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Hallstead Jewelers Case Study

...Hallstead Jewelers Case Study Amanda Dutcher October 6, 2011 1) Fixed Costs=Salaries+Advertising+Administrative Expenses+Rent+Depreciation+Miscellaneous expenses Breakeven=Fixed Costs/Contribution Margin 2003-3230000/377.03=8,566.96 units 2004-3333000/357.68=9,318.39 units 2006-4921000/352.52=13,959.49 units Breakeven$=Breakeven Units*Unit Price 2003-8566.96*845=$7,239,079.12 2004-9318.39*812=$7,566,532.68 2006-13959.49*819=$11,432,822.31 Margin of Safety=Sales-Breakeven Sales 2003=8583000-7239079.12=1343920.88=15.66% 2004=8102000-7566532.68=535467.32=6.61% 2006=10711000-11432822.31=-721822.31=6.74% The breakeven point increases from year to year because of the increases in fixed costs. Because these costs are increasing, the company needs to produce and sell more units in order to cover them. The margin of safety decreases from year to year for the same reason. The change from 2003 to 2004 for breakeven units and the margin of safety were not nearly as significant as the change in 2006. This change in fixed costs is because they moved to a new, larger location causing them to increase dramatically. This caused for not only an increase in rent, but also most likely an increase in the amount of employees. This major increase in fixed costs is what caused the major change in both the breakeven point and the margin of safety. 2) New Price=$737.10 New Sales Volume=14,0000 Sales=$10,319,400 $10,319,400-10,711,000=$-391,600 The decrease in price also......

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Hallstead Jewlers

...Hallstead Jewelers was one of the largest jewelry and gift stores in the United States for 83 years.   Customers came from throughout the region to buy from extensive collections in each department.   Any gift from Hallstead’s had an extra cache attached to it as they were known for having the best.    Even though the principal retail shopping areas shifted two blocks west, Hallstead’s reputation and selection still brought in customers.   In 1999 however, sales became stagnate and profits were starting to slip.   The owners (two sisters, Gretchen and Michaela) made several changes in an effort to revitalize the store back to its full glory.   The largest decision they made was to move the stores location, expanding it by 50% more space and selling staff.   This move resulted in a five-year lease as well as extensive and expensive renovations.   They also made some changes in product offerings and offered more sales potential at the cost of minor reductions in margins. During the year it took to complete the Hallstead’s renovation the industry started showing major changes toward internet based jewelry sales.   Tiffany & Company, a business with an origin much like Hallstead Jewelers, grew into an international powerhouse.   At the same time, a start-up internet seller, Blue Nile, became the second largest diamond seller in the U.S.   While Hallstead’s was growing their fixed costs by doubling their rent payments, Tiffany and Blue Nile were increasing their revenue with...

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Hallstead Jwelers Case Study

...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...

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5star Tools Case Study

...BUS5431 - Managerial Accounting Individual Case Study 7-2 FIVE STAR TOOLS James Jiambalvo – Chapter 7 Case 2 Submitted by: K Greene Executive Summary: Five Star Tools is a small family-owned business that manufactures diamond-coated cutting tools (chisels and saws) used by jewelers. The production of these tools involves three major processes. The first of these processes involves steel “blanks” (tools without the diamond coating) that are cut to size. The second process involves the blanks being sent to a chemical bath that prepares the tools for the coating process. The final process is the major process in the line. The blanks are coated with diamond chips in a proprietary process that simultaneously coats and sharpens the blade of each tool. Following the coating process, each tool is inspected and defects are repaired or scrapped. In the past two years, the company has experienced significant growth and with that growth has come some growing pains. The company finds itself at capacity in the coating and sharpening process. This process requires highly skilled workers and expensive equipment. Because of growth a bottleneck has been created by this operational process and this in turn has cause the company to miss delivery deadlines on orders from several important customers. Maxfield Turner, the son of Frederick Turner, founder of Five Star Tools, president of the company is having a discussion over lunch with Betty Spence, vice president of......

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...2004, Hallstead resided in their previous location which held 10,230 square feet. Between these years, there is an increase in their break-even point, but this change can be associated with a down year in sales. Their sales decreased by approximately $481,000. Along with that, we can see that Hallstead’s fixed costs remained stable, only increasing by $103,000. The year to focus on is the change in Hallstead’s location when they moved to a new store with 5,050 more square feet. With this change, their fixed costs rose immensely, and they failed to account for a necessary change in advertising. Hallstead was running their business in the same manner they did during their years in the smaller store. The margin of safety in 2003 was 20.35%. In 2004, this decreased to 8.71%, and the margin of safety for 2006 was – 7.82%. This value for 2006 is insignificant because they lost money. The margin of safety quantifies the cushion in percent of sales the firm has before they reach the break-even point. 2. While this idea may seem appropriate to put Hallstead on track, it is in fact a poor decision as net income decrease even more. The net income in this case would a negative value at - $1,124,160. The break-even point would increase to 15,507 units sold, and the break-even point in sales dollars would increase to $13,551,567.30. 3. This idea would not only decrease the break-even point in units sold to 10,662 units but it would also create a positive net income for Hallstead......

