Hallstead Jewelers Case Study

960 Words Jul 22nd, 2013 4 Pages
Hallstead Jewelers Case Study

Class: Managerial Accounting
Instructor: Robert O’Haver

1. The break even point in units and sales have increased form 2003 to 2004 to 2006 due to the greater increase in fixed costs especially from expanding the business as well as insufficient average sales and unit sales to compensate these changes. The margin of safety has decreased over the years due to the increase in expenses and the lack of gross profit to compensate.
Calculations:
| | 2003 | 2004 |2006 |
|Break-even point in number of sales |$3,197 / $.707 = |$3,260 / $.654 =
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Both the break even point for sales in dollars and the break even point for number of unit sales has reduced. The fact that this number has lowered is a good sign for the company. This simply means that they would have to sell less number of units or earn lower revenue to reach the break even point. The net income at the end of the statement has increased as well, which again is good.
Calculations:
Break even $4889/ 0.458 point in sales =$10674.67 thousand dollars Break even $4889/ 0.712 point in number =6866 units of sales tickets

Contribution Sales $10711
Margin format -VC $5799 CM $ 4912 Net Income $887
Contribution $4912/10711
Margin Ratio =0.458
Contribution $4912/6897
Margin per unit =$0.712
Price per unit $10711/6897 =$1.55

4. Here it is seen that the opposite of answer 3 happens. Both the point of break even for sales dollars and number of unit sales has gone up. Of course this is bad for the company as they now have to not only sell more units but also earn

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