Hallstead Jewelry sells fine jewelry and gems, watches, tabletop gifts and artistic gifts. The information below outlines the income statement for the years 2016, 2017 and 2018. The income statement numbers are stated in 1000's of US Dollars. Recently, in 2018, Hallstead Jewelry expanded their premises to include more showroom space. The result was that they made a loss in 2018. This has caused some concern for management, and they need your skills to help them better understand their business. Q1. The opening stock in 2018 was $230 and the closing stock at the end of 2018 was $80. Calculate the purchases made during the 2018 trading year. [2 Marks] Q2. Re-organise the income statement data for each of the years and calculate the contribution margins in dollars for 2016, 2017 and 2018. [4 Marks] Q3. Calculate the break-even point in number of sales tickets (volume of customer orders written) and break even in sales dollars for 2016, to 2017, to 2018? [4 marks] Q4. If the average prices were reduced by 10%, and the number of sales tickets (volume) increased to 7,500, would the company's sales revenue be increased? With the 10% price reduction what would be the new break-even point in sales tickets (volume) and dollar sales? [4 marks] Q5. If the advertising expense were to be increased by $200,000, how would this affect the break-even point? [2 marks] Q6. If the fixed costs and the volume of sales remain the same in 2019. How much would the average sales ticket (Price) have to increase by for Hallstead Jewellery to break even? [4 marks]

Halstead Jewelry Data 2016 2017 2018 Sales 8,583 8,102 10,711 Var COGS 4,326 4,132 5,570 Fixed Direct labour 1,021 1,081 1,551 Fixed Selling costs 53 93 122 Gross Margin 3,183 2,796 3,468 Total expenses 2,605 2,584 3,874 Fixed Salaries 1,000 1,000 1,664 Var Commissions 429 405 536 Fixed Advertising 254 250 257 Fixed Admin expenses 418 425 435 Fixed Rent 420 420 840 Fixed Depreciation 84 84 142 Net Profit 578 212 (406) Sales Tickets (Volume) 5,341 5,316 6,897 Average sales ticket (Price) 1,607 1,524 1,553