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Case Study Case Study Case Study

...This case study is an excellent example of how different types of parties can be brought together in a large scale transaction and how the original energy of those early meetings can be lost over time. I imagine that when Anthony Athanas was purchasing those old piers back in the 1960s many, if not all, of his colleagues, friends, and family members told him that he was off his rocker. I’m sure Athanas was looking at this land as his family’s ticket to financial prosperity and somewhat of a legacy that he could leave to his descendants for years and years to come. One of the items I wish the case would have divulged is the amount of money that Athanas had invested in the properties. For me this information would have given an insight to his net worth and how much he had riding on this investment. I assume it was substantial given his actions later in the process. Twenty years later Athanas’ dreams came true and all those naysayers were more than likely green with envy. The amount of pride Athanas’ had in his investment at that moment had to have been insurmountable. Being approached by a big time real estate development company and their extremely wealthy client, Hyatt Corporation, must have made Athanas feel larger than life and made him feel like something he isn’t, which is a developer himself. The case doesn’t give much insight into whether Athanas had any representation or anyone consulting him throughout the process. From the beginning, I saw this as matchup...

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Case Study

...Break-even point (Unit and Dollar) changed, like fixed cost, variable cost and contribution margin. When the fixed cost increase and the contribution margin decrease, the Break-even point (Unit) will go up. Therefore, the Break-even point (Dollar) also increases. In the part of margin of safety (%), it’s changed from 8.4%, 3.7% and -8.0% within 2008,2009 and 2011. This is due to the margin of safety (%) is calculated by subtracting the Break-even (Dollar) from budgeted sales. In other words, although the budgeted sales increased, Hallstead Jewelers’ Break-even point (Dollar) also increased and higher than budgeted sales in 2011. Hence, the margin of safety (%) dropped every year. (Index 1) 2. Although Hallstead Jewelers’ net income increased in 2008 and 2009, their income would be loss of 299,600 in 2011. (Index 2) 3. Gretchen through eliminating sales commissions to reduce variable cost so that made net income increased. Especially in 2011, Hallstead Jewelers’ net income is negative in question 1. With the elimination of sales commissions, however, the company’s net income changed to the positive profit. In the meantime, variable costs go up leading to an increase in net income for every unit sold. (Index 3) 4. Comparing break-even point with question 1, the break-even points (Unit and Dollar) decreased. That means the sisters got less revenue. When we see operation income, however, it will increase $200,000 in 2008,2009 and 2011. I suggested sisters try to cut......

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Hallstead Jewelers Case

...Hallstead Jewelers Case 1. The breakeven point in number of sales tickets between 2003 and 2004 went up from 4,535 to 5,000. In terms of sales dollars it increased from 7,287,745 to 7,620,000. This happened because while variable costs actually went down, their average sales ticket went down by 83 which caused them to have to sell more to break even. The breakeven point from 2004 to 2006 went up from 5,000 to 7,509. Breakeven in terms of sales dollars increased from 7,620,000 to 11,661,477. Though the average sales ticket went up some, it was not enough to cover the increase in variable and fixed costs which were probably caused by the move of location. Margin of Safety between 2003 and 2004 decreased from 1,295,255 to 482,000. Because the average sales ticket went down so much while sales remained relatively the same, they did not make enough profit to keep the same margin of safety. Between 2004 and 2006 margin of safety went down from 482,000 to –950,477. Sales tickets between these two years went up significantly, but it was not enough to cover the large increase in fixed and variable costs. This caused them to be well below the break-even in sales dollars. 2. If the average sales ticket was reduced to 1,398 and sales tickets were increased to 7,500, income would actually decrease from -406 to -1,112. The new break-even point in sales units would be 9,780, and the new break-even in sales dollars would be 13,672,440. 3. All else consistent......

