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

As DECA’s competitive events specialist, Randi primarily authors role-play scenarios for the collegiate and high school division’s competitive events programs. She also serves as DECA’s liaison for the Virtual Business Challenge and Stock Market Game. Randi assists with the recruitment of judges for both the high school and collegiate International Career Development Conferences. Randi has worked for DECA since 1998.

Discussion Questions

  • 1
  • 2
  • 3
  • 4

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