Executive Summary
While demand for the costume jewelry reproductions is strong and business is brisk, your museum jewelry business is incurring a 7.4% loss in the amount $10,400 per year. In order to achieve your financial objective of $25,000 earnings per year (after taxes), this reports recommends two key changes:
1. Increase price to museums by 25%, from $680 to $850 per batch
2. Increase average number of batches per week by 20%, from 5 batches to 6 batches.

These increases would generate an annual profit before taxes of $34,750 and it represents an overall gain of $45,100 over your current earnings.

Recommendations
The two key recommendations are detailed below.

Key Recommendation 1 – Increase price to museums by 25%, from $680 to $850 per batch. The museums are currently marking-up the price to their customers by 900%. This is a hefty mark-up. According to the Hallman Company, the average retail mark-up for jewelry should run between 60% and 67% (Retail mark-up). Ralph Gonzalez with StartUp Growth suggests a mark-up of 300%-400% for jewelry (Gonzalez, 2010) . A 25% increase in the price to the museums would allow the museums to charge a reasonable mark-up of more than 600% while improving your bottom line as illustrated in table 1 below.

Sensitivity Analysis Actual Sales Price 25% Higher
Sales in Dollars $136,000 $170,000
Batches per Year 200.00 200
Variable Unit Cost $116,000 $116,000
Contribution Margin $20,000 $54,000.00
Fixed Cost $30,050 $30,050
Net Income (or Loss) ($10,050) $23,950
Net Income/Sales -7.4% 14.1%

Table 1. Sensitivity Analysis depicting 25% higher sales price

The demand elasticity is low (indicates few substitutes, allowing for higher prices with minimal impact to demand (Livingstone, 2011)) since the museums are able to sell the jewelry at a mark-up of