Hallstead Jewel Essay

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“Hallstead Jewelers” Case Study 1) | 2003 | 2004 | 2006 | Total Fixed Cost ($) | 3,250,000 | 3,353,000 | 5,011,000 | Variable Cost ($) | 4,755,000 | 4,537,000 | 6,106,000 | Variable Cost Per Unit ($) | 890.28 | 853.46 | 885.31 | Contribution Margin Per Unit ($) | 716.72 | 670.53 | 667.69 | Breakeven Quantity (number of sales tickets) | 4,535 | 5,001 | 7,505 | Breakeven Sales ($) | 7,287,745 | 7,621,524 | 11,655,265 | Margin of Safety (%) | 15.09 | 5.93 | -8.82 | Based on the calculations shown above, the breakeven point has increased for both the number of sales tickets and the sales dollars in 2003, to 2004 and 2006. The breakeven point in number of sales went from 4,461 units, to 5,001 units, and 7,505 units and the break-even in sales dollars were $7,168,827 to $7,621,524 to $11,655,265. This would mean that Hallstead Jewelry would have to be able to sell more products while their costs increased. The margin of safety has gone down dramatically as well from 16.48% to 5.93% to -8.82%. Even though sales have gone up from 2003 to 2006, as the break-even in sales dollars increased through the years, the margin of safety decreased and is even negative in 2006. This is one of the explanations why Hallstead Jewelry incurred a loss in 2006. Some of the causes may be that their fixed costs have increased as lot as seen in the income statement specifically in the costs of good sold, salaries, rent, and depreciation. 2) | Old Price ($) | New Price (10% Increase, in $) | Old Income (Old P x Q) | New Income (7,500 units x New Price, in $) | Breakeven Quantity (units) | Breakeven Sales ($) | 2003 | 1,607 | 1,446.30 | 8,582,987 | 10,847,250 | 5,927 | 8,572,220.10 | 2004 | 1,524 | 1,371.60 | 8,101,584 | 10,287,000 | 6,472 | 8,876,995.20 | 2006 | 1,553 | 1,397.70 | 10,711,041 | 10,482,750 | 9,780 | 13,669,506.00 | Looking at the

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