Case Study Hallstead Jewelers

Fixed costs in 2004 are lower that of 2003 and contribution margin ratio is higher in 2004 than that of 2003. Hence, the break even point is lower for 2004.

From the point of view of the income statement, the current year earnings would decrease by $2.24 million ($11.54million - $9.3 million).

Net Loss – The combination of the operating gain and the non-operating loss produced a net loss of $51k compared to a budgeted loss of $22k. YTD operating and non-operating gains are $48k compared to a budget of $712k.

Advertising expenses are included as part of SG&A in the income statement. Additionally, attracting top management talent will further increase the company’s expenditure on SG&A since they have to incentive individuals to join such a company that has recently emerged from the bankruptcy. Based on projections, Eddie Bauer expected that SG&A as a percentage of net sales will decrease from 37.6% in 2004 to 34.3% in 2008, indicating a deviation from economic reality, regardless of expected operational efficiencies. Eddie Bauer would need to maintain its SG&A percentage to run new marketing campaigns and attract top talent. Eddie Bauer may be understanding its assumptions about how much it needs to invest to drive these strategic initiatives. Thus, it would be more appropriate to increase SG&A to around 40% of net sales to account for these large expenditures. Next important metric would be based on the company’s intent to resize to an optimal store size of 5,500 square feet as mentioned in the case. It is helpful to compare the company’s sales per square foot with top 10 comparable companies in the retail industry to determine whether Eddie Bauer’s projections are aligned with economic reality. Eddie Bauer is approximated to have 1.975 million square feet in retail space in 2006. Thus, Eddie Bauer should expect to attain retail

Breakeven Analysis for Product Tylenol Approach 1 - Same price as Tylenol Approach 2a - Cheaper than Tylenol Approach 2b - Cheaper w/lowered trade cost $ $ $ $ Unit Cost (Variable Cost) 0.60 0.60 0.60 0.60 Trade Cost (Selling Price to Retailers) $ 1.69 $ 1.69 $ 1.05 $ 0.70 Fixed Cost (Advertising) 2,000,000 6,000,000 6,000,000 6,000,000 Break-Even Quantity [Fixed Cost/(Trade Cost-Unit Cost)] 1,834,862 5,504,587 13,333,333 60,000,000 Contribution Margin (Unit) 64% 64% 43% 14%

The case is about The Sports Guy which is an independent sporting goods store owned by Bob “Rocky” Rhodes; his business is in the retail sporting goods industry. The store is located in the south part of a small town which is just outside the Greater Toronto Area. The town has been growing rapidly for the last few years and the area around the store has become a prosperous neighbourhood, making their location a busy commercial area. The Sports Guy store sells sports related clothing and equipment. About 70% of their sales consist of equipment and uniforms bought by local teams, and 30% of sales consist of regular (walk-in) retail trade. The store’s sales have increased over the years

There are some limitations of break-even as well. For example, it cannot give accurate results if the data used for it is predicted. Data such as change in direct cost

Buchwald Jewelers is the incredible vendor behind the massive sale of fine jewelry and diamonds in Hialeah like authentic engagement rings, earrings and wedding rings. Buchwald is acknowledged as the biggest and most reliable jewelry stores in Hialeah. The extensive popularity and credibility has been inspired by her devotion to quality customer service, quality products and great pricing.

7. Overall, the increase in net loss was primarily due to the lower-than-expected sales price and the increase in both marketing and fulfillment expenses.

Knox Jewelers LLC is a jeweler that is located in Woodbury, Minnesota. Knox Jewelers LLC specializes in unique engagement rings, unique wedding bands, diamonds, gemstones, gifts, and design your own ring. The services they offer include unique engagement ring and wedding band sales, diamond and gemstone sales, anniversary band sales, cleaning and maintenance of their jewelry, custom design, and earrings, bracelets, and pendant sales. Their jewelry making techniques are combined with their cutting-edge technologies and with the skills of their onsite master level artisans. The end result is a level of design and quality that they feel is in the upper echelon of

The Net Profit Margin in 2012 was 10.5% while in 2013 it was 66.6%. This increase in the Net Profit Margin can be attributed to the increase in net profits after taxes despite the fact that there was a slight decrease in revenues.

To reposition its water as a premium product, Healthy Spring will require an increase in its advertising and promotion budget of $900 daily. What is the maximum sales loss that Healthy Spring could tolerate before a 20% price increase would fail to increase its net profit? (That is, what is the breakeven sales change, including the incremental fixed cost of the advertising campaign?)

Under the original costing system used by Dakota Office Products, Customer A is shown to be slightly less profitable than Customer B. From the calculations above, we see that Customer A is slightly profitable at 0.3% profit as a percent of sales, and Customer B is not profitable, at a loss of (7.1%). We observe that Customer A is a consumer of low-cost services and generally pay their bills within 30 days unlike customer B who took 90 days or more. Timely servicing of debt led to profitability of Customer A.

Break Even Point in Sales = (Total Fixed Costs + Target Profit) ÷ Contribution Margin Ratio

The result of all the reductions of expenses on the revenues, takes us to the Net Earnings. This account reflects $12,266, $683 less than in 2008, but $1,690 more than 2007.