Beruflich Dokumente
Kultur Dokumente
Income Statement
2003 2004 2006
Sales 8,583,000.00 8,102,000.00 10,711,000.00
COGS 4,326,000.00 4,132,000.00 5,570,000.00
Gross margine 4,257,000.00 3,970,000.00 5,141,000.00
Expenses
Salaries 2,021,000.00 2,081,000.00 3,215,000.00
Commissions 429,000.00 405,000.00 536,000.00
Advertising 254,000.00 250,000.00 257,000.00
Administrative expense 418,000.00 425,000.00 435,000.00
Rent 420,000.00 420,000.00 840,000.00
Depreciation 84,000.00 84,000.00 142,000.00
Miscellaneous expense 53,000.00 93,000.00 122,000.00
Total expense 3,679,000.00 3,758,000.00 5,547,000.00
Inference: The increase in BEP in terms of units and in terms of revenue and decrease in %MOS is due to increased in fixed cos
renovation work of the shop, it resulted in negative growth in 2006.
n) and breakeven in sales dollars changed from 2003, to 2004, and
to increased in fixed cost. Since the rent and depreciation was continued even during the
Q2 One idea that the consultant had was to reduce prices to bring in more customers. If average prices were reduced t
would the company's income be increased? With prices reduced, what would be the new breakeven point in sales ti
Given 2003
Sales 8,583,000.00
price 1,607.00
Less variable cost
COGS 4,326,000.00
Commissions 429,000.00
Total Variable cost 4,755,000.00
Unit 890.28
PNL 578,000.00
2004 2006
8,102,000.00 10,711,000.00
1,524.08 1,552.99
4,132,000.00 5,570,000.00
405,000.00 536,000.00
4,537,000.00 6,106,000.00
853.46 885.31
212,000.00 (406,000.00)
Per Per
unit 7663.30 Unit
7663.30
512.38
9779.8089928974
13,669,186.71
(2,958,227.71)
-27.62%
Operating Statistics
2003 2004 2006
10,230.00 10,230.00 15,280.00
839.00 792.00 701.00
5,341.00 5,316.00 6,897.00 no of orders
1,607.00 1,524.00 1,553.00 price
Q3 Another idea that Gretchen had was to eliminate sales commissions. Hallstead's was the only jewelry store in the ci
and Father had insisted that commissions were one of the reasons for their success, Gretchen had her doubts? How
breakeven volume?
Given 2003
Sales 8,583,000.00
price 1,607.00
Less variable cost
COGS 4,326,000.00
Commissions 429,000.00
Total Variable cost 4,755,000.00
Unit 890.28
PNL 578,000.00
Solution
Sales commision = 0
So, Variable Cost = COGS
Years 2006
Sales 10,711,000.00
Variable cost (-) 5,570,000.00
Contribution 5,141,000.00
Fixed costs (-) 5,011,000.00
Years 2006
No. of sale tickets 6,897.00
MOS 270,808.12
%MOS 2.53%
2004 2006
8,102,000.00 10,711,000.00
1,524.08 1,552.99
4,132,000.00 5,570,000.00
405,000.00 536,000.00
4,537,000.00 6,106,000.00
853.46 885.31
212,000.00 (406,000.00)
807.60
745.40
BEP in units (6722.6) to decrease.
ds to BEP in sales dollars ($10440191.88) to decrease.
ating Statistics
2004 2006
10,230.00 15,280.00
792.00 701.00
5,316.00 6,897.00 no of orders
1,524.00 1,553.00 price
Q4 Michaela felt that a bigger store could benefit from greater advertising and suggested that they increase advertisin
the breakeven point? Would you recommend that the sisters try this?
Given 2003
Sales 8,583,000.00
price 1,607.00
Less variable cost
COGS 4,326,000.00
Commissions 429,000.00
Total Variable cost 4,755,000.00
Unit 890.28
PNL 578,000.00
Solution
Increase in Advertisement Exenses 200,000.00
Salaries 3,215,000.00
Advertising 457,000.00
Administrative expense 435,000.00
Rent 840,000.00
Depreciation 142,000.00
Miscellaneous expense 122,000.00
Total Fixed cost 5,211,000.00
Years 2006
Sales 10,711,000.00
Variable cost (-) 6,106,000.00
Contribution 4,605,000.00
Fixed costs (-) 5,211,000.00
Net Income (606,000.00)
Years 2006
No. of sale tickets 6,897.00
MOS (1,409,572.13)
%MOS -13.16%
2004 2006
8,102,000.00 10,711,000.00
1,524.08 1,552.99
4,132,000.00 5,570,000.00
405,000.00 536,000.00
4,537,000.00 6,106,000.00
853.46 885.31
212,000.00 (406,000.00)
885.31
667.68
11,655,380.34 465,191.79
to 7804 units
12,120,572.13 dollars
me and hence would not make this move.
ating Statistics
2004 2006
10,230.00 15,280.00
792.00 701.00
5,316.00 6,897.00 no of orders
1,524.00 1,553.00 price
Q5 How much would the average sales ticket have to increase to breakeven if the fixed cost remained the same in 200
Given 2003
Sales 8,583,000.00
price 1,607.00
Less variable cost
COGS 4,326,000.00
Commissions 429,000.00
Total Variable cost 4,755,000.00
Unit 890.28
PNL 578,000.00
Solution
Fixed cost of the company in 2006 =
Let the Selling price per unit be =
Total no of orders =
Total sales =
Particulars
Sales
(-)COGS
(-)Comission
CONTRIBUTION
So the average sales ticket have to increase by 1615 to break even if the fixed cost
fixed cost remained the same in 2007 as it was in 2006?
2004 2006
8,102,000.00 10,711,000.00
1,524.08 1,552.99
4,132,000.00 5,570,000.00
405,000.00 536,000.00
4,537,000.00 6,106,000.00
853.46 885.31
212,000.00 (406,000.00)
5,011,000.00
x
6,897.00
6897*x
2007
6897*x
5,570,000.00
6897x * 0.05
6552.15x-5570
to contribution.
6552.15x-5570=5011
x=1615
1615 to break even if the fixed cost remain the same in 2007 as it was in 2006
ating Statistics
2004 2006
10,230.00 15,280.00
792.00 701.00
5,316.00 6,897.00 no of orders
1,524.00 1,553.00 price
Q6 What would you recommend that the managers at hallstead Jewelers do?