Hallstead Jewelers

The price increase must be enough to cover the additional fixed cost, so we just need to know what that fixed cost is per copy sold. This equals the additional fixed costs / number of copies sold.

The company started off producing 20,000 units of mountain bikes. We did not change the production quantity. Last year our forecast sales were 24,000 when we only sold 19,866; therefore we thought it would be best to leave production at 20,000 bikes. Having excess inventory, we concluded that 20,000 units should be enough considering our quality has not changed and our advertising will not increase the sales dramatically. Although we had the choice to produce as much as 30,000 units, we felt as though we did not have sufficient money to increase production. We were interested in allocating the money towards marketing as opposed to production. We realized that without awareness, no matter how many units we make, sales would be inefficient.

d) Break even sales change that would change the profits by the same amount as a reduction in price.

Although the company did show an increased gross profit of $8,255,000 with $6,358,000 less Net Sales in 2013 versus 2012, that increase is due to the reduction in product Cost of Goods Sold by $14,613,000. Since increases in product price will negatively affect sales, one of management’s primary goals is to keep prices stable. This objective is achieved through implementation of cost cutting programs, investing in more efficient equipment, and automation of more steps in the production process.

The biggest challenge that they face as a company is they do not have the room the increase expenditure by such a vast amount. Currently there is $3,675,000 in promotional dollars allocated as follows; sales and administration expense (995,000), cooperative advertising programs with retailers (1,650,000), consumer advertising (562,000) and trade promotion (467,000). adding the $225,000 increase in consumer advertising will not allow the 5% of expected sales for total promo expenditures. John Bott, the vice president of sales disagreed with the budget allocation and noted that sales expenses and administration cost were projected to be $65,000 in 2008. This led him to believe that an additional sales representative would be needed to service company accounts because 50 were being added. Therefore he estimated this addition would cost at least $70,000 including salary and expenses in 2008. Bott also stated that “That's about $135,000 in additional sales expense that have to be added to our promotional budget for 2008”

In our second assumption, instead of using the cost of goods per cases in 1986, we try to use the percentage it counts in the total expenses which is 50.4% and to find the sales needed to break-even. The detail of the calculation is shown in the answer for questions d. The result is that 95,635, a little bit higher than the estimated sales of 90,000.

* We increased this costs as a percent of revenue 2.7% over the previous year for all forecasted periods

Total Sales Dollars (for covering each incremental dollar of advertising) = Absolute increase in dollar sales / Advertising expense = $500,000 / $150,000 = $3.33

The amount of extra sales that would be required to cover this cost of 300,000 would be

A $2 increase on admission prices has the potential to increase revenues with a low risk of profit loss. A loss would only occur if the price change were to lose more than 572 visitors. An increase to $14 a ticket will bring in extra profits and still remains below the competitors and the ROM’s regular hours

The $320,000, on the other hand, is a fixed cost associated with the proposed addition.

The revenue is $600,600*1.2= $720,720. The variable cost changes as sales increases and fixed cost stays the same, the gross profit is $175,500. After tax, the net income is $100,557.

Sales centre A, they had achieved great success over the last year and consistently outsells other sales centres. In fact, due to the large number of accounts managed by our sales team and larger staff, Sales centre A is expected to sell as much volume as the other two sales centres put together. That means, the expense budget for Sales centre A must be more than other, at least twice time then the other centre. Because, they need a lot of money to pay for their cost, such as Wages, telephone, office supplies, and commission. That seems not fair for Sale centre A.

Current funds allocated to advertising and sales promotion is 3% of net sales ($80,000,000) = $360,000

Adler's Jewelers is a jewelry store that is located in St. Louis, Missouri. This establishment was founded in 1909. Adler's Jewelers supplies rings, earrings, pendants, and bracelets. Their services include appraisals, engraving, pearl restringing, Adler’s gift card, custom design, watch repair, in house layaway, store credit card, and pearl restringing. Adler's Jewelers buys gold and diamonds. They have many satisfied clients across the United