bibiano is DECA's competitive events specialist. In this role, she conceptualizes and authors role-play scenarios for the collegiate and high school division’s competitive events programs. She also manages DECA's online competitive events and serves as a liaison to volunteer efforts at DECA's educational conferences.

Discussion Questions

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Classroom Connection

Career CLuster:

Finance

Instructional Area(s):

Financial Analysis

Performance Indicators:

Identify the impact of small business/entrepreneurship on market economies
Identify factors affecting a business’s profit
Explain the concept of competition
Discuss the use of cost-volume-profit analysis