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Hallstead Jewelers

...The breakeven point in units and in sales dollars has increased each year from 2003 to 2006 (with the renovation year of 2005 having been skipped). From 2003 to 2004, breakeven increased by 10.28% in units and 4.58% in dollars. These increases occurred because, while variable costs decreased by 4.58%, average ticket (unit) price decreased by 5.16%, meaning Hallstead was getting a lower contribution margin per ticket/unit. Fixed costs also slightly increased from 2003 to 2004, which in turn contributing to increasing breakeven point. Breakeven increased drastically from 2004 to 2006, increasing by 50.07% in units and 52.93% in dollars. The biggest reason for this is the massive increase in fixed costs. Particularly salaries, which increased by $1.134 million from 2004 to 2006 (54% increase from 2004 to 2006) and rent, which doubled from 2004 to 2006, increasing by $420,000. In this case, margin of safety indicates how much sales did Hallstead actually make above breakeven level, instead of using a budgeted or expected sales value. For 2003, if Hallstead’s sales were 15.09% lower, they would have been at exactly breakeven sales level. Margin of safety decreased significantly from 2003 to 2004, because Hallstead’s sales decreased while its breakeven point increased. Margin of safety continued to drastically decrease from 2004 to 2006 and was actually negative in 2006, meaning they needed to make 8.82% more in sales to have reached breakeven. This occurred because, even though......

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Hallstead Jewelers Case

...Hallstead Jewelers Case 1. According to the Exhibit 1 provided in the case, we set up new income statement for 2003, 2004 and 2006 (see exhibit a). The variable cost includes cost of good sold and commissions, and the fixed cost cover other things include selling expense, salaries, advertising, administrative expenses, rent, depreciation, and miscellaneous expenses. Then the brief result shows in the table below. | 2003 | 2004 | 2006 | Break-even point in dollars (in thousand of dollars)= Fixed cost/contribution margin ratio | $7,287.03 | $7,620.20 | $11,655.34 | Break-even point in units (sale ticket)= Break-even point in dollar/Sales per tickets | 4535 | 5000 | 7506 | Margin of Safety= (Budgeted sales - Break-even point sales)/Budgeted sales | 15.10% | 5.95% | -8.82% | (Table 1. All the related data can be found in exhibit a.) Both the break-even point in dollars and the break-even point in units increase a lot, and the margin of safety drops down to negative in 2006. The changes were caused by the huge increase in fixed cost (especially the rent since the bigger place they moved to in 2005). 2. If average prices were reduced ten percent and the number of sales tickets increased to 7500, the company’s income would be a net loss as $(1,109,410). And new breakeven point in sales would be 9633, and the new breakeven point in dollar would be $13,463,440. The income statement would be in the exhibit b. | Net Income/loss(Thousand of dollars) |......

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Tanishq Case Study

...only truly national jeweler that sold gold and gem-studded jewelry in boutiques across the country. Tanishq as a brand emerged from the Titan Industries, which was instrumental in bringing a paradigm change in the Indian Watch Industry by being the first Indian Company to introduce the Quartz Watches. It had entirely changed the market scenario over a period of ten years subsequent to its entry. By the year 1995, Titan Industries was keen to launch a new design watch targeted at the very high end consumer market segment. This gave the birth of Tanishq- as the Jewelry Watch Brand. This was a brand pegged as an ego satisfier, above the mundane and utilitarian. However the Jewelry Watch Brand concept did not click with the consumer as it was perceived to be clunky in design and highly overpriced. In 1996, brand Tanishq was therefore used to offer an entirely new product range to the consumer. This was Precious studded Jewelry. Underlying logic was the possibility of capitalizing on the high pricing of studded jewelry compared to plain gold jewelry, where the gold as a commodity mindset, of the consumer did not allow too many pricing options. However selling studded jewelry required a paradigm shift of the consumer mindset because, studded jewelry used 18 karat gold, which was considered as impure compared to the prevalent 22 karat gold. At this period the marketing campaigns were focused on establishing Tanishq’s credentials as a differentiated jeweler offering......

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Case Study

...The Case Study Approach Linda P. Williams Liberty University Online Author Note Linda P. Williams, Department of Psychology, Liberty University Online Correspondence concerning this article should be addressed to Linda P. Williams, Department of Psychology, Liberty University Online, 1971 University Blvd, Lynchburg, VA 24515, E-mail: lwilliams91@liberty.edu The Case Study Approach Introduction At some point during the pursuit of a degree psychology, the time comes when a student must learn various research techniques. One of the many approaches is case study, which this paper will focus on. Areas of discussion include reasons for using a case study, advantages/disadvantages to the approach, and ways acquire information to perform a case study. The essence of a case study A case study is used to offer a mental accounting of a person, school, neighborhood, business, or group of individuals over the course of time, way of research. It is sometimes referred to as naturalistic observation, but does not always follow the same protocol. Mental accounting is done by means of observation of various behavior or mind sets operating in their natural environment. This is noteworthy, especially when participants have a distinct disorder worthy of being studied to further the cause of research and development. Depending on the purpose of the investigation, the case study may present the individual’s history, symptoms, characteristic behaviors, reactions to......

