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 | 7,323.994 | 7,606.797 | 11,495.82 | Margin of Safety | 1259 | 495.2 | (1259) |

Calculations

2003
Breakeven Units: FC (3250) / CM (.71672) = 4,534.546

Breakeven sales: Total FC (3250) / CM ratio (.44375) = $7,323.944

Margin of Safety: Sales (8,583) - Breakeven Sales (7,323.994) = 1259

2004
Breakeven Units: FC (3353) / CM (.6706) = 5000

Breakeven sales dollars: Total FC (3353)