Hallstead Jwelers Case Study

In: Business and Management

Submitted By mittalm3
Words 2015
Pages 9
Hallstead Jewelers (Case Study1)

Accounting 2301
Managerial Accounting
Professor May
Spring 2013

By: Madhur Mittal, Ishaq Rehman, Ying Wang and Bohan Li

Question 1

Breakeven is a point at which a company covers all its costs and its profit is zero. After reviewing Hallstead Jewelers Income Statement, operational statistics, and table 2 and 3, for fiscal years 2003, 2004, and 2006, we can see a slight change in the breakeven unit and dollar amounts between the fiscal year of 2003 when compared to 2004. At the same time we also examine a major change when comparing the breakeven points of the fiscal year 2004 to 2006. This can be seen in Tables 1, 2, and 3.

Hallstead Jewelers | Income Statement | For the years 2003, 2004, and 2006 (In thousands) | | 2003 | 2004 | 2006 | Total Sales | $8,583 | $8,102 | $10,711 | Variable Costs | | | | Cost of Goods Sold | $4,326 | $4,132 | $5,570 | Commissions | $429 | $405 | $536 | Total Variable Costs | $4,755 | $4,537 | $6,106 | Contribution Margin | $3,828 | $3,565 | $4,605 | | | | | Fixed Costs | | | | Salaries | $2,021 | $2,081 | $3,215 | Advertising | $254 | $250 | $257 | Administrative Expenses | $418 | $425 | $435 | Rent | $400 | $400 | $750 | Depreciation | $84 | $84 | $142 | Miscellaneous Expenses | $53 | $93 | $122 | Total Fixed Costs | $3,230 | $3,333 | $4,921 | | | | | Net Income | $598 | $232 | $(316) |
Table 1

Contributions per unit | For the Years 2003, 2004, and 2006 | | 2003 | 2004 | 2006 | Number of Sales Ticket | 10153 | 9967 | 13063 | Value of Average Sales Ticket | $845.37 | $812.88 | $819.95 | Variable Cost per ticket | $468.33 | $455.20 | $467.43 | Contribution per…...

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