Question

1. How has the breakeven point in number of sales tickets (number of customer orders written) and break-even sales in dollars changed from 2003, to 2004, and to 2006? How has the margin of safety changed? What caused the changes?

2. One idea that the consultant had was to reduce prices to bring in more customers. If average prices were reduced ten percent (10%), and the number of sales tickets (unit sales) increased to 7,500, would the company's income be increased? With prices reduced, what would be the new break-even point in sales tickets and sales dollars? (answer 2 pls)
Exhibit 2 Hallstead Jewelers Operating Statistics 2003 2004 2006 Sales space (square feet) Sales per square foot Sales tickets Average sales ticket 10,230 $ 839 5,341 $ 1,607 10,230 $ 792 5,316 $ 1,524 15,280 $ 701 6,897 $1,553 Source: Casewriter
rices reduced, what would be the new break-even point in sales tickets and sales dollars?

Answer 1

(thousand doller) 2003 2004 2006 sales 8,583 8102 10,711 less: Livanable cost cost of good sold 4326 4132 5570 commission - 429 405536 Total variable cost 4755 4,537 6106 contribution margin [3,828 3565 4605 carbribution margin Rabo 5 contro bulion marginhen 38 28 3565x100 4608xjoo sale 8582 No 8102 40 1071 44.60% 441 43% Break even point in Dollar - Fixed cost contrbuhin margin Ratio 2003 2004 2006 Breale even polht in 3679-429 53758-405 5567-536) Dollar 4460% 44% 43% $7286956157620.49311653.488 converted thousand to 87,286.996.76204 557 116534881 numbea Break even point in Mamber it geket $7,286,996 $7620,455 $11,653,488 $1607 $1529 $ 1553 4535 5000 7503

Break can even chane 1 2003 to 2004 to 2006 2004 = 500o - 4535=465 a number of ticket) 2006 = 7504-5000= 2504 (Momberor tickets 2004 = $7,602,455-$7286996 cin dollars 29315459 2006 - 811653488 - $7620455 in coollar - 4033033 margin - of sakty Actual sale - Break even point 2003 -5 8583-57287=81296 (in thousand) 2004 = 98102-$ 7620=8482 (in thousand) 200 6 = $1071- $ 11653- 942(in thousad) change in magin of rate 2004 = $482- $1296568 14 (in thousand) 2006 = - $942-3482=61424 (in thousand) Change occurred due to change volume of scale a Cated increasing and margin of somety is de creasing 2003 2004 2006 New Sale 10847250 10287000 10 482250 ( Soox Newselling Po tess: Vonible tost 4279500 408 3300 549 5400 confibution 6567750 62037004987350

2003 2004 2006 contmbletion mase in Ratio Go.55% 60. 30 44.58 - Break even point 3679-429 $3768 - 405 55947-56 in pollar Go. 557 66.30% 44581 =53675560 12401 in thousand) 3367000 5560000 1/240000 I Break dompol4 5367000555 60oo0s11240000 | ทน /ว8, 4 & 4 1463 & 1371.6 113977 - 1294 1 4054 8042