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Hallstead Jewelers

...Hallstead Jewelers Overview: Hallstead is a family owned business that has been in business for 83 years. They sell fine jewelry and gems, watches, and tabletop gifts. Gretchen Reeves and her sister Michaela Hurd took over the business in 2002. Prior to them taking over the business, their father and previously their grandfather had managed the business at its original Lake Avenue location. The original location was a prime location back when the store opened. Since then the main shopping area moved a few streets over to Washington Street. When the sisters took over the business profits had already been slipping for several years. The sisters hired a consultant who recommends they move to a new location where they could have more space and fresh new look. Upon a location becoming available on Washington Street, they move the business in 2005. Moving took most the year to accomplish so they were considering that year a loss. Based on the preliminary income statement for 2006, they had a loss almost double the income of 2004 which was the last “normal” year. The sisters are determined to figure out what happened between 2004 and 2006. Their consultant suggested to consider increasing their advertising for the new location or changing their pricing strategy to compete with internet companies. Additionally, Gretchen wanted to consider stopping the sales commissions since they were the only store in the city to still pay them. Both their father and......

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Hallstead Jewelers Case Study

...Hallstead Jewelers How has the breakeven point in number of sales tickets (number of customer orders written) and breakeven in sales dollars changed from 2003 to 2004, and to 2006? How has the margin of safety changed? What caused the changes? The break-even point in the number of sales tickets for 2003, 2004, and 2006 are 4,535, 5,000, and 7,505 respectively. The break-even point in sales dollars for 2003, 2004, and 2006 are $7,287,043, $7,620,696, and $11,655,277 within these years. The margin of safety is the difference between the expected level of sales and break-even sales. Since there is no expectation of sales mentioned in the case report, a constant level of expected sales is assumed. If the expected level of sales remains constant, the break-even sales point will increase as the margin of safety decreases. Within these years, the margin of safety changed from 15%, 6%, to -9%. As shown in Table 1, fixed costs increased along with the break-even sales point and sales did not meet expectations, therefore the company reported a loss in 2006. This was caused by an increase in salaries (larger storage room), administrative expenses, miscellaneous expenses, depreciation (increase in assets from the larger store), and rent expenses (new store); which all caused an increase in fixed costs and break-even sales. Table 1: Break-even Sales Calculations (thousands of dollars) 2003 2004 2006 Sales $8,583 $8,102 $10,711 Less variable costs: Cost of......

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Hallstead Jewllers Case Final Draft

...Due Date: 24th May 24, 2016 Hallstead Jewelers Professor James Reagan Carly Cugine Fernando Morey Perez Olivia Hajas Uday Saha Yineng Zhang Part 1 **In Thousands** Variable Costs | 2003 | 2004 | 2006 | Sales Ticket Units | 5341 | 5316 | 6897 | Average Sales Ticket | 1607 | 1524 | 1556 | Sales | 8583 | 8102 | 10711 | Variable costs | | | | COGS | (4326) | (4132) | (5570) | Commission | (429) | (405) | (536) | Total Variable Cost | (4755) | (4537) | (6106) | Total Contribution Margin | 3828 | 3565 | 4605 | Contribution Margin Per Unit | .7167 | .6706 | .6677 | Fixed Cost | 2003 | 2004 | 2006 | Salaries | 2021 | 2081 | 3215 | Advertising | 254 | 250 | 257 | Administrative Exp | 418 | 425 | 435 | Rent | 420 | 420 | 840 | Depreciation | 84 | 84 | 142 | Misc. | 53 | 93 | 122 | Total | 3250 | 3353 | 5011 | Breakeven analysis: For this part of the case study we used the following formulas to get Breakeven in units and Breakeven sales. The calculations can be found below and are in thousands of dollars. * Breakeven # of tickets = total FC / (selling price per ticket - VC per ticket) * Breakeven in sales dollars = [total FC / (selling price per ticket - VC per ticket)] * (selling price per ticket) or total FC/ CM ratio * Margin of Safety = Expected Sales - Breakeven in Sales Dollars Results | 2003 | 2004 | 2006 | Break even # units | 4,535 | 5,000 | 7473 | Break even sales dollars |......

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Hallstead Jewelers Case Study

Autor: gohlayyen  •  May 11, 2015  •  Case Study  •  1,409 Words (6 Pages)  •  2,530 Views

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