Managerial Accounting
Autor: Tushar Mehta • September 16, 2016 • Course Note • 824 Words (4 Pages) • 784 Views
Question 1
The break even point in units and sales have increased from 2003 to 2004 to 2006 due to the greater increase in fixed costs (15% YoY growth rate) especially from expanding the business and lower than expected sales (avg and unit). The margin of safety has decreased over the years due to the increase in expenses and the lack of gross profit to compensate. Calculations
| 2003 | 2004 | 2006 | Growth |
Fixed costs | 3,197.00 | 3,260.00 | 4,889.00 | 15% |
Variable costs | 4,808.00 | 4,630.00 | 6,228.00 | 9% |
Sales revenue | 8,583.00 | 8,102.00 | 10,711.00 | 8% |
Sales tickets | 5,341.00 | 5,316.00 | 6,897.00 | 9% |
Sales price per unit | 1.61 | 1.52 | 1.55 |
|
Variable cost per unit | 0.90 | 0.87 | 0.90 |
|
Contribution per unit | 0.7068 | 0.65 | 0.65 |
|
BEP for sales tickets | 4,523.23 | 4,991.41 | 7,521.62 |
|
Contribution | 3,775.00 | 3,472.00 | 4,483.00 |
|
Contribution margin ratio | 0.4398 | 0.4285 | 0.42 |
|
BEP for sales $ | 7,268.83 | 7,607.29 | 11,681.03 |
|
MOS | 15% | 6% | -9% |
|
Question 2
7500 units at a 10% average price reduction will get a net loss of $1,178 which is worse than the 2006 net loss of $406. Therefore, the net income would decrease. With this, the new breakeven point would be $13,813 which would require Hallstead Jewelers to sell 9,882 units Calculations
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