...Hallstead Jewelers How has the breakeven point in number of sales tickets (number of customer orders written) and breakeven in sales dollars changed from 2003 to 2004, and to 2006? How has the margin of safety changed? What caused the changes? The break-even point in the number of sales tickets for 2003, 2004, and 2006 are 4,535, 5,000, and 7,505 respectively. The break-even point in sales dollars for 2003, 2004, and 2006 are $7,287,043, $7,620,696, and $11,655,277 within these years. The margin of safety is the difference between the expected level of sales and break-even sales. Since there is no expectation of sales mentioned in the case report, a constant level of expected sales is assumed. If the expected level of sales remains constant, the break-even sales point will increase as the margin of safety decreases. Within these years, the margin of safety changed from 15%, 6%, to -9%. As shown in Table 1, fixed costs increased along with the break-even sales point and sales did not meet expectations, therefore the company reported a loss in 2006. This was caused by an increase in salaries (larger storage room), administrative expenses, miscellaneous expenses, depreciation (increase in assets from the larger store), and rent expenses (new store); which all caused an increase in fixed costs and break-even sales. Table 1: Break-even Sales Calculations (thousands of dollars) 2003 2004 2006 Sales $8,583 $8,102 $10,711 Less variable costs: Cost of goods...
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...Due Date: 24th May 24, 2016 Hallstead Jewelers Professor James Reagan Carly Cugine Fernando Morey Perez Olivia Hajas Uday Saha Yineng Zhang Part 1 **In Thousands** Variable Costs | 2003 | 2004 | 2006 | Sales Ticket Units | 5341 | 5316 | 6897 | Average Sales Ticket | 1607 | 1524 | 1556 | Sales | 8583 | 8102 | 10711 | Variable costs | | | | COGS | (4326) | (4132) | (5570) | Commission | (429) | (405) | (536) | Total Variable Cost | (4755) | (4537) | (6106) | Total Contribution Margin | 3828 | 3565 | 4605 | Contribution Margin Per Unit | .7167 | .6706 | .6677 | Fixed Cost | 2003 | 2004 | 2006 | Salaries | 2021 | 2081 | 3215 | Advertising | 254 | 250 | 257 | Administrative Exp | 418 | 425 | 435 | Rent | 420 | 420 | 840 | Depreciation | 84 | 84 | 142 | Misc. | 53 | 93 | 122 | Total | 3250 | 3353 | 5011 | Breakeven analysis: For this part of the case study we used the following formulas to get Breakeven in units and Breakeven sales. The calculations can be found below and are in thousands of dollars. * Breakeven # of tickets = total FC / (selling price per ticket - VC per ticket) * Breakeven in sales dollars = [total FC / (selling price per ticket - VC per ticket)] * (selling price per ticket) or total FC/ CM ratio * Margin of Safety = Expected Sales - Breakeven in Sales Dollars Results | 2003 | 2004 | 2006 | Break even # units | 4,535 | 5,000 | 7473 | Break even sales dollars | 7,323...
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...Aussie pies Anna Amphlett and Andrew Ferris has decided to startup a new business in Seattle, U.S.A under the name of Aussie Pies Inc. after their visit to Australia; where they discovered the meat pies, the national snack food of Australia and interested in starting up a business in U.S to produce and sell similar meat pies, The couple has decided to apply for a loan through a contact to establish a new business. Even though bank has tentatively agreed to provide the loan up to one million with 6% interest per year, still loan committee of the bank require business plan including complete set of projected financial statements for the first year of operations, including income statement, statement of cash flow and balance sheet. Please see the detail of the company from below report, The company Anna Amphlett and Andrew Ferris have discovered the meat pies, the national snack food of Australia, during their visit to Sydney. They found Australian consumed vas number of meat pies during sporting events and other occasions and pies are served with ice-cold beer. They decided to explore the possibility of establishing a business in USA. They have decided to locate the first outlet in Pike Place Market, a popular destination for tourist to Seattle in USA, particularly International travelers who curious about other cuisines and willing to try new foods. They have decided to make the pies with high-quality, low fat due to most international travelers belong to...
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