Although the company is currently struggling with a negative operating income, the increase in breakeven dollars is relatively nominal. Breakeven in sales tickets is 9, — an increase of 1, from the previous year.
Another idea was to eliminate sales commission. This move resulted in a five-year lease as well as extensive and expensive renovations.
The figure below illustrates that the elimination of sales commission greatly affects operating income. We showed Hallstead case essay to be a bad idea as operating income significantly decreased with the price reduction.
Eliminating sales commission greatly enhanced operating income and resulted in positive operating income for all three years. By eliminating the sales commission in a projection of the three previously reported years, we can see that operating income is in the positive for all three periods.
They also made some changes in product offerings and offered more sales potential at the cost of minor reductions in margins. The following answers will take a deeper look into the mechanics of the business and provide Gretchen and Michaela with recommendations to get their business back on track.
In an effort to explore ideas in strategy that would return the business to profitability, the sisters compiled some questions for their accountant to analyze using some additional operating statistics. Changes in Breakeven and Margin of Safety The following table shows that while the breakeven in both sales dollars and number of sales tickets has continued to rise fromtoand tothe margin of safety has decreased over the same period of time.
Further consideration should be given to eliminate them if possible. Works Cited Jiambalvo, James. Based on our analysis of Hallstead Jewelers we would recommend that they discontinue the practice of paying sales commissions.
In however, sales became stagnate and profits were starting to slip. Managerial Accounting 4th ed. It would probably be a good idea for Hallstead Jewelers to try the increase in advertising. How to Write a Summary of an Article? What caused this change?
The increased advertising budget should be assessed on an annual basis to validate its effectiveness. We implemented several options to see what variances would occur. Customers came from throughout the region to buy from extensive collections in each department. At the same time, a start-up internet seller, Blue Nile, became the second largest diamond seller in the U.
Perhaps some of this increased advertising budget should be spent on expanding their business to the internet and advertising there; allowing Hallstead to compete more directly with Blue Nile and boost sales.
The owners two sisters, Gretchen and Michaela made several changes in an effort to revitalize the store back to its full glory.Read this essay on Hallstead Jewelers Case Study.
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Hallstead Jewelers Bryan Julian Brandon Krakowieski Venkata Marella Dakota Pawlicki Kristin Reynolds Breakeven point in # Sales Tickets Breakeven sales dollars. 1.)The breakeven point in number of sales has risen along with the breakeven point in sales dollars from to The margin of safety has decreased as well.
Hallstead Jewelers Case Essay 1. According to the Exhibit 1 provided in the case, we set up new income statement forand (see exhibit a). Hallstead Jewelers Case Study; 1. 0Summary 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.
Just send your request for getting no plagiarism essay mint-body.com Haven't found. Free Essay: Hallstead Jewelers Managerial Accounting ACCT – Case Analysis 1 September 29, Melissa Ng Variable costs are made up of cost of goods.Download