Journals

Hallstead Jewelers - Solutions to questions 1, 2, 3 and 4 (1)

Description
Hallstead Jewelers - Solutions to questions 1, 2, 3 and 4 (1)
Categories
Published
of 10
All materials on our website are shared by users. If you have any questions about copyright issues, please report us to resolve them. We are always happy to assist you.
Related Documents
Share
Transcript
  Halstead JewelersIncome Statements200320042006Sales$8,583,000 $8,102,000 $10,711,000 Cost of goods sold$4,326,000 $4,132,000 $5,570,000 Gross Margin$4,257,000 $3,970,000 $5,141,000 Expenses Seling Expense Salaries$2,021,000 $2,081,000 $3,215,000 Commissions$429,000 $405,000 $536,000 Adversing$254,000 $250,000 $257,000 Administrave expenses$418,000 $425,000 $435,000 Rent$420,000 $420,000 $840,000 Depreciaon$84,000 $84,000 $142,000 Miscellaneous expenses$53,000 $93,000 $122,000 Total expenses$3,679,000 $3,758,000 $5,547,000 Net Income$578,000 $212,000 ($406,000)Halstead Jewelers - Operang StascsSales Space (square feet)10,230 10,230 15,280 Sales per square foot$839 $792 $701 Sales ckets5,341 5,316 6,897 Average sales cket$1,607 $1,524 $1,553 Variable cost per cket$810 $777 $808 Queston1 200320042006Sales Tickets:4,616 5,033 7,442 Sales Dollars:$7,417,643 $7,669,759 $11,556,831 Notes. Margin of Safey 200320042006Expected Sales$8,583,000 $8,583,000 $12,874,500 Breakeven Sales:$7,669,759 $11,556,831 Margin of Safety:$913,241 $1,317,669 Queston 2. Years Ene January 31 Breakeven  Average sales per cket decreased in 2004 causing the breakeven in both sales ckets and total sales to increase.Although averages sales per cket increased marginally from 2004 to 2006 it was not enough to cover the addional xed costs due to 50% increase in sta and space (rent) in new locaon.Notes. Assume 2004 is at to 2003 and assume 50% increase over 2004 sales due to 50% more space and sales sta in new locaon.Margin of safety increased in 2006 due to ancipated increase in sales.Halstead Jewelers -2006 Original Operang Stascs200610% Decrease in Sales Price  Sales Tickets:6,897 7,500 Average sales cket:$1,553 $1,398 @ 10% decreaseVariable cost per cket:$808 $808 Halstead JewelersIncremental AnalysisSales$10,711,000 $10,482,750 ($228,250)Cost of goods sold$5,570,000 $5,570,000 $0 Gross Margin$5,141,000 $4,912,750 ($228,250)Expenses Seling Expense Salaries$3,215,000 $3,215,000 $0 Commissions$536,000 $536,000 $0 Adversing$257,000 $257,000 $0 Administrave expenses$435,000 $435,000 $0 Rent$840,000 $840,000 $0 Depreciaon$142,000 $142,000 $0 Miscellaneous expenses$122,000 $122,000 $0 Total expenses$5,547,000 $5,547,000 $0 Net Income($406,000)($634,250)($228,250) Or Incremental Analysis - 2006 Total Contribuon Margin = (Selling Price - Variable cost) * number of ckets$5,141,000 $745 6,897 $4,425,769 $590 7,500The total contribuon margin would decrease and create a greater 2006 loss of net income.Contribuon Margin$4,425,769 Total Expenses$5,547,000 ($1,121,231)2006Sales Tickets:9,400 # ckets = (pr Sales Dollars:$13,138,467 sales =breake Queston 3. Halstead JewelersIncremental Analysis2006Income Statement200610% Decrease in Sales PriceIncremental Revenue & Costs Breakeven  With a 10% decrease in sales price the new 2006 Contribuon Margin would be less than srcinal 2006 Contribuon Margin and thus the net income would be reduced. More sales would need to occur to breakeven in this scenario.2006Income Statement2006No CommissionIncremental Revenue & Costs  Sales$10,711,000 $10,711,000 $0 Cost of goods sold$5,570,000 $5,570,000 $0 Gross Margin$5,141,000 $5,141,000 $0 Expenses Seling Expense Salaries$3,215,000 $3,215,000 $0 Commissions$536,000 $0 ($536,000) Adversing$257,000 $257,000 $0 Administrave expenses$435,000 $435,000 $0 Rent$840,000 $840,000 $0 Depreciaon$142,000 $142,000 $0 Miscellaneous expenses$122,000 $122,000 $0 Total expenses$5,547,000 $5,011,000 ($536,000)Net Income($406,000)$130,000 $536,000 Sales Tickets:6,897 6,723 Average sales cket:$1,553 $1,553 Variable cost per cket:$808 $808 2006 - OriginalSales Tickets:6,897 6,723 # ckets = (pr Sales Dollars:$10,711,041 $10,440,109 sales =breake Queston 4 Halstead JewelersIncremental AnalysisSales$10,711,000 $10,711,000 $0 Cost of goods sold$5,570,000 $5,570,000 $0 Gross Margin$5,141,000 $5,141,000 $0 Expenses Seling Expense Salaries$3,215,000 $3,215,000 $0 Commissions$536,000 $536,000 $0 Adversing$257,000 $457,000 $200,000 Administrave expenses$435,000 $435,000 $0 Rent$840,000 $840,000 $0 Depreciaon$142,000 $142,000 $0 Miscellaneous expenses$122,000 $122,000 $0 Total expenses$5,547,000 $5,747,000 $200,000 Net Income($406,000)($606,000)($200,000)Halstead Jewelers -2006 Original Operang Stascs2006 - No Commission Breakeven  2006 - No CommissionBreakeven volume would go down by 719 sales ckets and sales to breakeven would decrease by $1,116,723.2006Income Statement2006Increase AdversingIncremental Revenue & Costs  Sales Tickets:6,897 7,710 Average sales cket:$1,553 $1,553 Variable cost per cket:$808 $808 2006 - OriginalSales Tickets:6,897 7,710 # ckets = (pr Sales Dollars:$10,711,041 $11,973,519 sales =breake #3#4 Halstead Jewelers -2006 Original Operang Stascs2006 - Increase Adversing Breakeven  2006 - Increase AdversingBreakeven volume would go up by 813 sales ckets and sales to breakeven would increase by $1,262,478. I would not recommend this opon.  #5#6
Search
Similar documents
View more...
Tags
Related Search
We Need Your Support
Thank you for visiting our website and your interest in our free products and services. We are nonprofit website to share and download documents. To the running of this website, we need your help to support us.

Thanks to everyone for your continued support.

No, Thanks
SAVE OUR EARTH

We need your sign to support Project to invent "SMART AND CONTROLLABLE REFLECTIVE BALLOONS" to cover the Sun and Save Our Earth.

More details...

Sign Now!

We are very appreciated for your Prompt Action!

x